Week 10 problems HELP!
- Given the following information:
Total assets
$100,000
Don't use plagiarized sources. Get Your Custom Essay onWeek 10 problems HELP!Just from $13/PageDebt (12% interest rate)
$80,000
Equity
$20,000
Variable costs of production
$14 per unit
Fixed cost of production
$27,000
Units Sold
12,300
Sales price
$19.75 per unit
What happens to operating income and net income if output is increased by 10 percent? Verify your answer.
- A firm needs $100 to start and has the following expectations:
Sales
$200
Expenses
$185
Tax rate
33% of earnings
- What are earnings if the owners invest the $100?
- If the firm borrows $40 of the $100 at an interest rate of 10%, what are the firm’s net earnings?
- What is the return on the owners’ investment in each case? Why do the returns differ?
- If expenses rise to $194, what will be the returns in each case?
- In which case did the returns decline more?
- What generalization can you draw from the above?
- A firm with sales of $5,000 has the following balance sheet:
Assets, Liabilities and Equity as of xx/xx/xx |
|||
Assets |
Liabilities and Equity |
||
Accounts receivable |
$1,300 |
Accounts payable |
$1,200 |
Inventory |
1,600 |
Long-term debt |
2,500 |
Plant |
1,700 |
Equity |
900 |
Total |
$4,600 |
Total |
$4,600 |
The firm earns 20 percent on sales and expects those sales to rise to $5,500. The increased sales may require additional financing. Accounts receivable and inventory will increase, and trade accounts will also spontaneously increase with the increase in sales. Management expects to distribute 75% of earnings.
- Determine the new balance sheet entries for those assets and liabilities that spontaneously change with the level of sales using the percent of sales technique. (Accounts receivable, inventory, and accounts payable vary with sales; the other entries do not). Round off to nearest percentage point, such as 22% or .22.
- Will the firm need external financing to achieve sales of $5,500?
- Construct the pro forma balance sheet for sales of $5,500. Any new financing should be obtained by issuing new long‑term debt. Any excess funds should be held in cash.
NOTE:
We have worked on a similar assignment and our student scored better and met their deadline. All our tasks are done from scratch, well researched and 100% unique, so entrust us with your assignment and I guarantee you will like our services and even engage us for your future tasks. Click below button to submit your specifications and get order quote