Hot Wok Cuisine is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing exclusively organic Chinese cuisine. It has some pricing power because it provides differentiated products and therefore, has some entry barriers in place. In this scenario, Hot Wok Cuisine is most likely operating in a(n) Multiple Choice oligopoly. monopoly. monopolistically competitive industry. perfectly competitive industry.

Answers

Answer 1

Answer:

monopolistically competitive industry.

Explanation:

this Asian restaurant is likely operating a monopolistically competitive industry. This kind of market structure is a combination of monopoly and competitive market. as it offers products and services which one similar. Also the question says that it has some barriers to entry, which is a characteristic of monopolistically competitive industry. Also goods are similar but not differentiated


Related Questions

AIDA represents attention, interest, desire and
A. Action.
B. Assessment.
C. Attitude.
D. Accountability.

Answers

The Answer Is Option A, Action

The purchasing function's main concern is with:________

Answers

Answer:

Sourcing of Suppliers

Explanation:

Purchasing Function of the Business deals with the requisitions of materials and supplies to supply the internal demands or order of the business.

This function entails finding the right supplier offering quality materials at affordable prices.

Bill’s Bakery is trying to decide if it should use all of its resources to make 12 dozen chocolate chip cookies or 10 dozen peanut butter kiss cookies. What is the trade off that Bill will make?

Answers

Answer:

The trade off Bill's Bakery will make will be using most of its resources in producing the product that would be more attractive to the customers while producing lesser of the less attractive product

Explanation:

The trade off that Bill will make will be using most of its resources in producing the product that would be more attractive to the customers while producing lesser of the less attractive product. this will be dependent on which product will be more beneficial to Bill's Bakery financial i.e based on customers depend .

A Trade off is a business exchange where by one benefit is given up for another because both cannot be compatible at a time

Dake Corporation's relevant range of activity is 5,200 units to 6,000 units. When it produces and sells 5,600 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 6.55 Direct labor $ 3.80 Variable manufacturing overhead $ 2.15 Fixed manufacturing overhead $ 3.50 Fixed selling expense $ 1.05 Fixed administrative expense $ 0.75 Sales commissions $ 0.85 Variable administrative expense $ 0.75 If 5,400 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Answers

Answer:

Total direct manufacturing cost= $55,890

Explanation:

Giving the following information:

5,600 units:

Average Cost per Unit Direct materials $ 6.55

Direct labor $ 3.80

The manufacturing overhead is an indirect cost. It is allocated based on a predetermined rate. We will take into account only the direct materials and direct labor.

For 5,400 units:

Total direct manufacturing cost= 5,400*(6.55 + 3.8)

Total direct manufacturing cost= $55,890

ConAgra Foods is a global manufacturer of processed and packaged foods with revenues of $11 billion annually. It recently acquired Pinnacle Foods, which added iconic brands to its portfolio such as Birds Eye, Duncan Hines, Earth Balance, and Vlasic. Pinnacle Foods will continue to have control over its resources and distinct mission, and it will operate independently of ConAgra Foods. Pinnacle Foods is known as a(n) _______.

Answers

Answer:

wholly owned subsidiary

Explanation:

A wholly-owned subsidiary is a form of subsidiary arrangement, between two companies, whereby a company is completely owned or its whole stock is bought by another company often referred to as Parent Company after the arrangement or the agreement of the acquisition.

It is also characterized by having control over its resources and specific mission, also operates independently.

Hence, in this case, the right answer is a wholly owned subsidiary

Answer:

Strategic Business Unit

Explanation:

I'm taking the class now

A basic ARM is made for $120,000 at an initial interest rate of 3 percent for 30 years with an annual reset date. The borrower believes that the interest at the beginning of year 2 will increase to 4 percent (i.e., the interest rate will reset). Assume no negative amortization. Given that the interest rate will increase to 4 percent as predicted, what will be the balance at the end of year 2 or the beginning of year 3

Answers

Answer:

$115,302.71

Explanation:

During the first year, the monthly payments were $505.92, and at the end of the year, the principal's balance was $117,494.70.

Then the interest rate increases to 4%, and your monthly payment also increases to $570.72. At the end of year 2, the principal's balance is $115,305.96 (see amortization schedule).

you can determine the monthly payment by using an annuity formula:

original monthly payment = $120,000 / 237.18938 (PV annuity factor, 0.25%, 360 periods) = $505.9248437 ≈ $505.92

adjusted monthly payment (second year) = $117,494.70 / 205.86942 (PV annuity factor, 0.3333%, 348 periods) = $570.7243941 ≈ $570.72

After a tragic event in which an armed intruder storms into a mall and fatally shoots several people, the city of Belmonte institutes a law that prohibits any form of weapon in public retail establishments. This reaction would be an example of following which school of risprudential toucht? a. Sociological b. Historical c. Irrational Forces d. Natural Law e. Legal Realism

Answers

Answer: c. Irrational Forces

Explanation:

The Irrational Forces school of Jurisprudential thought explains that sometimes laws are passed due to some stimuli in the society that draws such a reaction from the society that the law makers pass a law under pressure

The law therefore does not have to be rational or based on reason. The law makers of Belmonte passing this law against firearms in public areas did this because of the public shooting. It therefore falls under this school of thought.

A sweatshop is an example of an ethical mode of production.

Answers

Answer:

Algunas de las empresas maquiladoras en México son General Motors, General Electric, Ford Motors, Sony, HP, Hyundai, entre otros. Los productos que elaboran las maquiladoras son de gran variedad, tales como: . - Productos alimenticios.11 abr. 2016

Explanation:

Answer:

False

Explanation:

On July 1, 20X4, Pillow Corp. obtained significant influence over Sleep Co. through the purchase of 3,000 shares of Sleep's 10,000 outstanding shares of common stock for $20 per share. On December 15, 20X4, Sleep paid $40,000 in dividends to its common stockholders. Sleep's net income for the year ended December 31, 20X4, was $120,000, earned evenly throughout the year. In its 20X4 income statement, what amount of income from this investment should Pillow report

Answers

Answer: $18,000

Explanation:

Income from investment is the percentage of the acquired company's income that the company that acquired it will report as their own based on their percentage of ownership.

By purchasing 3,000 shares out of 10,000, Pillow Corp owns;

= 3,000 / 10,000

= 30% of Sleep Co.

These shares were bough on July 1 so the relevant period will be half a year.

At the end of the year, Pillow Corp will report 30% of half of Sleep Co. income as income from investment for the year.

= 30% * 120,000 * 0.5

= $18,000

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in a. formulating theories about economic events. b. performing an experiment in an economic system. c. applying mathematical methods to economic analysis. d. analyzing available data.

Answers

Answer:

b. performing an experiment in an economic system.

Explanation:

In contrast to scientific experimentation, whereby connections and differences can be measured between two or more variables. In economics, theory and observation are more difficult than in sciences such as physics due to the difficulty in performing an experiment in an economic system, as human beings' opinions change over time, due to dynamism in human society.

Hence, in this case, the correct answer is option

In identifying an industry's key success factors, strategists should Select one: A. consider whether the number of strategic groups is increasing or decreasing and whether the five competitive forces are powerful or relatively weak. B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage. C. focus their attention on what it will take to capitalize on the impacts of the industry's driving forces. D. try to single out all factors that play a major role in shaping whether buyer demand grows rapidly or slowly. E. consider what it will take to overtake the company with the industry's overall best strategy.

Answers

Answer:

B. consider on what basis customers choose between competing brands, what resources and competitive capabilities firms need to be competitively successful, and what shortcomings are almost certain to put a company at a significant competitive disadvantage

Explanation:

In any industry there is always competition between firms to attract and retain customers. They must come up with strategic ways by which competitive edge is maintained.

This will translate to higher profits compared to other firms.

As a strategist the key success factors in the industry must be identified to aid in planning.

These success factors include: what makes customers choose between brands, capabilities that ensure a firm's success, and factors that can put a business at a competitive disadvantage.

On January 1, 2005, Marcy Company purchased 1,000 shares of its own common stock for $22,000. On February 1, 2005, they sold 600 of these shares for $25 per share, and on March 1, 2005, they sold the remaining 400 shares for $15 per share. The journal entry required on March 1 will include: A) credit Contributed Capital, Treasury Stock, $1,800 B) debit Retained Earnings for $1,800 C) debit Retained Earnings for $2,800 D) debit Contributed Capital, Treasury Stock, $2,800 E) debit Contributed Capital, Treasury Stock, $1,800

Answers

Answer:  E) debit Contributed Capital, Treasury Stock, $1,800

Explanation:

Treasury stock was bought at price of;

= 22,000/1,000

= $22

Sold 600 for $25 so they made a profit of;

= (25 - 22) * 600

= $1,800

This gain was sent to Contributed Capital, Treasury Stock.

Now that stock is to be sold on March 1, it is sold at $15. Loss from initial purchase is;

= ( 22 - 15) * 400

= $2,800

Debit Contributed Capital, Treasury Stock of the maximum amount it can be debited of to reflect this loss which would be $1,800 which was gained in the February purchase. The rest of the loss will go to Retained earnings.

Treasury Bonds are issued by the U.S. Government in:_______.I. bearer form.
II. book entry form.
III. minimum denominations of $100.
IV. minimum denominations of $10,000.

Answers

Answer:

minimum denominations of $100

Explanation:

These bonds are issued by the United States government in minimum denomination of a 100 dollars.

These bonds have their maturity periods to be greater than 20 years. Before they get to their period of maturity, these kind of bonds earn interest at certain periods. The owner of such a bond would earn an amount that is the same as the principal.

An environmental analysis can accurately foretell the future.
a) true
b) false

Answers

It is true I hope this helps

The following items and amounts were taken from Familia Inc.’s 2022 income statement and balance sheet, the end of its first year of operations. Interest expense $ 2,200 Equipment, net $ 54,700 Interest payable 700 Depreciation expense 3,200 Notes payable 11,800 Supplies 4,100 Sales revenue 44,300 Common stock 26,800 Cash 2,900 Retained earnings ? Salaries and wages expense 15,600 Supplies expense 900

Answers

Question is:

(a)  In each case, identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item as attached as picture

Answer

Items                            Identification

Interest expense           Expense

Interest payable            Liability

Notes payable               Liability

Sales revenue               Revenue

Cash                               Asset

Salaries and                   Expense

wages expense

Equipment, net               Asset

Depreciation expense   Expense

Supplies                          Asset

Common stock               Stockholder's equity

Retained earnings          Stockholder's equity

Supplies expense          Expense

A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used. Work in Process Inventory Beginning WIP 116,900 Direct materials ? Direct labor ? Applied overhead ? To finished goods ? Ending WIP 152,000 Factory Overhead 116,900 105,210 Finished Goods Inventory Beginning FG 137,100 376,700 349,100

Answers

Answer:

The cost of direct materials used is $124,090

Explanation:

Ending Finished Goods = $349,100 - $376,700 = $137,100 - ($27,600)

Ending Finished Goods = $109,500

Calculation of Direct labor

Here, the company's overhead cost is 60% of direct labor cost

Ending factory overhead cost = 60% * Direct labor cost

$109,500 = 60% * Direct labor cost

Direct labor cost = $109,500 / 60%

Direct labor cost = $182,500

Calculation of direct materials cost

Particular                                                 Amount

Beginning finished goods inventory     $376,700

Add: Ending WIP                                     $152,000

Less: Beginning WIP                               $116,900

Less: Direct labor                                    $182,500

Less: Ending Factory overhead             $105,210

Direct Material Cost                              $124,090

Hence, the cost of direct materials used is $124,090.

The Wall Street Journal reports that the rate on three-year Treasury securities is 1.22 percent and the rate on four-year Treasury securities is 1.4 percent. The one-year interest rate expected in three years, E(4r1), is 1.8 percent. According to the liquidity premium hypotheses, what is the liquidity premium on the four-year Treasury security, L4? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Answers

Answer:

0.142%

Explanation:

We are required to find the liquidity premium on the four-year Treasury security (L4)

1R4 = 1.4%

1R3 = 1.22%

E(4r1) = 1.8%

1 + 1R4 = [{(1+1R3)^3} * (1+E(4R1) + L4)]^1/4

1 + 0.014 = [{(1 + 0.0122)^3) * (1+0.018 + L4)]^1/4

1.014^4 = [{(1 + 0.0122)^3) * (1+0.018 + L4)]

1.057187 = (1.0370483) * (1.018 + L4)

1.057187/1.0370483 = 1.018 + L4

1.0194192 = 1.018 + L4

L4 = 1.0194192 - 1.018

L4 = 0.00142

L4 = 0.142%

Hence, liquidity premium on the four-year Treasury security(L4) = 0.142%

The government spends $45 million on heart disease research and gains in reducing death from heart disease are significant. If the law of diminishing returns holds, what would additional increases in expenditure on heart disease research likely do to reduce death from heart disease

Answers

Answer:

They would cause relatively smaller reductions in death from heart disease.

Explanation:

Since in the question it is mentioned that the government incurred $45 million for research on the heart disease and gain that decreased the death occured from the heart disease. Now if the law of diminishing retuns hold, so the extra rise in expenditure on heart disease result in relatively small decline as it decreases the returns

Therefore the same is to be considered

Which of the following best defines rational behavior? Group of answer choices A. Analyzing the total gains from a decision. B. Improving net gain by pursuing decisions as long as the marginal benefits exceed the marginal costs. C. Seeking to gain by choosing to undertake actions as long as the marginal costs exceed the associated marginal benefits. D. Seeking to maximize total gain regardless of cost.

Answers

Answer:

B. Improving net gain by pursuing decisions as long as the marginal benefits exceed the marginal costs.

Explanation:

A rational consumer continues consumption as long as marginal benefit derived from consumption exceeds marginal cost.

Marginal benefit is the increase in benefit as a result of consuming an extra unit of a product.

Marginal cost is the increase in cost as a result of consuming one more unit of a product

For example, the marginal benefit from consuming a 5th bottle of a drink is $5. The cost of the bottle is $4. The rational consumer can increase benefit by consuming one extra bottle of the drink. If the cost of the drink were $7, a rational consumer would not consume the 5th bottle because marginal cost exceeds marginal benefit

Diseconomies of scale arise primarily because: of the difficulties involved in managing and coordinating a large business enterprise. the short-run average total cost curve rises when marginal product is increasing. beyond some point marginal product declines as additional units of a variable resource (labor) are added to a fixed resource (capital). firms must be large both absolutely and relative to the market to employ the most efficient productive techniques available.

Answers

Answer: of the difficulties involved in managing and coordinating a large business enterprise

Explanation:

Diseconomies of scale is when there's an increases in average total cost used during the production of a product due to the expansion in size of the firm in the longrun.

The main factor that can be attributed to diseconomies of scale is when there's difficulty in the effective and efficient control and coordination of the operations of a firm due to its growth.

Diseconomies of scale arise primarily because of the difficulties involved in managing and coordinating a large business enterprise.

Diseconomies of scale arise primarily because of the difficulties involved in managing and coordinating a large business enterprise. Option (b) is correct.

Diseconomies of scale can happen for a number of reasons, but the inability to effectively manage an expanding staff is a common culprit. A company's internal overcrowding impact is frequently the main factor contributing to scale-related inequities.

Economies of scale result in reduced production costs and higher production while diseconomies of scale result in higher production costs.

Therefore, Option (b) is correct.

Learn more about diseconomies, here;

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g If you could reinvest the cash flow stream of $798, $508, $509, $967, $503, $1,362, $1,015, and $1,387 at 8.6% interest, how much will you have from this investment in 8 years? (In other words, what is the future value of this stream of cash flows?) Note that the cash flows are not necessarily the same as the previous problem's cash flows. The cash flow stream starts in one year; so, the last cash flow is 8 years from now. Round to the nearest cent.

Answers

Answer:

$4,707.92

Explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow in year 1 = $798

Cash flow in year 2 = $508

Cash flow in year 3 = $509

Cash flow in year 4 = $967

Cash flow in year 5= $503

Cash flow in year 6 = $1,362

Cash flow in year 7 = $1,015

Cash flow in year 8 = $1,387

I = 8.6%

Present value = $4,707.92

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

Management finds the variation in quarterly unit product costs to be confusing. It has been suggested that the problem lies with manufacturing overhead because it is the largest element of total manufacturing cost. Accordingly, you have been asked to find a more appropriate way of assigning manufacturing overhead cost to units of product. Required: 1. Assuming the estimated variable manufacturing overhead cost per unit is $0.60, what must be the estimated total fixed manufacturing overhead cost per quarter? 2. Assuming the assumptions about cost behavior from the first three quarters hold constant, what is the estimated unit product cost for the fourth quarter? 3. What is causing the estimated unit product cost to fluctuate from one quarter to the next? 4. Assuming the company computes one predetermined overhead rate for the year rather than computing quarterly overhead rates, calculate the unit product cost for all units produced during the year.

Answers

Question Completion:

Company A makes a single product that is subject to wide seasonal variations in demand.  The company uses a job-order costing system and computes predetermined overhead rates on a quarterly basis, using the number of units to be produced as the allocation base.  Its estimated costs, by quarter, for the coming year are given below:

                                                                             Quarters

                                                   First            Second     Third          Fourth

Direct materials                      $240,000   $120,000   $60,000   $180,000

Direct labor                                 96,000       48,000      24,000      72,000

Manufacturing overhead         228,000     204,000    192,000         ?

Total manufacturing costs    $564,000   $372,000 $276,000         ?

Number of units produced        80,000       40,000     20,000      60,000

Estimated unit product cost     $7.05          $9.30       $13.80           ?

Answer:

Company A

1. Total fixed manufacturing overhead cost per quarter:

                                                                             Quarters

                                                   First            Second     Third          Fourth

Fixed manufacturing o/h       $180,000    $180,000   $180,000   $180,000

2. Estimated unit product cost for the fourth quarter:

= Total manufacturing costs divided by estimated units produced

= $468,000/60,000 = $7/80

3. The fluctuation in the estimated unit product cost is caused by the fixed manufacturing overhead vis-a-vis the units produced.  When more units are produced, the fixed manufacturing overhead per unit is less than when less units are produced.

4. Calculation of the unit product cost for all units produced during the year = total manufacturing costs divided by total units produced

= $1,680,000/200,000

= $8.40

Explanation:

Data and Calculations:

a) Estimated variable cost = $0.60

                                                                             Quarters

                                                   First            Second     Third          Fourth

Direct materials                      $240,000   $120,000   $60,000   $180,000

Direct labor                                 96,000       48,000      24,000      72,000

Manufacturing overhead         228,000     204,000    192,000     216,000

Total manufacturing costs    $564,000   $372,000 $276,000  $468,000

Number of units produced        80,000       40,000     20,000      60,000

Estimated unit product cost     $7.05          $9.30       $13.80         $7.80

b) Variable manufacturing overhead = $0.60 * units produced

                                                                             Quarters

                                                   First            Second     Third          Fourth

Number of units produced        80,000       40,000     20,000     60,000

Variable manufacturing

 overhead (units * $0.60)       $48,000     $24,000     $12,000     $36,000

c) Fixed manufacturing overhead = Total manufacturing overhead minus variable manufacturing overhead

Manufacturing overhead       $228,000   $204,000   $192,000   $216,000

Variable overhead                    $48,000     $24,000     $12,000     $36,000

Fixed manufacturing o/h        $180,000    $180,000   $180,000   $180,000

d) Total manufacturing costs per annum:

Total manufacturing costs    $564,000   $372,000 $276,000  $468,000

= $1,680,000

Number of units produced        80,000       40,000     20,000      60,000

Total units produced = 200,000 units

Which statement about the purpose of PESTEL is correct? A. It helps managers understand how a firm's external environment affects the firm. B. It helps managers understand how a firm's internal strength may help it take advantage of an external opportunity C. It helps managers understand the relationship between the firm's industry and its buyers and suppliers D. It helps managers understand the firm's internal environment, such as its employees' union.

Answers

Answer:

A. It helps managers understand how a firm's external environment affects the firm.

Explanation:

PESTEL is an acronym that stands for Political, Economic, Socio-cultural, and technological. It analyses the environment in which a business operates.

In marketing it has found an application in forecasting market decline and growth, market direction, and potential.

The analysis is an external one that identifies strengths and weaknesses in macro-environmental factors. This knowledge can now be used in SWOT analysis by the business.

Greystone Inc. plans to pay a $4.30 dividend during the upcoming year, and dividends are expected to grow at the rate of 8% per year. The risk free rate is 6% and the expected return on the market portfolio is 12%. The current price of the stock is $85. What is the estimated beta of Greystone, Inc.

Answers

Answer:

Beta = 1.18

Explanation:

The computation of the beta is shown below:

But before that we need to calculate the following calculations

Current stock price = D1 ÷ (Required rate of return  - growth rate)

$85 = $4.30 ÷ (Ke - 0.08)

(Ke - 0.08) = 0.0506

Ke = 0.1306

= 13.06%

Now

Expected rate of return(Ke) = Risk free rate + Beta × (Market rate of return - Risk free rate of return)

13.06% = 6% + Beta × (12% - 6%)

13.06% = 6% + Beta × 6%

So, the  Beta = 1.18

The agency relationship in corporate finance occurs:__________

Answers

Answer:

when the shareholders hire a manager to run their company.

Explanation:

An agency relationship in corporate finance is a situation whereby a party known as an agent is hired by another party which is the principal, to perform certain functions or services. Based on this question, the share holders are known as the principal while the manager act as the agent. The relationship is formed after the agent has agreed that he or she will represent the principal

When Apple introduced its iPhone 11 with Slofie (slow-
motion selfie) capability and a high price tag, it used_______ to avoid direct competition with Samsung,
Google, and others.

Answers

Answer:

trademark

Explanation:

When the announcement was made about the iPhone 11's new Slofie (slow- motion selfie) capability, Apple also said it had applied for a US trademark on Slofie.

Note, a trademark is a legally issued right for a symbol, phrase, or word to be used to denote a specific product or service, thus it gives a right of ownership to the trademark applicant. Therefore, it limits direct competition from others.

Answer:

Trademark

Explanation:

A trademark is an intellectual property which consists of a particular design aimed at identifying a product as being from a particular source.

Once a trademark is established on a product other companies will be unable to use that technology nor design without purchasing rights to use the trademark.

Apple first introduced Solfie which is a name coined for slow motion selfie on their iPhone 11.

In order to avoid competition with Samsung, Google, and others they trademarked Slofie thereby preventing competitors from using similar technology

Opportunity Cost is the measurement

of sacrifice. Opportunity Cost exists

because of what?

A. the production of two goods in an economy

B. the PPF Model of economics

C. the scarcity of resources available in an economy

Answers

Answer:

C. the scarcity of resources available in an economy

Explanation:

Opportunity cost is the cost of the option foregone when one alternative is choose over other alternatives.

It is usually assumed that humans wants are limitless and the resources available to satisfy these needs are limited. So, as more quantity of a good is being produced, there would be less resources available to produce another good.

It is due to opportunity costs that the PPF curve is bowed outward because as more of one good is being produced, less of the other good would be produced

Answer: C. the scarcity of resources available in an economy

Explanation:

Opportunity Cost is indeed a measurement of sacrifice as it is the cost of the next best alternative foregone in other to be able to make the current decision.

The reason Opportunity costs exist is because of a scarcity of resources. This means that we have to manage our resources by applying them to one alternative at a time so that they do not finish. Had resources been infinite, all alternatives could be embarked on.

The firm projected its proforma of financial statements using AFN method and finds that next year its AFN is $2 million. Its total asset this year is $40 million and its net sales this year is $50 million. The CFO has decided to finance its entire projected AFN through issuing common stock. What would you expect to happen in next year’s financial ratio based on AFN method if we expect its net income remains constant?

Answers

Answer:

Its earnings per share will decrease.

Its return on equity will go down.

Its equity multiplier will go down.

Explanation:

Since net income remains the same, earnings per share will decrease. This happens because there will be more stocks outstanding (the denominator in the EPS formula), so the result will be lower.

Return on equity will also decrease, since net income will remain the same while equity increases (same logic as EPS).

Unless this company is 100% financed through equity, it will have some debt (liabilities). The equity multiplier = total assets / total equity. E.g. total assets increase from $20 to $22 million, and total equity increases from $30 to $32 million.

Original equity multiplier = $40 / $30 = 1.333

Equity multiplier after issuing more stocks = $42 / $32 = 1.3125

C. Its equity multiplier will go down.

D. Its current ratio will go down.

E. Its quick ratio will go down.

Regina Corp. is a property and casualty insurance company in its third year of operations and has a net loss of $100,000. Regina had taxable income of $10,000 and $30,000 in its first and second year of operations, respectively. Regina expects to be profitable within the next year. Regina is allowed to carry back the net operating loss to previous years. The enacted income tax rate is 40%. The income tax benefit from the NOL carryforward shown on Regina's income statement in the year of the loss is

Answers

Answer:

$24,000

Explanation:

Total Taxable income of first and second year = $10,000 + $30,000 = $40,000

Net loss in 3rd year = $100,000  

Net Operating loss carry back = Regina Taxable income Total of first and second year of operations

Net Operating loss carry back = $40,000

Net Operating loss Carry forwards = Net loss - Net Operating loss carry back

Net Operating loss carry forward = $100,000 - $40,000

Net Operating loss carry forward = $60,000

Income tax rate = 40%

Income tax benefit from the Net Operating loss carry forward = Net Operating loss carry forward * Income tax rate

Income tax benefit from the Net Operating loss carry forward = $60,000 * 40%  

Income tax benefit from the Net Operating loss carry forward = $24,000 .

You are considering a stock investment in one of two firms (Lots of Debt, Inc. and Lots of Equity, Inc.), both of which operate in the same industry. Lots of Debt, Inc. finances its $34.25 million in assets with $32.25 million in debt and $2.00 million in equity. Lots of Equity, Inc. finances its $34.25 million in assets with $2.00 million in debt and $32.25 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the equity multiplier. (Round your answers to 2 decimal places.)

Answers

Answer:

Debt Ratio = Total Debt Total/ Assets

Equity Multiplier = Assets/Equity

Lots of Debt

Debt Ratio

= 32.5/34.25

= 0.95

Equity Multiplier

= 34.25/2

= 17.13

Lots of Equity

Debt Ratio

= 2/34.25

= 0.06

Equity Multiplier

= 34.25/32.25

= 1.06

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