Answer:
False
Explanation:
A recession is a period of general decline in economic activities. It is when the GDP of a country for two consecutive quarters is negative.
Potential output is the output an economy can produce if all its resources are fully employed.
During a recession, output is negative so output would be less than potential output.
what educational background or training rose lamont need?
Answer:
needed a master's in my field to teach at a California community college, so I have an M.S. in Applied Economics.
Explanation:
exactly what the link to the article said
If IBM manufactures a computer in the United States and sells it to a French business firm in Paris, it will cause an increase in:_________a. Net exports.b. Imports.c. Both investment and net exports.d. Government expenditures.e. Consumption.
Answer:
B
Explanation:
When goods produced in a country are sold to other countries, it is known as export.
When a country purchases a foreign produced good, it is known as import
the difference between export and import is known as net export.
Net export increases when export increases and decreases when import decreases.
As a result of the sale of the computer, US net export would increase and France's net export would decrease.
Normally, an adult at rest should have respirations that:___________.
Answer:
12 to 20 breaths per minute
Explanation:
According to most medical practitioners, an adult (someone from the ages of 18 upwards) at rest should normally have between 12 to 20 breaths per minute.
Note, the respirations refer to the number of breaths (in and out) a person takes per minute (60 seconds). Hence, if the respirations are lower than 12 or over 25 breaths per minute, it is considered abnormal.
Santo Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the net income of the investor under each of the following accounting methods?
Fair Value Method Equity Method
a. No Effect Decrease
b. Increase Decrease
c. No Effect No Effect
d. Increase No Effect
Answer:
d. Increase - No Effect
Explanation:
Under the fair value method, cash dividends are considered revenue. E.g. a $10,000 dividend will increase net income by $10,000 - taxes.
Under the equity method, cash dividends are not considered revenue (have no effect on income statement) and instead they decrease the assert account. Investment revenue takes place when the company reports net income for the year.
On January 1, Boston Enterprises issues bonds that have a $1,300,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par.
A. How much interest will Boston pay (in cash) to the bondholders every six months?
2. Prepare journal entries to record (a) the issuance of bonds on January 1; (b) the first interest payment on June 30; and (c) the second interest payment on December 31.
3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 96 and (b) 104.
Answer:
1. $45,500
2. Journal entries
3. Journal entries
Explanation:
The Interest amount can be calculated by multiplying the face value of bonds with annual interest and the time period. Journal entries are given below
Requirement 1 (Interest amount)
Interest amount = Face value of bond x annual interest rate x 6/12
Interest amount = 1,300,000 x 7% x 6/12
Interest amount = $45,500
Requirement 2 (Journal entries to record issuance of bond and interest expense)
1 Jan (issuance of bond payable )
DEBIT CREDIT
Cash 1,300,000
Bonds payable 1,300,000
30 June (interest expense recorded)
DEBIT CREDIT
Cash 45,500
Bonds payable 45,500
31 Dec (interest expense recorded)
DEBIT CREDIT
Cash 45,500
Bonds payable 45,500
Requirement 3 (Journal entry for issuance assuming bonds are issued at a.96 b.104)
At 96
DEBIT CREDIT
Cash(1,300,000 x 96%) 1,248,000
Discount(1,300,000 - 1248,000) 52,000
Bonds payable 1,300,000
At 104
DEBIT CREDIT
Cash(1,300,000 x 104%) 1,352,000
Premium (1,300,000 - 1248,000) 52,000
Bonds payable 1,300,000
The income statement for the Kingbird, Inc. for the month ended July 31 shows Service Revenue $19,520, Salaries and Wages Expense $8,620, Maintenance and Repairs Expense $2,920, and Income Tax Expense $1,240. The statement of retained earnings shows an opening balance for Retained Earnings of $24,290 and Dividends $1,600.
The income statement for the Kingbird, Inc. for th
(a) Prepare closing journal entries. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit Credit
July 31
Entry field with correct answerService Revenue
Entry field with correct answer19520
Entry field with correct answer
Entry field with correct answerIncome Summary
Entry field with correct answer
Entry field with correct answer19520
(To close revenue account)
July 31
Entry field with correct answerIncome Summary
Entry field with correct answer12780
Entry field with correct answer
Entry field with correct answerMaintenance and Repairs Expense
Entry field with correct answer
Entry field with correct answer2920
Entry field with correct answerIncome Tax Expense
Entry field with correct answer
Entry field with correct answer1240
Entry field with correct answerSalaries and Wages Expense
Entry field with correct answer
Entry field with correct answer8620
(To close expense accounts)
July 31
Entry field with correct answerIncome Summary
Entry field with correct answer6740
Entry field with correct answer
Entry field with correct answerRetained Earnings
Entry field with correct answer
Entry field with correct answer6740
(To close net income/(loss) to retained earnings)
July 31
Entry field with correct answerRetained Earnings
Entry field with correct answer1600
Entry field with correct answer
Entry field with correct answerDividends
Entry field with correct answer
Entry field with correct answer1600
(To close dividends to retained earnings)
(b) What is the ending balance in Retained Earnings?
Ending balance in Retained Earnings $
Answer:
The solution to the question is shown on the first, second, third , fourth uploaded image
Explanation:
A new aerated sewage lagoon is required in a small town. Earlier this year one was built on a similar site in an adjacent city for $2.3 million. The new lagoon will be 60% larger. Use the power sizing exponent 1.13 to estimate the cost of the new lagoon.Equipment or Facility Size Range Power- Sizing ExponentBlower, centrifugal 10,000- 100,000 ft^3/min 0.59Compressor 200-2100 hp 0.32Crystallizer, vacuum batch 500-7000 ft^2 0.37 Dryer, drum, single atmospheric 10-100 ft^2 0.4Fan, centrifugal 20,000-70,000 ft^3/min 1.17Fitter, vacuum rotary drum 10-1500 ft^2 0.48Lagoon, aerated 0.05-20 million gal/day 1.13Motor 5-20 hp 0.69Reactor, 300 psi 10-1000 gal 0.56Tank, atmospheric, horizontal 100-40,000 0.57
Answer:
The answer is "4.05 Million".
Explanation:
Formula:
[tex]\text{New Lagoon Cost = cost \times size^y}[/tex][tex]\text{New Lagoon Cost} = cost \times size^y[/tex] Where y is the exponent for power-sizing
[tex]= \$ 2.3 \times (1.65)^{1.13}\\\\ =\$ 2.3 \times 1.76098987\\\\ = 4.0502767\ \ OR \ \ 4.05[/tex]
The Lagoon carbonated power portion from the given table is 1.13, that's why the final answer is "$ 4.05 million"
Use a production possibilities frontier to describe the idea of efficiency.
Answer:
Efficiency
Explanation:
Efficiency is when a market is producing the greatest possible amount given its resources. This is demonstrated by the production possibility frontier, which displays the maximum amount of a good that can be produced in relationship to the production of another good.
Which of the following statements describes an oil and gas blind pool offering?a) the oil exploration occurs in an area that is not adjacent to any known oil reserves.b) money is raised without a specific property being stated, and the GP selects the investments.c) the income from producing wells is purchased at a discount from the present value of the projected future flows.d) an unknown number of representatives participates in the sale of known partnership units.
Answer:
b) money is raised without a specific property being stated, and the GP selects the investments.
Explanation:
A blind pool offering can be defined as a limited liability partnership or investment program that isn't backed up by the required investment goals for the funds that has been gathered from investors.
When money is raised without a specific property being stated, and the GP selects the investments it describes an oil and gas blind pool offering.
Woodwick Company issues 9%, five-year bonds, on December 31, 2014, with a par value of $96,000 and semi-annual interest payments.Semi-annual Period-End Unmortized Premium Carrying value 0) 12/31/2816 $8,031 $104,0311) 6/3e/2817 7,228 183,2282) 12/31/2817 6,425 182,425 Use the above straight-line bond amortization table and prepare journal entries for the following A) The issuance of bonds on December 31, 2016.B) The first interest payment on June 30, 2017.C) The second interest payment on December 31, 2017.
Answer:
A) The issuance of bonds on December 31, 2016.
Dr Cash 104,031
Cr Bonds payable 96,000
Cr Premium on bonds payable 8,031
B) The first interest payment on June 30, 2017.
Dr Interest expense 3,517
Dr Premium on bonds payable 803
Cr Cash 4,320
C) The second interest payment on December 31, 2017.
Dr Interest expense 3,517
Dr Premium on bonds payable 803
Cr Cash 4,320
Kendra decided to leave her job in the city and move to the country where she plans to start her own business selling homemade preserves, soaps, lotions, and candles. Kendra’s business would be:___________.A. a sole proprietorship.B. a partnership.C. a private investment.D. employee owned.E. owned by stockholders.
Answer:
A
Explanation:
A sole proprietorship is a type of business that is owned by one person
Characteristics
it is owned by one person the business has unlimited liabilitythe business has limited access to capitalthe business usually lacks continuity. this type of business usually ceases to exist when the owner diesthe business is usually not separated from the ownerOperations management moves from knowing the needs of consumers to actually satisfying those needs.a) trueb) false
Answer:
True
Explanation:
Remember, no business operations would exist if there aren't any identified customer needs to solve.
Also, we need to bear in mind that Operations management activities are done in any business in other to efficiently (profitably) process raw materials, labor, etc into the goods and services needed by consumers.
Which of the following statements is true of personnel management during the 1930s and 1940s?a. It was concerned almost exclusively with hiring first-line employees. b. It was concerned solely with structuring individual jobs to maximize efficiency and productivity. c. It was considered a function of line managers. d. It was seen as a critical function in most business organizations.
Answer: It was concerned almost exclusively with hiring first-line employees.
Explanation:
Personnel management has to do with the planning, integration, compensation, and maintainance of employees to achieve Individual or organizational goals.
Recently, personnel management is now called human resources management. Before then, personnel management during the 1930s and 1940s was concerned almost exclusively with hiring first-line employees who worked on issues relating to the company's future and achieving the company's goals
Including the change control system within the ________ is a key to a successful project.A. Work Breakdown Structure.B. Project Baseline.C. Risk Management Plan.D. Work Breakdown Structure and Proect Baseline.
Answer:
The correct answer is C) Risk Management Plan
Explanation:
Change Control System is a key component of the Risk Management Framework/Strategy.
Many times, a project will change midway thus altering significantly the expected results, costs and even purpose of the project. This usually poses a lot of challenges to Project Managers.
Factors or sources of changes to a project include but are not limited to:
Project Owner;Extraneous risks;Customer to Project Owner etc.Cheers!
When the changes are implemented in a process or a system they are ensured by a change control system.
It follows, surveys and accepts the changes before the product or the process are influenced by the change.
The correct answer is:
Option C) Risk Management Plan
This can be explained as:
Risk management is mainly controlled by the change control system.Many times, a project get altered thus concerning the anticipated results, expenses and even direction of the project. This usually feigns a lot of difficulties to managers.A change in the project affects the owner, risks, and the customers.Therefore, risk management is a key to changing the control system.
To learn more about change control system follow the link:
https://brainly.com/question/25278765
Classify each resource used in production as land, labor, capital, or entrepeneurs.
1. Aunt Sandy's Jammin' Jellies (the business)
2. Anika, a server at Sonic Drive-In
3. Your favorite bartender
A. Land
B. Labor
C. Capital
D. Entrepreneurs
Answer:
1. Aunt Sandy's Jammin' Jellies (the business) - Entrepreneurs
Entrepreneurship refers to the process of bringing together the various other factors of production to be able to produce goods and services. Aunt Sandy's as a business is an entrepreneur as it brought together factors of production to make Jellies.
2. Anika, a server at Sonic Drive-In - Labor
Labor refers to the actual people who contribute to the business. Anika is a server at the Drive- In and so works there contributing to the success of the business so she is Labor.
3. Your favorite bartender - Labor
Like Anika above, your favorite bartender is also a person contributing to the success of the bar so is considered labor.
Aunty Sandy's Jammin Jellies is an Entrepreneurs
The entrepreneurship is the factor that brings the other factors of production (land, labor and capital) together.Anika, who is server at Sonic Drive-in is an example of Labor.
The Labor is the factor that helps tp produce the goods and services.The favorite bartender is an example of Labor
The Labor is the factor that helps or contribues to the production of goods and services.Read more about factor of production
brainly.com/question/16755022
The economist Milton Friedman argued that
Answer:
APEX: Unemployment is natural and acceptable in an economy.
Explanation:
The economist Milton Friedman made several arguments throughout his career, but some of his notable viewpoints include:
Advocacy for free marketsMonetarism and the role of the Federal ReserveCritique of government interventionNegative income tax and welfare reformSchool choice and educational reformIt is important to note that these are only some of the viewpoints associated with Milton Friedman, and they represent a simplified overview of his ideas.
Friedman's economic theories and policy recommendations have been subjects of debate, with both proponents and critics discussing their implications and effectiveness.
Learn more about monetarism here:
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#SPJ6
Why is it smart to keep you cool when making claim, and how should you go about it?
Answer:It is important to keep calm when making a claim because it gives off the impression that you know what you're talking about. Going crazy and yelling will make you look immature and no one would want to hear your claim.
Explanation:
It is smart to keep cool while making a claim, guarantees clear-cut explanation and direct tone of the message, and go with the proper and full knowledge about it.
What is making claim?Making claim must takes place when an individual's property has been damaged, or he/she have been hurt. He can sole claim something that is made by one of the titled dangers recited in the policy.
It is important while making a claim that an individual must have a full knowledge about the claim and he/she must be cool at the same time. It supports the insurer work peacefully.
Insurer will be bright to clear off the claims of groups who are conjunct and do not overact with the numerical quantity of the claim.
Therefore, the person making a claim must have to be cool.
Learn more about making claim, refer to:
https://brainly.com/question/22898077
____________________ are a pool of assets that trade like stocks on an exchange. They track a group of stocks, such as all stocks in an index or stocks of companies in emerging markets.
Answer:
Exchanged-traded funds
Explanation:
Exchanged-traded funds are forms of investment that are usually traded on stock exchange the way other securities are traded, but they have an underlying asset.
Unlike mutual funds ETF are traded on the stock exchange at all periods of the day.
Assets held by ETF includes, shares, currencies, bonds, and commodities like gold and oil.
Value of trade is kept close to the net value of the underlying asset.
Which of the following is not a principal dimension of a servicescape?
A) spatial layout and functionality
B) signs, symbols and artifacts
C) facility location
D) ambient conditions
Answer:
C) facility location
Explanation:
There are three components or principle of servicescape that are applied for the study as a measure for satisfaction that involves the condition related to the ambient, spatial layout & functionality, and the symbol, sign & artifacts
But do not include the facility location
Therefore the option C is selected as it does not involed in the service scape
Trade and cash discounts; the gross method and the net method compared [LO7-3].Tracy Company, a manufacturer of air conditioners, sold 200 units to Thomas Company on November 17, 2016. The units have a list price of $550 each, but Thomas was given a 25% trade discount. The terms of the sale were 2/10, n/30. Required: 1. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on November 26, 2016, assuming that the gross method of accounting for cash discounts is used. Transaction listA. Record the sale of 200 units with a list price of $550, a 25% trade discount (if applicable), with terms of 2/10, n/30 under the gross method. B. Record the cash collection on November 26.2. Prepare the journal entries to record the sale on November 17 (ignore cost of goods) and collection on December 26, 2016, assuming that the gross method of accounting for cash discounts is used.
Answer and Explanation:
The Journal entries are shown below:-
1. Within discount period
Nov 17
Accounts receivable Dr, $82,500
To Sales revenue $82,500 (200 × $550 × 75%)
(Being sales revenue is recorded)
Nov 26
Cash Dr, $80,850
Sales discount Dr, $1,650 ($82,500 × 2%)
To Accounts receivable $82,500
(Being cash collection is recorded)
2. Beyond discount period
Nov 17
Accounts receivable Dr, $82,500
To Sales revenue $82,500 (200 × $550 × 75%)
(Being sales revenue is recorded)
Dec 15
Cash Dr, $82,500
To accounts receivable $82,500
(Being cash collection is recorded)
The following information is for S&P Enterprises for the month of September: Direct materials $82,000 Direct labor $51,000 Variable manufacturing overhead $32,000 Fixed manufacturing overhead $30,000 Variable selling expense $16,000 Fixed selling expense $15,000 Variable administrative expense $9,000 Fixed administrative expense $18,000 . (Enter your answer as a Total period cost for the month of September was $ whole number) The following information is for S&P Enterprises for the month of September: ___________.
Answer and Explanation:
The computation of the total period cost is shown below:
Variable selling expense $16,000
Fixed selling expense $15,000
Variable administrative expense $6,000
Fixed administrative expense $18,000
Total period Cost $51,000
ANd, the total fixed cost is
Fixed Manufacturing overheads $30,000
Fixed selling expenses $15,000
fixed admin expenses $18,000
Total fixed cost $63,000
We simply added all the above items
Alfred Home Construction is considering the purchase of five dumpsters and the transport truck to store and transfer construction debris from building sites. The entire rig is estimated to have an initial cost of $125,000, a life of 8 years, a $5000 salvage value, an operating cost of $40 per day, and an annual maintenance cost of $2000. Alternatively, Alfred can obtain the same services from the city as needed at each construction site for an initial delivery cost of $125 per dumpster per site and a daily charge of $20 per day per dumpster. An estimated 45 construction sites will need debris storage throughout the average year. If the minimum attractive rate of return is 12% per year, how many days per year must the equipment be required to justify its purchase?
Answer:
If the total number of days per year is 1,419 or less, then the company should obtain the services from the city. But if the total number of days per year is 1,420 or more, then the company should purchase the equipment.
Explanation:
alternative 1:
initial outlay = $125,000
useful life 8 years
depreciation per year = ($125,000 - $5,000) / 8 = $15,000
costs:
$40 per day
maintenance $2,000 per year
total annual costs = $40x + $2,000
alternative 2:
$125 x 45 sites = $5,625
$20x
total annual costs = $5,625 + $20x
how large does x need to be in order for alternative 1 to be better using a 12% discount rate
cash flows
year 0 = ($125,000)
year 1 = $40x + $2,000 - $5,625 - $20x = $20x - $3,625
year 2 = $20x - $3,625
year 3 = $20x - $3,625
year 4 = $20x - $3,625
year 5 = $20x - $3,625
year 6 = $20x - $3,625
year 7 = $20x - $3,625
year 8 = $20x - $3,625 + $5,000 = $20x + $1,375
I used the present value of an annuity formula, to determine the value of cash flow:
the PV annuity factor for 12% and 7 periods is 4.5638, so:
24,756.20 x 4.5638 = $112,982
$29,756.20 / (1.12⁸) = $12,018
total = $125,000
$20x - $3,625 = 24,756.20
$20x = $28,381.20
x = $28,381.20 / $20 = 1,419.06 days (including all 45 sites)
That means that if the total number of days per year is 1,419 or less, then the company should obtain the services from the city. But if the total number of days per year is 1,420 or more, then the company should purchase the equipment.
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $358,700; materials of 401,000 and direct labor of $211,000. During the year Adams incurred $409,000 in materials costs, $412,300 in overhead costs and $215,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.
Answer:
Allocated MOH= $365,500
Explanation:
Giving the following information:
Estimated total overhead= $358,700
Estimated direct labor cost= $211,000
Actual direct labor cost= $215,000
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 358,700/211,000
Predetermined manufacturing overhead rate= $1.7 per direct labor dollar
Now, we can allocate overhead:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1.7*215,000
Allocated MOH= $365,500
Write each item listed below to the appropriate category . GOODS SERVICES Cutting Hair Doctor Computers Cleaning Business Tasks performed by people that customers will buy to satisty a want or need Jewelry Package Delivery Business Massage Therapist Groceries Material items or products that customers will buy to salisty a want or need Cars Clothing Dentist Ice Cream Waiting Tables Magazines Teaching
Answer:
Goods are actual tangible items that a person can buy in other to satisfy their needs and/ wants while Services are intangible but are provided to a person by another person in order to satisfy the needs and/or wants of the person the services are being provided for.
GOODS;
Material items or products that customers will buy to satisfy a want or needJewelryGroceriesComputersCarsClothingIce Cream MagazinesSERVICES
Tasks performed by people that customers will buy to satisfy a want or need Cutting Hair Doctor Cleaning Business Package Delivery Business Massage Therapist DentistWaiting Tables TeachingSuppose that you have a choice of working during the summer or taking summer classes. Summer tuition and books are $2,000. If you work, you could make $10,000. Your rent is $4,000 for the summer, regardless of your choice. The opportunity cost of going to summer school is therefore equal to:_________.
a. $14,000
b. $12,000
c. $2,000
d. $10,000
Determine the following:_______.a. The stockholders' equity of a corporation that has assets of $435,000 and liabilities of $326,000.b. The assets of a corporation that has liabilities of $250,000, common stock of $100,000, and retained earnings of $85,000.
Answer:
a. $109,000
b. $435,000
Explanation:
a. The calculation of Stockholder equity is shown below:-
Stockholder equity = Assets - Liabilities
= $435,000 - $326,000
= $109,000
b. The calculation of assets is shown below:-
Assets = Liabilities + Common stock + Retained earnings
= $250,000 + $100,000 + $85,000
= $435,000
Therefore for computing thr stockholder equity and assets we simply applied the above formula.
jk I figured it out hahaha
Answer:
thats great♡♡♡♡♡♡
Explanation:
just need points♡♡♡♡
G. Gram invested $43,000 cash in the company in exchange for its common stock.
May:
1 The company rented a furnished office and paid $2,200 cash for May’s rent.
3 The company purchased $1,910 of office equipment on credit.
5 The company paid $740 cash for this month’s cleaning services.
8 The company provided consulting services for a client and immediately collected $5,900 cash.
12 The company provided $2,600 of consulting services for a client on credit.
15 The company paid $770 cash for an assistant’s salary for the first half of this month.
20 The company received $2,600 cash payment for the services provided on May 12.
22 The company provided $3,900 of consulting services on credit.
25 The company received $3,900 cash payment for the services provided on May 22.
26 The company paid $1,910 cash for the office equipment purchased on May 3.
27 The company purchased $75 of office equipment on credit.
28 The company paid $770 cash for an assistant’s salary for the second half of this month.
30 The company paid $300 cash for this month’s telephone bill.
30 The company paid $250 cash for this month’s utilities.
31 The company paid $2,000 cash in dividends to the owner (sole shareholder).
Required:
Prepare income statement for May.
Answer:
Explanation:
Income statement for the month ended May 31
Revenue
Consulting services
(5,900+2,600+3,900) 12,400
Expenses
Rent 2,200
Cleaning 740
Salary 770
Salary 770
Telephone 300
Utilities 250
Total expenses 5,030
Net Income 7,370
The office equipment are assets which are meant to be recorded in the statement of financial position. However , a proportionate depreciation are supposed to be charged to the income statement as expenses , but the detailed information concerning that was not given.
The dividends payout shout be recorded in the statement of retained earning for the month.
The brothers who created The GFB early on began shopping the product to independent coffee shops and then expanded into grocery and natural food stores. These choices represent which core aspect of marketing?
Answer:
Marketing channels.
Explanation:
Marketing Channels is one of the core aspects of marketing which enables a company to marketize its products, services, and brand identity to it's customers.
The Gluten Free Bars (GFB) are the vegan bars created by Marshall and Elliot Rader (brothers). The brothers created the GFB in 2010, and heralded the gluten-free industry.
To marketize their products, they used the element of marketing channels. They first reached to their possible customers by shopping their products to independent coffee shops, then to grocery and natural food stores. They used the channels of independent coffee shops, grocery and natural food stores to marketize their products and services to their possible customers.
Thus the correct answer is that they used marketing channels aspect of marketing.
How much cash does the firm actually have? You are the CFO of ABC Corp. You are looking to hire a financial analyst, and you've given an assignment to two short-listed candidates. You've given the following information to the job applicants: The company reported net sales of $5, 625 million. Assume that there were no noncash sales. Operating costs (excluding depreciation and amortization) were 65% of the company's total revenues. Depreciation and amortization charges were 5% of total sales. Interest charges were 15% of earnings before interest and taxes (EBIT) with a tax rate of 40%. You've asked the candidates to give you a number that best represents the cash flow situation of the company. Jake submits a report stating that the firm has $861 million in cash. Kurt submits a report stating that the firm has $1, 142 million in cash available Based on the information given to them, which applicant has provided a better estimate of the company's current cash flows? Kurt Jake
Answer:
Kurt
Explanation:
The computation of the cash available is shown below;
But before that first we have to determine the net income which is shown below:
Net sale $5,625
Less:
Operating cost -$3,656.25 ($5,625 × 65%)
Depreciation -$281.25 ($5,625 × 5%)
EBIT $1,687.5
Less
interest -$253.125 ($1,687.50 × 15%)
Profit before tax $1434.375
Less:
Tax -$573.75 ($1,434.375 × 40%)
Net income $860.625
Add: depreciation $281.25
Cash $1,141.875
Hence, the Kurt provide a better estimation for the current cash flows