Answer: Job description
Explanation:
A job description is a written statement that shows the responsibility of a worker in a particular organization. A job description can also include the details about the company such as the mission and vision of the company and its culture.
The job description is a written statement of what a job holder does, how it is done, under what conditions it is done, and why it is done.
If an analyst wished to determine the degree to which leverage was being employed by a subject company, she would most likely examine that issuer's:______.
a) sales to debt ratio.
b) debt to equity ratio.
c) current ratio.
d) price to book ratio.
Answer:
B) debt to equity ratio.
Explanation
The debt to equity ratio is computed by dividing the issuer's long-term debt by their total capitalization. The higher the ratio, the more leverage being used by the company.
Hope this helps! （づ￣3￣）づ╭❤～
5. Kroger can use __________ gathered from ClickList orders to determine which products they should keep more or less of in stock.
Answer: Data analytics
Explanation:
Data analytics simply has to do withcanalyzing raw data to make conclusions about a particular information. Data analytics is used by organizations in order to optimize their business performance.
Kroger can use data analytics gathered from ClickList orders to determine which products they should keep more or less of in stock.
Identify at least two challenges that Salesforce faces and explain why these are important challenges to Salesforce.
Answer:
Two challenges that Salesforce may face today:
1. Competitions
2. Cash Flows
Explanation:
1. Salesforce has been the global Software-as-a-Service (SaaS) provider for Customer Relationship Management (CRM) system. However, they are challenged by new market joiners such as Hubspot. There are also new startups offering free and simple cloud-based CRM systems that targetting small businesses. The entry of the new competitors seriously threatens the leading market share of Salesforce.
2. The current pandemic affected negatively to all enterprises, including Salesforce's outstanding customers. They should expect a drop in their total number of fee payers while the cost to maintain their high product standard is still the same as before. It may give them a lot of working capital headaches.
Many managers describe performance appraisal as the responsibility that they like least. Why is this so? What could be done to improve the situation?
Answer:
Many managers describe performance appraisal as the responsibility that they like least. Why is this so?
it might be so because managers may feel that performance appraisal is not as productive as other activities, or because they lack the personal skills, or the motivation, to engage in that activity.
What could be done to improve the situation?
Managers should be taught that performance appraisal can be a very effective and productive method for the firm. When workers are praised for their work (when they deserve it), they are likely to be happier in the workplace, and it has been shown by countless studies that happier workers are also more productive.
"Your customer has been declared legally incompetent and his daughter has presented the proper legal papers appointing her as the guardian. Which statement is TRUE?"
Answer: B. Trading instructions can be accepted only from the daughter
Explanation:
The customer has been declared legally incompetent which means that he should not be making decisions that have to do with something as serious as trading instructions as he will not be able to comprehend them.
The only person that should therefore take over such roles would be his daughter who is a legal guardian. As she is not his guardian, she is able to take such decisions for him and so the trading instructions should be accepted only from the daughter.
You take out a car loan for 13,381 dollars. If your loan has an annual interest rate of 8.86 percent, and you will make monthly payments for 5 years, how much of your first payment will go towards principal (go towards paying down the outstanding loan balance)?
Answer:
Principal paid in the first payment =$2,656.52
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
We will use the following relationships:
Interest paid = Interest rate × loan balance
Principal paid = Monthly installment - Interest paid
Monthly installment = Loan amount/Annuity factor
Annuity factor = (1- (1+r)^(-n))/r
r - annual interest rate
n- number of period = 12× 5 = 60
Monthly interest rate - 8.86/12 =0.738 %
Loan amount = 13,381
Annuity factor = (1 - (1.00738)^(-60) )/ 0.00738=48.336
Monthly interest payment = Loan amount/Annuity factor
13,381/48.336=2,755.32
Interest due in the first month = interest rate × loan amount
= 0.738 %× 13,381 =98.796
Principal aid in the first year = Monthly installment - interest due 1st month
= 2,755.32 - 98.796 = 2,656.52
Principal paid in the first payment =$2,656.52
ROI, Residual Income, and EVA with Different Bases Envision Company has a target return on capital of 12 percent. The following financial information is available for October ($ thousands):
Software Division . Consulting Division Venture Capital Division
(Value Base) (Value Base) (Value Base)
Book Current Book Current Book Current
Sales $100,000 $100,000 $200,000 $200,000 $800,000 $800,000
Income 12,250 11,700 16,400 20,020 56,730 51,920
Assets 70,000 90,000 100,000 110,000 610,000 590,000
Liabilities 10,000 10,000 14,000 14,000 40,000 40,000
Required
a. Compute the return on investment using both book and current values for each division. Round answers to three decimal places.
Book Value Current Value
Software Answer ? Answer ?
Consulting Answer ? Answer ?
Venture Capital Answer ? Answer ?
b. Compute the residual income for both book and current values for each division. Use negative signs with answers, when appropriate.
Book Value Current Value
Software $Answer 3,850 $Answer 900
Consulting Answer 4,400 . Answer 6,820
Venture Capital Answer (16,470) Answer (1,880)
c. Compute the economic value added income for both book and current values for each division if the tax rate is 30 percent and the weighted average cost of capital is 10 percent. Use negative signs with answers, when appropriate. Book Value Current Value
Software $Answer ? $Answer ?
Consulting Answer ? Answer ?
Venture Capital Answer ? Answer ?
Answer:
a. ROI = income / Assets
Book Value Current Value
Software Division 0.175 0.13
Consulting Division 0.164 0.182
Venture Capital Division 0.093 0.088
Workings:
i. Book value
Software Division = 12,250/70,000=0.175
Consulting Division = 16,400/100,000=0.164
Venture Capital Division = 56,730/610,000 =0.093
ii. Current value
Software Division = 11,700/90,000=0.13
Consulting Division = 20,020/110,000=0.182
Venture Capital Division= 51,920/ 590,000=0.088
b. Residual income = Income - {Asset x Return on capital 12% }
Book Value Current Value
Software Division 3850 900
Consulting Division 4400 6820
Venture Capital Division -16470 -18880
Workings:
i. Book value
Software Division = 12,250-(70,000*12%)=3850
Consulting Division = 16,400-(100,000*12%)=4400
Venture Capital Division = 56,730-(610,000*12%) =-16470
ii. Current value
Software Division = 11,700-(90,000*12%)=900
Consulting Division = 20,020-(110,000*12%)=6820
Venture Capital Division= 51,920-(590,000*12%)=-18880
c. Economic Value Added ( EVA ) = Net Income After Tax - ( Amount of Capital x Weighted Average Cost of Capital [WACC] )
C. Software Division
(Value Base)
Book Current
Sales 100,000 100,000
Income 12,250 11,700
Assets 70,000 90,000
Liabilities 10,000 10,000
Capital invested 60,000 80,000
(Asset - Liabilities)
Tax on Income(30%) 3675 3510
Income after Tax 8,575 8,190
(Income - Tax on
income) (A)
Capital invested 6,000 8,000
* WACC - 10% ) (B)
EVA (C)=(A)-(B) 2,575 190
Consulting Division
(Value Base)
Book Current
Sales 200,000 200,000
Income 16,400 20,020
Assets 100,000 110,000
Liabilities 14,000 14,000
Capital invested 86,000 96,000
(Asset - Liabilities)
Tax on Income(30%) 4920 6006
Income after Tax 11,480 14,014
(Income - Tax on
income) (A)
Capital invested 8,600 9,600
* WACC - 10% ) (B)
EVA (C)=(A)-(B) 2,880 4,414
Venture Capital Division
(Value Base)
Book Current
Sales 800,000 800,000
Income 56,730 51,920
Assets 610,000 590,000
Liabilities 40,000 40,000
Capital invested 570,000 550,000
(Asset - Liabilities)
Tax on Income(30%) 17019 15576
Income after Tax 39,711 36,344
(Income - Tax on
income) (A)
Capital invested 57,000 55,000
* WACC - 10% ) (B)
EVA (C)=(A)-(B) -17,289 -18,656
Joseph contributed $25,000 in cash and equipment with a tax basis of $6,400 and a fair market value of $12,600 to Berry Hill Partnership in exchange for a partnership interest.
a. What is Joseph’s tax basis in his partnership interest?
b. What is Berry Hill’s basis in the equipment?
Answer:
(A) $31,400
(B) $6,400
Explanation:
Joseph contributed $25,000 in cash and equipment
The tax basis is $6,400
The fair market value paid to Bill hill partnership is $12,600
(A) Joseph tax basis in his partnership interest can be calculated as follows
= contribution+tax basis
= $25,000+$6,400
= $31,400
(B) Since Joseph contributed a tax basis of $6,400 to Bill hill partnership in exchange for a partnership interest then, Bill hill's basis in the equipment is $6,400
You sold a car and accepted a note with the following cash flow stream as your payment. What was the effective price you received for the car assuming an interest rate of 6.0%?
A. Year 0-$0.
B. Year 1-$1,000.
C. Year 2-$2,000.
D. Year 3-$2,000 and Year 4-$2,000.
Answer:
year two
Explanation:because less time still you'll have 2,000
In the _____ stage of the product life cycle, competition intensifies and profits diminish. Companies increase their promotional efforts but emphasize selective demand.
Answer: maturity
Explanation:
The product life cycle is the time used by a product from the day the product is introduced into the market till the day it's withdrawn. The four stages of the product life cycle are the introduction stage, the growth, the maturity stage and finally the decline stage.
In the maturity stage of the product life cycle, competition intensifies and profits diminish. Companies increase their promotional efforts but emphasize selective demand.
The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015, 760 million shares had been issued and the number of shares in treasury stock was 101 million. During 2016, the only common share transactions were that 18 million common shares were reissued from treasury and 24 million common shares were purchased and held as treasury stock.Required: Determine the number of common shares a. Issued b. In treasuryc. Outstanding at the end of 2016.
Answer:
a. 760 million shares
b. 107 million shares
c. 653 million shares
Explanation:
a. The number of Issued stock is unchanged because Issued stock encompasses both outstanding and treasury stock.
b. Treasury Stock = Beginning balance - Reissued from treasury + repurchased for treasury
= 101 - 18 + 24
= 107 million shares
c. Outstanding stock = Issued Stock - Treasury Stock
= 760 - 107
= 653 million shares
true or false: a supply curve describes how much a producer of services are willing to sell at different prices
Answer:
True
Explanation:
The supply curve is a graph showing the quantities of a good or service a supplier is willing and able to supply at differnt prices.
According to the law of supply. the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.
the supply curve is upward sloping
On January 1, 2017, Boston Enterprises issues bonds that have a $1,850,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months
Answer:
Interest per six months =$64,750 .
Explanation:
Bonds are instruments used by companies, governments and other entries to borrow from the public.
They represent a contractual agreement where the borrower commits to pay a percentage of the principal amount borrowed plus the principal amount to the lender or investor.
The proportion of the amount borrowed which is paid as interest is called coupon. The interest payment is computed as the the coupon rate in percentage multiplied by the amount borrowed.
Interest payment = Coupon rate (%) × Nominal Value
Annual interest payment = 7% × 1,850,000 =$129,500
Semi-annual interest payment = Annual interest payment/2
Semi-annual interest payment =129,500 /2 =64,750 .
Interest per six months =$64,750 .
Note we had to divide by 2 because they are two six months in a year.
Ben and Jerry were shareholders of water ice, inc., an s corporation. On january 1, year 1, Ben owned 40 shares and Jerry owned 60 shares. Ben sold his shares to Joe for $10,000 on March 31, 2011. The corporation reported a $50,000 loss at the end of 2011. How much of the loss is allocated to Joe?
A. $12,500.
B. $10,000.
C. $20,000.
D. $15,068.
Answer:
Option D. $15,068
Explanation:
The share of Ben will 40% of the loss if he does not sells the shares which is:
Ben's Share of Loss = $50,000 * 40% = $20,000
But Ben sold his 40% to Joe on March 31, 2011. This means 90/365 days of the year, Ben owned the shares. Hence:
Ben's share of loss = $20,000 * 90/ 365 = $4,931.5
The remainder is Joe's share of loss which is:
Joe's Share of Loss = $20,000 - $4,931.5 = $15,068
Hence the option D is correct.
If a stock has a preemptive right, it gives current stockholders the right to purchase any new shares issued by the firm, so as to maintain their level of ownership. This right helps protect current stockholders against both dilution of control and dilution of value.
a. True
b. False
Answer: True
Explanation:
When new shares are issued, the preemptive right helps maintain the position of the shareholder. The preemptive right is vital to shareholders as it protects them against the dilution of ownership interests.
Also, it gives current stockholders the right to purchase any new shares issued by the firm, so as to maintain their level of ownership.
Charlie hopes to accumulate $83,000 in a savings account in 10 years. If he wishes to make a single deposit today and the bank pays 3 percent compounded annually on deposits of this size, how much should Charlie deposit in the account
Answer:
PV= $61,759.80
Explanation:
Giving the following information:
Future value (FV)= $83,000
Number of years (n)= 10 years
Interest rate (i)= 3% compounded annually
To calculate the initial deposit, we need to use the following formula:
PV= FV/(1+i)^n
PV= 83,000 / (1.03^10)
PV= $61,759.80
A project has cash flows of -152,000, 60,800, 62300, and 75000 for years 0 to 3 respectively. The required rate of return is 13 years percent. Based on the internal rate of return of__________percent, you should________the project.
Answer:
Based on the IRR of 14.05 percent, you should be accept the project
Explanation:
Internal rate of Return is the discount rate of that equates the present value of cash inflows to the initial cost. It is the maximum cost of capital that can be used to evaluate a project without causing harm to the shareholders.
It is calculated as follows:
IRR = a% + ( NPVa/(NPVa + NPVb)× (b-a)%
NPV = PV of cash inflows - initial cost
Step 1: NPVa at 13% discount rate
PV of cash inflow = 60,800× 1.13^(-1) + 62300 ×1.13^(-2) + 75000 ×1.13^(-3)
= 154,574.11
NPVa = 154,574.11 - 152000 = 2,574.11
Step 2: NPVb at 20%
PV of cash inflow = 60,800× 1.20^(-1) + 62300 ×1.20^(-2) + 75000 ×1.20^(-3) = 137,333.33
NPVb = 137,333.33 - 152,000 = (14,666.67)
Step 3: IRR
IRR = 13% + ( 2,574.11 /(2,574.11 + 14,666.67) )× (20-13)%
IRR = 14.05%
Based on the IRR of 14.05%, the project you should be accept the project
Since the IRR (14.05%) is greater than the required rate rate (13%) , the project should be accepted. An IRR which is higher than the hurdle rate implies that the project would increase the wealth of the shareholders
Company X was expected to have earnings per share of $0.52 for the upcoming quarter. On the day of the results, the company reported earnings per share of $0.83. What happened to the share price when the stock market opened?
Answer:
Rise in stock price.
Explanation:
In general, the stock price has increased because the expected earning was $0.52 per share but the actual earnings were $0.83. therefore, we can say that stock prices have increased. moreover, there are other factors that may affect the stock price. But in this case. A positive surprise in the earnings per share results in stock price going up.
Erosion costs. Fat Tire Bicycle Company currently sells bicycles per year. The current bike is a standard balloon-tire bike selling for $, with a production and shipping cost of $. The company is thinking of introducing an off-road bike with a projected selling price of $ and a production and shipping cost of $. The projected annual sales for the off-road bike are . The company will lose sales in fat-tire bikes of units per year if it introduces the new bike, however. What is the erosion cost from the new bike? Should Fat Tire start producing the off-road bike? What is the erosion cost from the new bike?
Answer:
A. $1,725,000
B. Yes
Explanation:
Calculation for the erosion cost from the new bike
First step to find the erosion cost
Using this formula
Erosion cost =(Sales-Production and shipping cost )*Loss of sales units per year
Let plug in the formula
Erosion cost=(100-40)*7,500
Erosion cost=60*7,500
Erosion cost= $450,000
Second step is to calculate for the Net annual Cash flow using this formula
Net annual cash flow= (Projected selling price-Production and shipping cost)*Projected annual sales-Erosion cost
Let plug in the formula
Net annual cash flow= (370-225)*15,000 - 450,000
Net annual cash flow =145*15,000-450,000
Net annual cash flow =2,175,000-450,000
Net annual cash flow=$1,725,000
B.Yes Fat Tire start producing the off-road bike
Because the net annual cash flow is positive
n January 1, 1987, three 100 par value bonds with 6% annual coupons will mature at the end of 1, 2, and 3 years, respectively. The redemption value of each bond is 100. You are given that the prices for these bonds on January 1, 1987 are: Maturity Date Price December 31, 1987 101.92 December 31, 1988 102.84 December 31, 1989 105.51 These prices are based on an interest rate of i in 1987, j in 1988, and k in 1989. Determine j.
Answer:
j = 4.52%
Explanation:
face value = $100, with 6% annual coupons
bond₁ matures in 1 year (December 31, 1987), market price $101.92
bond₂ matures in 2 years (December 31, 1988), market price $102.84
bond₃ matures in 3 years (December 31, 1989), market price $105.51
we must determine the market interest rate (j) for bond₂, and to do this we will use the approximate yield to maturity formula:
YTM = {coupon + [(face value - market price)/n]} / [(face value + market price)/2]
YTM = {6 + [(100 - 102.84)/2]} / [(100 + 102.84)/2] = 4.58 / 101.42 = 0.045158 = 4.52%
Since the bonds are sold at a premium, it means that the coupon rate is higher than the market rate.
2. Skip and Peggy are brother and sister and they fight about everything. Skip says that perfectly competitive firms maximize profit where marginal revenue equals marginal cost. Peggy says perfectly competitive firms maximize profit where price equals marginal cost. Settle this sibling rivalry once and for all.
Answer: They are both right.
Explanation:
Firms in every market will always maximise profit where their Marginal Revenue equals Marginal Cost because at this point, resources are being fully utilized. This is therefore no different in a Perfectly competitive market so Skip is correct.
Peggy is also correct however because in a Perfectly Competitive market, the demand curve is perfectly elastic. This creates a situation where the Price, Marginal Revenue and Average Revenue are all the same and represent the demand curve as well.
With the Price being the same as the Marginal Revenue in a Perfectly competitive firm, that means that where the Price equals Marginal Cost is where the Marginal Revenue equals Marginal Cost as well so indeed perfectly competitive firms maximize profit where price equals marginal cost.
A regulated Natural Monopoly is more likely to advertise freely under which of the following types of regulation?
a) price regulation
b) profit regulation
c) output regulation
d) social regulation
Answer:
A
I took the quiz
Explanation:
Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, LOADING..., was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a % tax rate) if a. the sales price was $? b. the sales price was $? c. the sales price was $? a. If the sales price is $, what is the after-tax cash flow?
Answer:
after tax cash flow = $29,512.32
Explanation:
the numbers are missing in this question:
purchase cost = $82,000
tax rate = 40%
selling price at end of year 4 = $32,000
MACRS 7 year depreciation schedule:
year % depreciation expense carrying value
1 14.29% $11,717.80 $70,282.20
2 24.29% $19,917.80 $50,364.40
3 17.49% $14,341.80 $36,022.60
4 12.49% $10,241.80 $25,780.80
after tax cash flow = $32,000 - [($32,000 - $25,780.80) x 40%] = $32,000 - $2,487.68 = $29,512.32
On November 1, Alan Company signed a 120-day, 8% note payable, with a face value of $9,000. What is the maturity value of the note on March 1
Answer:
$9,236.71
Explanation:
The computation of the maturity value of the note is shown below:-
Interest Amount = ($9000 × 8%) × 120 ÷ 365
= $720 × 120 ÷ 365
= $236.71
So, the Maturity Value is
= Face value + Interest amount
= $9,000 + $236.71
= $9,236.71
Therefore for computing the maturity value we simply applied the above formula.
9 Given figures showing: Sales £8,200, Opening inventory £1,300, Closing inventory £900, Purchases £6,400, Carriage inwards £200, the cost of goods sold figure is (A) £6,800 (B) £6,200 (C) £7,000 (D) Another figure
Explanation:
the correct answer is
B)£6,200
If a company's required rate of return is 10% and, in using the net present value method, a project's net present value is zero, this indicates that the
Answer:
The project earns a 10% rate of return
Explanation:
This indicates that the “ project earns a 10% rate of return”. Since it is given in the question that the required rate of return is 10% and the company analysis that the net present value of the project is zero. That means the project is profitable and earns a sufficient profit or project giving a sufficient return. Therefore, it can be determined that the project is providing the earning or rate of return 10 per cent.
The company is termed as the established legal entity that has been built on the basis of the company act of the year 2013. The act demonstrates or depicts the economic activities of the company and also determines the various measures to calculate the earning and the contribution to the growth of the economy.
The indication in the context is The project earns a 10% rate of return
This signifies that the "promotes affordable a 10% rate of return." Because the needed rate of return is 10percent and also the company analysis suggests that the project's net present value is zero, the answer is yes.
This implies that the project is profitable and produces a sufficient profit or payback. In a conclusion, it can be determined that the challenging design has a 10% earning or rate of return.
To know more about the indication of the net present value, refer to the link below:
https://brainly.com/question/17162144
________ are a means for consumers to share text, images, audio and video information with each other and with companies, and vice versa. Group of answer choices Social media Microsites Interstitials Pay-per-click ads Mobile ads
Answer:
Social Media.
Explanation:
Social media are increasingly being used by people and companies around the world. Through it it is possible to share information, photos, videos, social interactions, etc.
For companies, these platforms are more than just an interaction tool, they can act as a marketing channel that will strengthen the relationship with the consumer, in addition to attracting new customers, strengthening the brand image, engaging consumers, creating shopping desires, providing data on consumer trends, etc.
Social Media are a means for consumers to share text, images, audio and video information with each other.
The following information should be considered:
Social media are increasingly being used by people and companies around the world. Through it is possible to share information, photos, videos, social interactions, etc.Learn more: brainly.com/question/17429689
In this module, you learned about the risks or costs associated with financial goals. What are the risks or costs associated with your goal, and how can you overcome these challenges
Answer with Explanation:
My goal is to start a business totally based on a new idea with great potential to influence the lives of the people of America. For this I had worked on a startup idea for couple of years and continuously reforming it.
The biggest risks associated with this goal is funding problems, business risks, market research, innovation issues and Software designing issues.
Now these are some risks that I face but I overcome these challenges by:
Risks Solution
Funding Risk: By presenting my startup idea on a international competition by writing business proposal based on well researched market, product innovation and the financial prospect of the business. There are numerous accelerator programs operated by the state and other organizations that encourage startups and helps with numerous facilities. So I will also present my idea here to secure funding from a wider number of investors.
Business Risks: Giving special considerations to business risks and their mitigation strategies.
Innovation: The products will be innovative enough to generate handsome amount of profit and must be capable of giving tough time to its competitors.
Market Research: The best performing businesses know who their customers are and what they are desiring from them. So market research would capable of identifying my potential customers and that it must be representative of the sample taken.
Software Designing: The software design must be user friendly and must effectively resolve users issues. Furthermore, it must be continuously updated with better features and friendly functioning.
BangBang Percussion Company tried to implement a flextime system. However, after only a few months, they abandoned the new system. Which of the following is the most likely reason BangBang would drop its flextime plan?
A. The employees resented being required to come to work early or stay late.
B. It caused an increase in traffic congestion.
C. Workers tend to be less productive when they have to work longer hours in a single day.
D. It often made communication among employees more difficult.
Answer: It often made communication among employees more difficult.
Explanation:
Flextime is a way of redesigning the traditional work schedules in such a way that the workers will work at the hours that's convenient for them and flexible rather than working based on normal office schedule or timing.
The most likely reason BangBang would drop its flextime plan is when communication among employees becomes difficult.
The Atlantic Division of Stark Productions Company reported the following results for 2019:
Sales $4,000,000
Variable costs 3,200,000
Controllable fixed costs 300,000
Average operating assets 2,500,000
Management is considering the following independent alternative courses of action in 2020 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 10% with no change in sales or variable costs.
2. Reduce average operating assets by 10% with no change in controllable margin.
3. Increase sales $500,000 with no change in the contribution margin percentage.
Compute the return on investment for 2019.
Answer:
The Atlantic Division of Stark Productions Company
Return on Investment = Net Income/Average operating assets x 100
1. Reduced controllable fixed costs by 10% with no change in sales or variable costs:
Net Income = $530,000 ($500,000 + 30,000)
Return on investment = $530,000/$2,500,000 x 100
= 21.2%
2. Reduced average operating assets by 10% with no change in controllable margin:
Net Income = $500,000 and average operating assets = $2,250,000
Return on Investment = $500,000/$2,250,000 x 100
= 22.22%
3. Increased sales to $4,500,000 with no change in the contribution margin percentage:
Sales $4,500,000
Variable costs 3,600,000
Contribution $900,000
Controllable fixed costs 300,000
Net operating income $600,000
Average operating assets 2,500,000
Return on Investment = $600,000/$2,500,000 x 100
= 24%
Explanation:
a) Data and Calculations:
Sales $4,000,000
Variable costs 3,200,000
Contribution $800,000
Controllable fixed costs 300,000
Net operating income $500,000
Average operating assets 2,500,000
Return on investment = Net Income/Average operating assets x 100 = $500,000/$2,500,000 x 100 = 20%
Contribution margin ratio = $800,000/$4,000,000 x 100 = 20%
The Atlantic Division's Return on Investment, as a performance measure, evaluates the efficiency of the investment in Atlantic Division. This ratio is obtained by dividing the returns or benefits of the investment by the cost of the investment, and then multiplying by 100.