Explanation:
Vertical growth
Vertical growth is considered to be a traditional strategy for a startup. This primarily means scaling your service/product within the existing line of business. By going deeper into the current market, you get a chance to increase the demand for your product and its adoption.
Namely, there are two ways to scale vertically:
1). By adding more features and capabilities to the existing product, and
2). By introducing new products to complement your core value proposition.
Horizontal growth
Horizontal growth typically means expanding the product or service to new markets, be it new geographies or business domains. By scaling horizontally, you might face additional challenges, unique to the markets you are targeting. This might be product localization issues or industry-specific business aspects. However, a vertical growth strategy is typically more lucrative and can result in better long-term ROI.
Some of the most common ways to scale your startup horizontally include the following:
1). Bringing your product/service to new markets – this can be done by developing the new market or penetrating the existing one and trying to outcompete the local providers.
2). Applying the existing assets in new business domains (for example, going from a product to a SaaS model). If your product turned out to be successful in one field, you can try to extract its core and adapt it to serve other industry needs.e.t.c
Which strategy is the right?
When choosing between vertical or horizontal growth strategies, there is no definite answer. Moreover, the best solution would be to try and combine both, at the right time, using the proper approach.
A firm with a return on common equity (ROCE) of 30% has financial leverage of 37.5% and a net after-tax borrowing cost of 5% on $240 million of net debt.
i) What rate of return does this firm earn on its operations?
ii) The firm is considering repurchasing $150 million of its stock and financing the repurchase with further borrowing at a 5% after-tax borrowing cost. What effect will this transaction have on the firm’s return on common equity if the same level of operating profitability is maintained?
iii) Will this repurchase change the per-share intrinsic value of the equity? Why?
iv) Will the normal P/E ratio for this firm change because of this transaction? Why?
v) The firm had an unlevered price-to-book ratio (P/B) of 1.8 prior to the transaction. What will be the effect of the repurchase on the levered price-to-book ratio?
vi) Would you expect the earnings-per-share growth rate to change after the repurchase transaction? Why?
i) The formula to find out the rate of return on operations is: ROCE = Earnings before Interest and Taxes (EBIT) ÷ (Total Equity + Total Liabilities)Therefore, substituting values,30% = EBIT ÷ (Total Equity + Total Liabilities)The return on operations is 30%.
ii) The firm is considering repurchasing $150 million of its stock and financing the repurchase with further borrowing at a 5% after-tax borrowing cost. The amount of net debt will increase as a result of the repurchase of $150 million worth of stock. The net debt after the transaction is $240 million + $150 million = $390 million.
The new total capital is:Total Capital = Total Equity + Net Debt = Total Equity + $390 million
The return on common equity (ROCE) formula is:ROCE = Earnings before Interest and Taxes (EBIT) ÷ (Total Equity + Net Debt)
After plugging in the values, the new return on common equity will be:
ROCE = EBIT ÷ (Total Equity + $390 million)
iii) Yes, the intrinsic value of per share equity will change after the repurchase of shares. The number of outstanding shares will decrease, resulting in a decrease in total equity. This will lower the intrinsic value of per share equity.
iv) Yes, the normal P/E ratio for the firm will change because of this transaction. After the repurchase of shares, the total number of outstanding shares will decrease, causing the earnings per share (EPS) to increase. This will result in an increase in the P/E ratio of the firm.
v) The firm had an unlevered price-to-book ratio (P/B) of 1.8 prior to the transaction.
The formula for levered price-to-book ratio is:Levered P/B ratio = (Levered Equity ÷ Total shares outstanding) × Market price per share
After the repurchase, the number of shares outstanding will decrease, resulting in a decrease in the total equity. As a result, the levered P/B ratio will decrease.
vi) Yes, the earnings per share growth rate is expected to change after the repurchase transaction because the repurchase will reduce the number of shares outstanding. The earnings per share will rise as a result of the reduction in the number of shares.
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A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3. What is the projected on-hand inventory at the end of period 3?a. 14 b. 32 c. 12 d. 20
The projected on-hand inventory at the end of period 3 would be 12 units (option c).
To calculate the projected on-hand inventory at the end of period 3, we need to consider the initial inventory, customer orders, and the planned arrival of MPS quantity.
Given:
Initial inventory (period 0): 56 units
Customer orders: 24 units (period 1), 18 units (period 2), and 15 units (period 3)
MPS quantity planned for arrival in period 3: 100 units
Starting with the initial inventory of 56 units, we deduct the customer orders for each period. In period 1, we subtract 24 units, leaving us with 32 units. In period 2, we subtract another 18 units, resulting in 14 units remaining.
Since the MPS quantity of 100 units is planned to arrive in period 3, we add this quantity to the existing 14 units. This gives us a total of 114 units.
However, since the customer orders for period 3 are 15 units, we subtract this amount from the projected inventory.
Therefore, the projected on-hand inventory at the end of period 3 is 12 units (option c).
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The U.S. federal taxing system is sufficient and efficient
(based on the Keynesian definition of efficiency).
Group of answer choices
True
False
False because based on the Keynesian definition of efficiency, the U.S. federal taxing system is considered inadequate and inefficient by many observers.
The U.S. federal taxing system cannot be deemed sufficient and efficient based on the Keynesian definition of efficiency. According to Keynesian economics, efficiency in taxation refers to the ability of the tax system to generate adequate revenue while promoting economic stability and achieving equitable distribution of income.
Critics of the U.S. federal taxing system argue that it falls short in meeting these criteria. They point out various issues such as the complexity of the tax code, loopholes that allow some individuals and corporations to avoid paying their fair share, and the regressive nature of certain taxes that disproportionately burden low-income individuals. Additionally, concerns have been raised about the efficiency of tax expenditures, the effectiveness of tax incentives in promoting economic growth, and the overall fairness of the tax system.
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Directions: Review the scenario and answer the following questions. Use this document or typed Word document. Julie Marshall works in the Claims Department at Unified Care, Inc. She was approached by her manager, Bob Luck, to discuss that call backs have not been made to customers meeting their 24-hour return call guideline. The company has hired many new employees in her department, many of which she has not met. Julie is not a manager. 1. What is the problem? Write a problem statement that Julie can use when conducting her meeting. 2. What are the root cause (s) of the problem? Optional add a cause and effect diagram if needed to illustrate.
Julie Marshall works in the Claims Department at Unified Care, Inc. The problem statement is that customers are not receiving call backs within the company's 24-hour return call guideline. The root causes of the problem could be a lack of training and guidance provided to the new employees and a lack of effective communication between employees and departments. A cause and effect diagram could be used to illustrate these possible causes.
1. What is the problem? Write a problem statement that Julie can use when conducting her meeting. The problem is that customers are not receiving call backs within the company's 24-hour return call guideline. New employees have been hired in the Claims Department, and it appears that this issue has arisen since then.2. What are the root cause(s) of the problem? Optional add a cause and effect diagram if needed to illustrate.
The root cause of the problem is likely due to the lack of training and guidance provided to the new employees. They may not be aware of the company's policy on returning calls within 24 hours or may not understand the importance of meeting this guideline. Another possible cause could be a lack of effective communication between employees and departments.
Julie may not have been informed about the new hires, and new employees may not have been informed of the company's policies regarding call backs. A cause and effect diagram (also known as an Ishikawa or fishbone diagram) could be used to illustrate the possible causes of the problem. This diagram would allow Julie to visually map out the various factors that may be contributing to the problem and identify possible solutions.
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identify 3 different asset classes
demonstrate an understanding of the risk/reward relationship for each of the asset classes
know when it is appropriate to invest in each of the asset classes given each class's riskiness
what risk are rating agencies grading for bond ratings
what is an advantage of holding municipal bonds? What determines whether this is an advantage for the individual investor?
What does the acronym TIPS stand for? What are TIPS used for?
What is a zero-coupon bond?
Why do investors generally hold bonds in a portfolio?
Why do investors generally hold stocks in a portfolio?
What is market capitalization?
What does PE signify about a company?
Three different asset classes are stocks, bonds, and real estate. Stocks represent ownership in a company, bonds represent debt obligations, and real estate represents physical properties.
The risk/reward relationship varies for each asset class. Stocks have the potential for high returns but also high volatility. Bonds offer lower returns but lower risk compared to stocks. Real estate can provide both income and potential appreciation, but it also involves market and property-specific risks.
It is appropriate to invest in each asset class based on their riskiness. If you have a higher risk tolerance, investing in stocks may be suitable. If you prefer lower risk, bonds may be a better choice. Real estate can be suitable for investors seeking diversification and long-term returns.
Rating agencies grade bond ratings based on the risk of default by the issuer. They evaluate factors like the issuer's financial stability, credit history, and economic conditions.
An advantage of holding municipal bonds is their tax-exempt status. This can be advantageous for individual investors in higher tax brackets, as it allows them to potentially earn tax-free income.
TIPS stands for Treasury Inflation-Protected Securities. TIPS are used to protect investors from inflation by adjusting the bond's principal value based on changes in the Consumer Price Index (CPI).
A zero-coupon bond is a type of bond that does not pay periodic interest. Instead, it is sold at a discount to its face value and matures at face value. The investor earns a return by buying the bond at a discount and receiving the face value at maturity.
Investors generally hold bonds in a portfolio to diversify risk, generate income, and preserve capital. Bonds offer a more stable investment option compared to stocks.
Investors generally hold stocks in a portfolio to achieve capital appreciation and long-term growth. Stocks have the potential for higher returns but also higher volatility compared to bonds.
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Penny works for TSX in Ontario where she is a commissioned salesperson. TSX pays their commissioned salespeople on a straight commission of sales method at 0.35%. Penny is owed her semi-monthly commission payment based on $600,000.00 of products sold in the pay period. She did not receive an advance. Penny's TD1 federal and provincial are claim code 3. She will not reach the CPP, and Employment Insurance annual maximums this pay period.
Calculate Penny's gross earnings
Calculate Penny's Canada pension plan contribution.
Calculate Penny's Employment Insurance Premium.
Calculate the Federal income tax using the CRA payroll deduction tables.
Calculate the Provincial income tax using the CRA payroll deduction tables.
Calculate Penny's net commission pay.
Calculate the Federal income tax using the CRA payroll deduction tables.
Calculate the Provincial income tax using the CRA payroll deduction tables.
Calculate Penny's net commission pay.
1. Gross earnings: Penny's commission payment is based on the sales amount of $600,000.00. Therefore, her gross earnings are: Gross earnings = 0.35% × $600,000.00= $2,100.002.
Canada pension plan contribution:
The CPP contribution rate for 2021 is 5.45%. Therefore, Penny's CPP contribution is: CPP contribution
= $2,100.00 × 5.45%
= $114.153.
Employment Insurance Premium:
The EI premium rate for 2021 is 1.58%. Therefore, Penny's EI premium is:
EI premium = $2,100.00 × 1.58%
= $33.184.
Federal income tax:
Penny's TD1 claim code is 3. Her gross earnings are $2,100.00. Therefore, her federal income tax can be found using the CRA payroll deduction tables, as shown below:
Federal income tax = $26.00
Provincial income tax: Penny's TD1 claim code is 3. Her gross earnings are $2,100.00. Therefore, her provincial income tax can be found using the CRA payroll deduction tables, as shown below:
Provincial income tax = $26.00
Net commission pay:
Penny's net commission pay can be found by subtracting her deductions from her gross earnings:
Net commission pay = Gross earnings - (CPP + EI + Federal income tax + Provincial income tax)
= $2,100.00 - ($114.15 + $33.18 + $26.00 + $26.00)
= $1,900.673.
Federal income tax:
Penny's TD1 claim code is 3. Her gross earnings are $2,100.00. Therefore, her federal income tax can be found using the CRA payroll deduction tables, as shown below:
Federal income tax = $26.00Provincial income tax: Penny's TD1 claim code is 3. Her gross earnings are $2,100.00. Therefore, her provincial income tax can be found using the CRA payroll deduction tables, as shown below:
Provincial income tax = $26.00
Net commission pay: Penny's net commission pay can be found by subtracting her deductions from her gross earnings:
Net commission pay = Gross earnings - (CPP + EI + Federal income tax + Provincial income tax)
= $2,100.00 - ($114.15 + $33.18 + $26.00 + $26.00)
= $1,900.67
Therefore, Penny's gross earnings are $2,100.00; her Canada Pension Plan contribution is $114.15; her Employment Insurance Premium is $33.18; her Federal income tax using the CRA payroll deduction tables is $26.00; her Provincial income tax using the CRA payroll deduction tables is $26.00; and her net commission pay is $1,900.67.
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The bridge experiment demonstrated that
Group of answer choices
physical arousal from one source may be attributed to another source
men are likely to seek out danger
people connect with leaders when their values provide a bridge to organizational goals
women like men who seek out danger
22)
When a leader plays loud music, gets the crowd to stand up and dance, or encourages shouting and chanting they are
Group of answer choices
taking advantage of misattribution of arousal.
making their followers feel safe.
having a good time.
only displaying socialized charisma.
23)
Amazon offers to let other online stores list their items on amazon.com, through their Amazon sellers program. This is an example of _____.
Group of answer choices
Misattribution of arousal
Cromulence
generosity
co-opting rivals
24)
Most of us follow our doctor's advice because our doctor has ________ power
Group of answer choices
expert
referent
coercive
reward
1.) The bridge experiment demonstrated that physical arousal from one source may be attributed to another source. Option 1. 2) When a leader plays loud music, gets the crowd to stand up and dance, or encourages shouting and chanting they are taking advantage of misattribution of arousal. Option.1. 3) This is an example of co-opting rivals. Option 4. 4) Expert power. Option 1.
1.) The bridge experiment demonstrated that physical arousal from one source may be attributed to another source. The bridge experiment conducted by Dutton and Aron in 1974 demonstrated that physical arousal from one source may be attributed to another source. The experiment was conducted on two bridges, one scary and one not-so-scary, and two female interviewers (one pretty and one not-so-pretty) interviewed the men after they had walked on the bridge. The results demonstrated that the men who had walked on the scary bridge were more likely to be attracted to the pretty interviewer than the men who had walked on the non-scary bridge. Hence, it proved that physical arousal from one source may be attributed to another source.
2. When a leader plays loud music, gets the crowd to stand up and dance, or encourages shouting and chanting they are taking advantage of misattribution of arousal. This is a form of leadership where the leader intentionally induces a state of physiological arousal in their followers to excite them and associate it with the social context they are in.
3. Amazon offers to let other online stores list their items on amazon.com, through their Amazon sellers program. This is an example of co-opting rivals where Amazon is giving their rivals an opportunity to list their items on their platform and taking advantage of the existing traffic to increase their own revenue.
4. Most of us follow our doctor's advice because our doctor has expert power. Expert power is a form of power in which a person possesses superior skills or knowledge in a particular area and hence has power over others who are less skilled or knowledgeable. Doctors have power over their patients because of their superior knowledge of medical science and medicine.
Hence, the right answer is Option 1. Option.1. Option 4. Option 1.
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Direct Materials Purchases Budget Marshall Publishers Inc. budgeted production of 38,000 diaries in 2016. Paper is required to produce a diary. Assume 89 square yards of paper are required for each diary. The estimated January 1, 2016, paper inventory is 237,000 square yards. The desired December 31, 2016, paper inventory is 118,000 square yards. If paper costs $0.17 per square yard, determine the direct materials purchases budget for 2016. If required, round your final answer to the nearest dollar...............
The direct materials purchases budget for 2016 is approximately $554,710.
To calculate the direct materials purchases budget for 2016, we need to consider the paper requirements for producing the diaries and the desired paper inventory levels.
Here's the step-by-step calculation:
Calculate the total paper requirements for producing 38,000 diaries: Paper required per diary = 89 square yards Total paper requirements = 38,000 diaries × 89 square yards/diary = 3,382,000 square yardsDetermine the paper purchases needed to meet the total paper requirements and desired inventory levels: Paper purchases = Total paper requirements + Desired ending inventory - Beginning inventory Paper purchases = 3,382,000 square yards + 118,000 square yards - 237,000 square yards Paper purchases = 3,263,000 square yardsCalculate the total cost of paper purchases: Cost per square yard = $0.17 Total cost of paper purchases = Paper purchases × Cost per square yard Total cost of paper purchases = 3,263,000 square yards × $0.17/square yard = $554,710To know more about budget, visit:
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Which of the following represents the first three steps in the communication model in the correct order? a) Form message, decode message, receive message b) Decode message, encode message, and provide feedback c) Form message, encode message, and transmit message d) Encode message, provide feedback, transmit message
Which of the following reduces communication effectiveness with employees: a) paying attention b) watching non-verbal signals c) asking questions d) encouraging distractions
Which of the following has the most information 'richness': a) a written financial report b) a face-to-face conversation c) a letter sent via email d) a telephone call The complex tasks: group communication structure promotes the greatest effectiveness on a) comprehensive/team b) Y e) wheel
The element of communication that involves translating ideas into a systematic set of symbols that is generally understood by most people in a community is called: a) Noise b) Medium c) Decoding d) Encoding
The correct order of the first three steps in the communication model is c) Form message, encode message, and transmit message.
The process of communication can be understood by the communication model. The first three steps in the communication model are as follows:
Form message:
In this step, the sender has a message to communicate.
Encoding:
In this step, the sender takes the message and puts it into a form that can be transmitted. For example, the message could be encoded as words, pictures, or music. This step is essential for the message to be sent across.Transmit message: In this step, the sender transmits the message to the receiver. The message could be sent via different channels such as speaking, writing, or nonverbal communication. It's important that the channel used for transmitting the message is appropriate for the type of message and receiver.
Thus, the first three steps in the communication model are c) Form message, encode message, and transmit message. The option d) Encode message, provide feedback, transmit message is incorrect because the step of providing feedback comes after receiving the message.
Hence, the correct option is c. Paying attention reduces communication effectiveness with employees.
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in designing a global distribution channel one may attempt to distribute the product through the largest number of different types of intermediaries and the largest number of individual intermediaries of each type. this is referred to as: group of answer choices exclusive distribution intensive distribution selective distribution normal distribution cross border distribution
Intensive distribution is the strategy of distributing a product through a large number of different types of intermediaries and individual intermediaries of each type. This approach aims to maximize product availability and market penetration, particularly for products with broad appeal.
In designing a global distribution channel, attempting to distribute the product through the largest number of different types of intermediaries and the largest number of individual intermediaries of each type is referred to as intensive distribution. Intensive distribution aims to make the product available in as many outlets as possible, maximizing its availability to the target market.
Intensive distribution is often used for products with mass appeal, where wide coverage and convenience are essential. It is commonly employed for fast-moving consumer goods like snacks, beverages, and toiletries.
By utilizing intensive distribution, companies can increase their market penetration and reach a larger customer base. This strategy involves partnering with various intermediaries such as wholesalers, retailers, and distributors, enabling the product to be easily accessible across multiple locations.
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Task 5: Absolute and relative purchasing power parity 5a) Formulate the absolute and the relative purchasing power parity and explain what you can make statements about with it. 5b) Formally represent the relative purchasing power parity. 5c) Why does relative purchasing power parity find more empirical support?
5a) Absolute Purchasing Power Parity (PPP) allows statements about long-term exchange rate movements, while Relative Purchasing Power Parity (RPPP) allows statements about short-term exchange rate movements and the impact of inflation on currency values.
5b) The formal representation of Relative Purchasing Power Parity (RPPP) is S1/S0 = (P1/P0), where S1/S0 represents the exchange rate between two currencies at time periods 1 and 0, and P1/P0 represents the ratio of price levels between the two countries at the same time periods.
Absolute Purchasing Power Parity (PPP) is based on the idea that the exchange rate between two currencies should be equal to the ratio of their price levels. It assumes that identical baskets of goods should cost the same in different countries. Absolute PPP allows us to make statements about long-term exchange rate movements. If the actual exchange rate deviates from the PPP exchange rate, it suggests that there might be a potential misalignment in currency values.
Relative Purchasing Power Parity (RPPP), on the other hand, compares the changes in price levels between two countries over time. It suggests that the exchange rate between their currencies will adjust to reflect the difference in inflation rates. RPPP allows us to make statements about short-term exchange rate movements and provides insights into the impact of inflation on currency values.
Formally, RPPP is represented as:
S1/S0 = (P1/P0)Where S1/S0 represents the exchange rate between two currencies at time periods 1 and 0, and P1/P0 represents the ratio of price levels between the two countries at the same time periods.
Relative Purchasing Power Parity finds more empirical support because it focuses on comparing changes in price levels and inflation rates. These factors are more dynamic and subject to adjustments in the short run. In contrast, absolute PPP assumes long-term equilibrium, which may not hold due to various factors such as trade barriers, transportation costs, and non-tradable goods. Therefore, RPPP provides a more realistic framework for analyzing short-term exchange rate movements.
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Which of the following alternatives represents the correct amount of total separately disclosable items added to (deducted from) profit before tax as part of the adjustments in the cash generated from operations section according to indirect method in the statement of cash flows of Moletji Limited for the year ended 31 December 2020?
a. 9 600
b. 6 900
c. 16 500
d. 2 700
The correct amount of total separately disclosable items added to (deducted from) profit before tax as part of the adjustments in the cash generated from operations section according to the indirect method in the statement of cash flows of Moletji Limited for the year ended 31 December 2020 is not provided in the given options.
None of the given options specifies the correct amount of total separately disclosable items added to (deducted from) profit before tax. Without further information or additional options, it is not possible to determine the correct amount based on the given alternatives.
To accurately determine the adjustments in the cash generated from operations section, the specific financial statements or disclosures of Moletji Limited for the year ended 31 December 2020 would need to be consulted.
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The type of strike that involves workers deciding not to honor the terms of a collective bargaining agreement and walking out in violation of their obligations to their employer under the agreement is called a(n): a. wildcat strike. b. right to work strike.
c. unfair labor practice strike. d. economic strike. Which of the following is (are) true regarding union membership in the United States? a. In 1970, approximately 30 percent of the private U.S. workforce was unionized. b. By 1999, approximately 13.9 percent of the U.S. workforce was unionized. c. By 2016, 10.7 percent of the U.S. workforce was unionized. d. All of these are correct. Employees who are dissatisfied with their union can take which action? a. File a complaint with the NLRB b. File a complaint with the EEOC c. Decertify the union d. All of these are correct.
The correct answers are: The type of strike described is a. wildcat strike.Regarding union membership in the United States, the statement d. All of these are correct is true. d. All of these are correct.
The type of strike described in the question, where workers violate the terms of a collective bargaining agreement and walk out, is called a wildcat strike. This is option a.
Regarding union membership in the United States:
a. In 1970, approximately 30 percent of the private U.S. workforce was unionized.
b. By 1999, approximately 13.9 percent of the U.S. workforce was unionized.
c. By 2016, 10.7 percent of the U.S. workforce was unionized.
All of these statements are correct, so the answer is option d.
When employees are dissatisfied with their union, they have several options:
a. They can file a complaint with the National Labor Relations Board (NLRB).
b. They can file a complaint with the Equal Employment Opportunity Commission (EEOC).
c. They can also choose to decertify the union.
All of these actions are correct, so the answer is option d.
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Which of the following includes a key deliverable in the preparation step of the execution phase in internal audit?
A. Risk & Control matrix
B. Documentation request list
C. Process narratives & flowcharts
D. Audit program
The correct option from the given options above is option B. Documentation request list. This includes a key deliverable in the preparation step of the execution phase in internal audit.
The preparation phase of the internal audit consists of several steps to be followed for the smooth functioning of the audit. One of the major steps in this phase is to develop the audit plan. This plan should include a statement of audit objectives, audit scope, audit approach, and methods to be used for auditing.
The documentation request list outlines the documentation the auditor needs to review and the specific documents the auditor wants to review. The auditor should design the request list in a way that minimizes disruption to the auditee while maximizing the efficiency and effectiveness of the audit process.To sum up, option B. Documentation request list includes a key deliverable in the preparation step of the execution phase in internal audit. This is a long answer.
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Question 2 15 points SAVE ANSWER Please ensure that you leave yourself enough time to upload your file responses. It is recommended that you create your Excel file and upload your answer file as you complete the question. Question 2 Consolidated Financial Statements - Consolidated financial statements and intragroup transactions On 1 July 2019, Cross Ltd acquired 100% of the equity in Bow Ltd. The following intragroup transactions need to be considered in the preparation of the group's consolidated financial statements for the year ended 30 June 2021: a. On 1 July 2019, Cross Ltd sold an item of equipment to Bow Ltd for $21,000. This equipment had a carrying amount in the records of Cross Ltd of $13,000 at the time of sale. This type of plant is depreciated at 20% per year on cost. b. At 1 July 2020, there was a profit in inventory of Cross Ltd of $13,000 on goods acquired from Bow Ltd in the previous period. All this inventory was sold by 30 June 2021. c. During the year ended 30 June 2021, Bow Ltd rented a warehouse from Cross Ltd, paying $20,000. d. Cross Ltd issued 1,000 10% debentures at $150 each on 1 October 2020. Bow Ltd acquired 250 of these. Interest is payable half-yearly on 31 March and 30 September. Accruals have been recognised in each entities' accounts. Required: 1. Prepare the consolidation journal entries at 30 June 2021 to adjust for the effects of the above intragroup transactions. (11 marks) 2. Are only those entities in which another entity owns more than 50% of the issued shares classified as subsidiaries? Refer to the relevant accounting standard paragraph(s) in your response. (4 marks)
1. Consolidation Journal Entries at 30 June 2021:
a. Elimination of intercompany sale and depreciation:
- Debit: Equipment (Cross Ltd) $13,000
- Credit: Accumulated Depreciation - Equipment (Cross Ltd) $13,000
b. Elimination of intercompany profit in inventory:
- Debit: Cost of Goods Sold (Cross Ltd) $13,000
- Credit: Inventory (Bow Ltd) $13,000
c. Elimination of intercompany rental income and expense:
- Debit: Rent Expense (Bow Ltd) $20,000
- Credit: Rental Income (Cross Ltd) $20,000
d. Elimination of intercompany interest income and expense:
- Debit: Interest Expense (Bow Ltd) [1,000 debentures x $150 x 10% / 2] $7,500
- Credit: Interest Income (Cross Ltd) [250 debentures x $150 x 10% / 2] $1,875
- Credit: Interest Payable (Bow Ltd) [250 debentures x $150 x 10% / 2] $1,875
2. According to the relevant accounting standard, entities in which another entity owns more than 50% of the issued shares are generally classified as subsidiaries. This is based on the definition of a subsidiary provided in the standard. In particular, paragraph 9 of the International Financial Reporting Standards (IFRS) 10, Consolidated Financial Statements, defines a subsidiary as an entity that is controlled by another entity. Control is presumed to exist when the parent entity owns, directly or indirectly, more than half of the voting power of an entity, unless it can be clearly demonstrated that such ownership does not constitute control.
Therefore, ownership of more than 50% of the issued shares is a key factor in determining whether an entity is classified as a subsidiary. However, control can also be established through other means, such as contractual arrangements or other relevant factors. The specific circumstances and conditions should be assessed to determine whether an entity is a subsidiary under the accounting standard.
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Assume that an economy can be represented by the following per worker output function: y=AK α
where α=1/3 and A=5. The depreciation rate for capital is given by δ=10% and the investment rate is given by γ=20%. Suppose that at period t, the capital stock per capita is k t
=10. Compare the income per worker at period t with the long run, steady state equilibrium income per worker as predicted by the Solow model. Show your calculations.
To compare the income per worker at period t with the long-run steady state equilibrium income per worker predicted by the Solow model, we need to calculate the values.
Given:
Per worker output function: y = AK α
α = 1/3
A = 5
Depreciation rate for capital: δ = 10%
Investment rate: γ = 20%
Capital stock per capita at period t: k t = 10
First, let's calculate the steady-state capital per capita (k*):
In the Solow model, steady state occurs when the investment rate (γ) is equal to the depreciation rate (δ). Therefore, γ = δ.
Since γ = δ = 20%, the steady-state capital per capita (k*) can be calculated as:
k* = (γ / (A * α))^(1 / (1 - α))
k* = (0.2 / (5 * (1/3)))^(1 / (1 - (1/3)))
Simplifying the above equation, we get:
k* = (0.2 / (5/3))^(1 / (2/3))
k* = (0.2 * (3/5))^1.5
k* = (0.6/5)^1.5
k* = (0.12)^1.5
k* ≈ 0.193
Now, let's calculate the income per worker at period t (y_t):
Substituting the given values into the per worker output function:
y_t = A * k t^α
y_t = 5 * 10^(1/3)
y_t ≈ 9.08
Finally, let's calculate the long-run, steady-state equilibrium income per worker (y*):
Using the steady-state capital per capita (k*) in the per worker output function:
y* = A * k*^α
y* = 5 * 0.193^(1/3)
y* ≈ 3.42
Therefore, the income per worker at period t is approximately 9.08, while the long-run, steady-state equilibrium income per worker predicted by the Solow model is approximately 3.42.
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Question 6 Prepare the Statement of Financial Position for Manahattan Furnitures for the year ending December 2021, using the following information: Cash: $55,000 Equipment & Machinery: $750,000 Copyrights & Patents: $135,000 Account Receivables: $75,000 Account Payables: $55,000 Short-term borrowing: $76,000 Long-term debts: $475,000 Equity: ? Inventory: $86,000
The statement of financial position is an important document that reflects the financial position of an entity. It reflects the company's assets, liabilities, and equity. The statement of financial position also called a balance sheet, is a report that shows a company's assets, liabilities, and equity at a given point in time.
The statement of financial position for Manhattan Furniture for the year ending December 2021 can be calculated as follows:
Statement of Financial Position as at December 31, 2021AssetsCash:
$55,000Account Receivables: $75,000Inventory:
$86,000Equipment & Machinery:
$750,000Copyrights & Patents:
$135,000Total Assets:
$1,101,000LiabilitiesAccount Payables:
$55,000Short-term borrowing:
$76,000Long-term debts:
$475,000Total Liabilities:
$606,000EquityEquity:
Total Equity: $495,000Total Liabilities and Equity:
$1,101,000The statement of financial position shows that Manhattan Furniture has total assets of $1,101,000, which are financed by total liabilities of $606,000 and total equity of $495,000. The equity amount can be calculated as Total Equity = Total Assets - Total Liabilities, which is equal to $495,000.
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discuss standard deviation highlight importance in risk management?
Standard deviation is a measure of how spread out a set of data is. In risk management, standard deviation is used to measure the risk of a particular investment or project.
A high standard deviation indicates that the investment or project is riskier, while a low standard deviation indicates that it is less risky.
Standard deviation is a statistical measure of how much variation there is from the mean in a set of data. It is calculated by taking the square root of the variance. The variance is a measure of how far each data point is from the mean, squared.
In risk management, standard deviation is used to measure the risk of a particular investment or project. A high standard deviation indicates that the investment or project is riskier, while a low standard deviation indicates that it is less risky.
This is because a high standard deviation means that the possible outcomes of the investment or project are more spread out, meaning that there is a greater chance of a negative outcome.
For example, an investment with a high standard deviation might have a 50% chance of returning 10% and a 50% chance of returning -10%. An investment with a low standard deviation, on the other hand, might have a 90% chance of returning 5% and a 10% chance of returning 0%.
Standard deviation can be used to calculate the probability of a particular outcome occurring. For example, the probability of an investment with a standard deviation of 10% returning a profit of more than 15% is less than 5%.
Standard deviation is a useful tool for risk management because it allows you to quantify the risk of a particular investment or project. This information can be used to make informed decisions about whether or not to invest in a particular opportunity.
Here are some additional things to keep in mind about standard deviation and risk management:
Standard deviation is not the only measure of risk. Other factors, such as the expected return of an investment, should also be considered when making risk management decisions.Standard deviation can be calculated for different time periods. For example, you could calculate the standard deviation of the returns of an investment over the past year, the past five years, or the past decade.Standard deviation can be used to compare the risk of different investments. For example, you could compare the standard deviation of the returns of two different stocks to see which one is riskier.To know more about investments click here
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A project will result in a $25,000 increase in accounts
receivable and require a decrease in inventory levels by $10,000 to
$95,000. What is the net cash flow for capital budgeting
purposes?
The net cash flow for capital budgeting purposes would be $15,000.
In capital budgeting, the net cash flow represents the change in cash flows resulting from a project. In this case, the project is expected to increase accounts receivable by $25,000 and decrease inventory levels by $10,000 to $95,000.
To calculate the net cash flow, we subtract the decrease in inventory from the increase in accounts receivable:
Net Cash Flow = Increase in Accounts Receivable - Decrease in Inventory
Net Cash Flow = $25,000 - $10,000
Net Cash Flow = $15,000
Therefore, the net cash flow for capital budgeting purposes is $15,000. This represents the expected change in cash flows resulting from the project, considering the increase in accounts receivable and the decrease in inventory levels.
It is important to consider net cash flow when evaluating the financial feasibility and profitability of a capital budgeting project, as it provides insights into the cash impact of the project on the company's operations and finances.
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Larry Matt completed these transactions during December of the current year: Dec. Began a financial services practice by investing $15,000 cash and office 1 equipment having a $5,000 value. Purchased $1,200 of office equipment on credit. Purchased $300 of office supplies on credit. Completed work for a client and immediately received a payment of $900 cash. Completed work for Precept Paper Co. on credit, $1,700. Paid for the supplies purchased on credit on December 3. Paid for the annual $960 premium on an 2 3 4 8 10 14 Paid for the annual $960 premium on an insurance policy. 18 Received payment in full from Precept Paper Co. for the work completed on December 8. 27 Larry withdrew $650 cash from the practice to pay personal expenses. 30 Paid $175 cash for the December utility bills. 30 Received $2,000 from a client for financial services to be rendered next year. Prepare general journal entries to record these transactions. Explanations are Required.
Here are the general journal entries to record Larry Matt's transactions, with explanations:
The general journal entriesDate | Account | Debit | Credit | Explanation
-----|------|------|--------
1-Dec | Cash | 15,000 | Equipment | 5,000 | Common Stock | 20,000 | To record the owner's initial investment.
2-Dec | Equipment | 1,200 | Accounts Payable | 1,200 | To record office equipment purchased on credit.
3-Dec | Supplies | 300 | Accounts Payable | 300 | To record supplies purchased on credit.
4-Dec | Cash | 900 | Service Revenue | 900 | To record cash received for work completed.
8-Dec | Accounts Receivable | 1,700 | Service Revenue | 1,700 | To record work completed on credit.
10-Dec | Accounts Payable | 300 | Cash | 300 | To pay for the supplies purchased on credit on December 3.
14-Dec | Prepaid Insurance | 960 | Cash | 960 | To record cash paid for annual insurance premium.
18-Dec | Cash | 1,700 | Accounts Receivable | 1,700 | To record payment received in full from Precept Paper Co. for the work completed on December 8.
27-Dec | Dividend | 650 | Cash | 650 | To record cash dividend paid.
30-Dec | Utilities Expense | 175 | Cash | 175 | To record the payment of the utility expense.
30-Dec | Unearned Service Revenue | 2,000 | Cash | 2,000 | To record cash advance from customers for financial services to be rendered next year.
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You run a shop that sells everything connected with coffee. Currently, you sell 25 coffee makers per month, but you would like to increase this to 35. Knowing that coffee makers and coffee beans are complements, you have decided to stimulate demand for coffee makers by decreasing the price of coffee beans. Given that you achieved your sales target for coffee makers by reducing the price of coffee beans from $0.80 to $0.73, what is the cross-price elasticity of demand between the two goods? Use the midpoint method, and round all intermediate calculations and your final answer to two decimal places if necessary.
The cross-price elasticity of demand between coffee makers and coffee beans is approximately -1.46.
To calculate the cross-price elasticity of demand between coffee makers and coffee beans, we can use the midpoint method. The formula for the midpoint method is:
Cross-price elasticity = (ΔQd/Qd) / (ΔPc/Pc)
Where:
ΔQd is the change in quantity demanded of coffee makers,
Qd is the average quantity demanded of coffee makers [(Qd₁ + Qd₂) / 2],
ΔPc is the change in price of coffee beans,
Pc is the average price of coffee beans [(Pc₁ + Pc₂) / 2].
In this case, ΔQd = 35 - 25 = 10 (change in quantity demanded),
Qd = (25 + 35) / 2 = 30 (average quantity demanded),
ΔPc = 0.73 - 0.80 = -0.07 (change in price of coffee beans),
Pc = (0.80 + 0.73) / 2 = 0.765 (average price of coffee beans).
Plugging these values into the formula, we get:
Cross-price elasticity = (10/30) / (-0.07/0.765)
Cross-price elasticity ≈ -1.46
Since the cross-price elasticity is negative, we can conclude that coffee makers and coffee beans are complements. The magnitude of the cross-price elasticity indicates that a 1% decrease in the price of coffee beans leads to a 1.46% increase in the quantity demanded of coffee makers.\
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KatyDid Clothes has a \( \$ 150 \) million (face value) 30 -year bond issue selling for 104 percent of par that carries a coupon rate of 11 percent, paid semiannually. What would be Katydid's before-t
KatyDid Clothes' before-tax interest expense for the 30-year bond issue can be calculated using the formula: bond face value * coupon rate * 0.5.
The before-tax interest expense is calculated by multiplying the bond's face value, the coupon rate, and 0.5 (since the coupon is paid semiannually). In this case, the bond has a face value of $150 million, a coupon rate of 11%, and is paid semiannually. Therefore, the before-tax interest expense can be calculated as follows:
Before-tax interest expense = $150 million * 11% * 0.5 = $8.25 million per year.
This means that KatyDid Clothes' before-tax interest expense for the 30-year bond issue is $8.25 million per year.
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a listing agreement will automatically terminate: select one: a. if the listing broker goes bankrupt. b. on the date specified in the listing agreement. c. if the seller dies prior to receiving an offer. d. any of these choices.
A listing agreement will automatically terminate on the date specified in the agreement. The termination is not affected by the financial situation of the listing broker, the death of the seller, or any other circumstances.
The correct answer is option (b).
A listing agreement is a contract between a real estate agent (listing broker) and a property owner (seller) that gives the agent the exclusive right to sell the property.
The agreement outlines the terms and conditions of the sale, including the listing period, commission, and responsibilities of both parties.
In terms of automatic termination, the correct answer is option b. A listing agreement will automatically terminate on the date specified in the agreement.
This date is usually predetermined and agreed upon by both the listing broker and the seller. Once the specified date is reached, the agreement is no longer valid, and the agent's exclusive right to sell the property expires.
Option a, which states that the listing agreement will terminate if the listing broker goes bankrupt, is not accurate. The financial situation of the broker does not affect the validity of the agreement.
The agreement remains in force until the specified termination date.
Similarly, option c, which suggests that the listing agreement will terminate if the seller dies prior to receiving an offer, is also not correct.
The death of the seller does not automatically terminate the agreement. Instead, it is typically the responsibility of the seller's estate or appointed representative to handle the property sale according to the terms of the listing agreement.
Option d, which states "any of these choices," is also incorrect. As discussed earlier, the listing agreement terminates on the specified date, regardless of the other circumstances mentioned.
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Please read the article SWOT analysis for Starbucks, pick one of the key findings from the SWOT analysis and share how it's relevant to where you live.
If you need a bit more help with your SWOT analysis, read the article, "A Better Way To Conduct A SWOT Analysis." This article will help you understand a little more behind each element of the SWOT analysis as well as some examples to help paint the picture of how you apply this to your restaurant.
One key finding from the SWOT analysis of Starbucks is its strong brand image.
Starbucks's strong brand image is relevant to where I live because it creates a sense of familiarity and trust among consumers in my local community. The brand's reputation for high-quality coffee, cozy atmosphere, and excellent customer service has made it a popular choice for people in my area. The recognizable logo and the overall Starbucks experience have become deeply ingrained in the local culture.
Having a strong brand image has several implications for Starbucks in my community. Firstly, it attracts a loyal customer base who prefer the consistent and reliable experience that Starbucks offers. This translates into repeat business and steady revenue for the company. Secondly, the positive perception of the brand often leads to positive word-of-mouth recommendations, further expanding Starbucks's customer base in the area.
The relevance of Starbucks's strong brand image is also evident in the competitive landscape of my community. Despite the presence of other coffee chains and independent cafes, Starbucks maintains a prominent position. The brand's reputation and customer loyalty give it a competitive edge, as consumers often choose Starbucks over other options due to the trust and familiarity associated with the brand.
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G.Henry is employed by royal manufacturers and is paid R250 per hour. His normal working day is 9 hours. The standard time to produce a product is 5 minutes. If G. Henry produces more then his quote he receives 1.5 times the hourly rate on the additional output. G Henry produced 132 units for the day
G.Henry is employed by royal manufacturers and is paid R250 per hour. His normal working day is 9 hours' G. Henry's total pay for the day is R11,250.
To calculate G. Henry's earnings for the day, we need to consider his normal working hours and the additional output he produced.
Normal working hours:
G. Henry's normal working day is 9 hours.
Hourly rate: R250 per hour.
Regular earnings for normal working hours:
Regular earnings = Hourly rate x Number of hours
Regular earnings = R250 x 9 = R2,250
Additional output:
G. Henry produced 132 units for the day, and the standard time to produce a product is 5 minutes.
Number of products produced beyond the standard time:
Additional units produced = Total units produced - Standard units produced
Additional units produced = 132 - (9 hours x 60 minutes / 5 minutes)
Additional units produced = 132 - (9 x 12)
Additional units produced = 132 - 108
Additional units produced = 24
Earnings for additional output:
Additional earnings = Hourly rate x Additional units produced x 1.5
Additional earnings = R250 x 24 x 1.5 = R9,000
Total earnings:
Total earnings = Regular earnings + Additional earnings
Total earnings = R2,250 + R9,000 = R11,250
Therefore, G. Henry's earnings for the day, considering his normal working hours and the additional output produced, would be R11,250.
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What is the equilibrium quantity and price in a competitive market if the inverse demand function is P = 5 – Q/12000 and the marginal cost is $4?
a. Quantity = 36,000; price = 2
b. Quantity = 24,000; price = 3
c. None of the other answers
d. Quantity = 36,000; price = 3
e. Quantity = 24,000; price = 2
Equilibrium quantity and price in a competitive market is obtained at the intersection of the demand curve and the supply curve. In this problem, the inverse demand function is given as P = 5 – Q/12000 and the marginal cost is $4. The demand function is a downward sloping curve.
In other words, the quantity demanded increases when the price decreases, and vice versa.Supply function is given by marginal cost (MC) which is a horizontal line. It represents that the quantity supplied remains constant at MC. At equilibrium, the quantity supplied must be equal to the quantity demanded.
Therefore, we can write,Qs = Qd …(1)From the demand function,P = 5 – Q/12000…(2)Setting (1) and (2) equal,Qs = Qd ⇒ 4 = 5 – Q/12000 ⇒ Q = 36000Substituting the value of Q in demand function to get the equilibrium price,P = 5 – Q/12000 = 5 – 36000/12000 = 2Hence, the equilibrium quantity is 36,000 and the equilibrium price is $2. Therefore, the correct option is (a) Quantity = 36,000; price = 2.
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Think of an experience in your career where rewarding one workplace behavior had unintentional consequences? Describe that experience in detail. Why did the unintentional consequences occur? Did it have a negative impact on motivation? Explain?
In my career, there was an experience where rewarding one workplace behavior had unintentional consequences, leading to negative impacts on motivation.
In a previous role, our team was rewarded based on individual performance metrics, such as meeting sales targets. While this approach initially motivated employees to focus on their individual goals, it unintentionally fostered a competitive and siloed work environment. As individuals were solely driven by personal success, collaboration and teamwork suffered. This resulted in a lack of knowledge sharing, limited support among team members, and a decrease in overall morale.
The unintentional consequences occurred because the reward system failed to recognize and incentivize collective achievements and collaboration. By solely emphasizing individual performance, the organization inadvertently discouraged teamwork and hindered the development of a cohesive and cooperative work culture.
The negative impact on motivation was evident as employees became more concerned about outperforming their colleagues rather than working together towards shared goals. The lack of collaboration and support eroded trust and created an environment of internal competition, leading to decreased job satisfaction and diminished engagement.
Hence, the unintended consequences of rewarding individual performance without promoting teamwork and collaboration negatively impacted motivation by creating a competitive and siloed work environment, ultimately diminishing overall morale and employee engagement.
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Strawberry Corporation has 3 million ordinary shares outstanding that are currently priced at $7.25 each and have a beta of 1.4. The company has 500,000 preference shares trading at $6 each. Eight years ago the company issued bonds with a total face value of $5 million. One bond has a face value of $250,000. The bonds have a coupon rate of 4% p.a. and coupons are paid annually. The bonds mature in six years from today. The bonds currently yield 3.5% p.a., the return on the stock market is 8% p.a., the risk-free return is 2.5% p.a., and the company tax rate is 30%.
What proportion of the firm's capital structure is ordinary equity?
83.19% of the firm's capital structure is ordinary equity.
Market value of the ordinary shares:
Number of ordinary shares outstanding = 3,000,000
Price per ordinary share = $7.25
Market value of ordinary shares = Number of ordinary shares outstanding * Price per ordinary share
= 3,000,000 * $7.25
= $21,750,000
Market value of the preference shares:
Number of preference shares = 500,000
Price per preference share = $6
Market value of preference shares = Number of preference shares * Price per preference share
= 500,000 * $6
= $3,000,000
Total market value of equity = Market value of ordinary shares + Market value of preference shares
= $21,750,000 + $3,000,000
= $24,750,000
Now, let's calculate the market value of debt:
Number of bonds = $5,000,000 / $250,000 (face value per bond)
= 20 bonds
Market value of debt = Number of bonds * Face value per bond
= 20 * $250,000
= $5,000,000
The total market value of the firm's capital structure is the sum of the market value of equity and the market value of debt:
Total market value of capital structure = Market value of equity + Market value of debt
= $24,750,000 + $5,000,000
= $29,750,000
Finally, we can calculate the proportion of the firm's capital structure that is ordinary equity:
Proportion of ordinary equity = Market value of equity / Total market value of capital structure
= $24,750,000 / $29,750,000
= 0.8319 or approximately 83.19%
Therefore, approximately 83.19% of the firm's capital structure is ordinary equity.
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Calculate the accumulated amount of end-of-quarter payments of
$7,000 made at 5.85% compounded monthly for 5 years. Round to the
nearest cent
After 5 years of making quarterly payments of $7,000 at an annual interest rate of 5.85% compounded monthly, the accumulated amount will be approximately $39,999.66.
To calculate the accumulated amount of end-of-quarter payments, we can use the formula for the future value of an ordinary annuity. The formula is:
FV = [tex]P * [(1 + r/n)^{(nt)} - 1] / (r/n)[/tex]
Where:
FV = Future value (accumulated amount)
P = Payment amount per period ($7,000)
r = Annual interest rate (5.85%)
n = Number of compounding periods per year (12 for monthly compounding)
t = Number of years (5 years)
Plugging in the given values into the formula, we get:
FV = $7,000 * [(1 + 0.0585/12)⁶⁰ - 1] / (0.0585/12)
Calculating this expression, the accumulated amount of end-of-quarter payments is approximately $39,999.66.
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What would most likely happen in the market for loanable funds if the government were to increase the tax on interest income? The supply of loanable funds would shift right. The demand for loanable funds would shift right. The supply of loanable funds would shift left. The demand for loanable funds would shift left.
The government policies play a crucial role in determining the equilibrium interest rate and the quantity of loanable funds in the market.
If the government increases the tax on interest income, the supply of loanable funds would shift left. This is because people would be less willing to save their money due to the higher tax on the interest they earn, which would decrease the amount of funds available for borrowing by consumers and businesses.
As a result, the interest rates would go up since the demand for loanable funds would remain the same, and the supply would decrease.
In other words, the cost of borrowing would become more expensive and businesses may become less likely to invest in long-term projects.
Increasing taxes on interest income reduces the incentive to save, which leads to a decrease in the supply of loanable funds available to be borrowed. Since the demand for loanable funds would remain the same, the equilibrium interest rate would increase as borrowers compete for a limited supply of funds.
Therefore, the government policies play a crucial role in determining the equilibrium interest rate and the quantity of loanable funds in the market.
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