...FORMULAS CHAPTERS 12, 14, 15 AND 16. CH 12 BREAK EVEN ANALYSIS Sales price EBIT = 0 = units X per unit Break-even level of units variable cost - units X sold per unit total fixed + sold cost total fixed cost = sales price variable cost per unit − per unit Total fixed cost S* = F/ [1 – (VC / S)] Break-even level of revenues = variable cost 1revenues Degree of operating leverage DOLs = Q (P – V) / [Q (P – V) – F] DOLs = revenue before fixed cost / EBIT = S – VC / [S - VC – F] Degree of financial leverage DFLEBIT = EBIT / (EBIT - I) Degree of combined leverage DCLS = (DOLS) X (DFLEBIT) EBIT – EPS indifference point: EPS: Stock plan (EBIT – I)(1 – t) – P / Ss = EPS: Bond plan (EBIT – I)(1 – t) – P / Sb EBIT = [Ib – Is (Sb / Ss ] / [ 1 - (Sb / Ss) ] 14 SHORT-TERM FINANCIAL PLANNING CURRENT ASSETS AS A PERCENTAGE OF SALES = Current assets / sales Projected current assets = projected sales X (current assets / sales) Projected addition net income cash dividends X 1 − = projected sales X to retained earnings sales net income Discretionary financing = projected total assets – projected liabilities – projected owner’s equity needed (DFN) predicted change predicted change − DFN = in total assets predicted change − in spontaneous liabilities in retained earnings External financing needs (EFN) EFN = predicted change in total assets – change in retained earnings ...
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...company is profitable can be somewhat overwhelming at first, but by applying the principals of total revenue, total cost, marginal revenue, and marginal costs the process of determining profitability is simplified greatly. In order to understand how the principles of economics affect the profitability of a company it is important to understand what each principal is. The first principle, total revenue can be summarized as, the price of a unit sold multiplied by the number of units sold. For example if the price per unit sold is $10 and the firm sells 10 units, the total revenue is $100. The next principle, total cost, is defined by McConnell, Brue, and Flynn (2012) as, “the sum of fixed costs and variable costs” (p. 35). Fixed costs are items that do not change when output is changed and can include items such as real estate, utilities, loan payments, and government fees. Variable costs on the other hand are the opposite of fixed cost and include the costs associated with an increase in output (McConnell, Brue, Flynn, 2012, p. 148). Examples of variable costs could include items such as materials, production supplies, and direct labor. Using total revenue to total cost profitability can be calculated by subtracting the total costs from the total revenue. In the case of Company A the total revenue to total cost would look like table 1 below. Table 1 Company A Total Revenue to Total Cost Units TR TC Total Revenue to Total Cost 0 $0.00 $10.00 -$10.00 1 $150.00 $30.00...
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...financial transactions both coming in and going out. As an accountant you are providing crucial information that could potentially decide whether or not a company should invest or sell out. There are a few basic assumptions of what accountants in general have to pay attention to those are economic entity, time period, monetary unit and going concern. Economic entity is when the financial activities of a business can be separated from the owners. This means that the business and personal accounts are separate that there is no need to be concerned whether or not the business money is being used for personal gain or use. Time period is when the business and owners do not want to wait for reports they wants to be able to monitor the company periodically so they can see if the business is succeeding or failing. This can be done monthly or quarterly. The most common of the time periods are the quarterly and yearly reports. The monetary unit means that in general the dollar is the most effective means of reporting economic data it goes in respect for the value of a dollar. As the dollar never changes even though there is constant inflation and deflation of the monetary value of the dollar the unit stays the same. The going concern means that it’s assuming that the company will still be operating in the future and the accountants are to use certain techniques in which the accountants act accordingly whether its liquidation or growth. Accounting has a specific process that has many...
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...Research Proposal: A CRITICAL ANALYSIS ON THE IMPLICATIONS AND EFFECTS OF CORRUPTION IN THE SOUTH AFRICAN ECONOMY AND HOW IT CAN BE MANAGED About the writer: Tyson Thamsanqa Sibanda Rosebank College South Africa: Bachelor of Business Administration 3 (2015) Contact details; Tyson.msimanga@gmail.com 0027786500000 / 0027815993434 BACKGROUND AND ORIGIN Corruption in South Africa has been so widespread that, unless it is decisively tackled in this presidential term, there is a real danger that it will become embedded as a ‘normal’ aspect of life in our country. Once it becomes part of the ‘culture’ of our society, it will be almost unmanageable to uproot. Corruption is generally defined as the abuse of public office for private gain. It usually comes in two forms. Firstly, the alleged ‘big-time’ corruption which take place when public officials bend the rules to channel patronage to relatives, friends and associates, or accept bribes; as well when private agents bribe public officials to give them exclusive advantages or privileges. Secondly, there is the quiet corruption, which occurs when public servants purposefully neglect their duties to provide public services or goods. Quiet corruption may not involve an exchange of money, but involves providers of public services such as teachers, nurses or other government officials, twisting the rules for their own private welfares. This includes, for example, public servants, such as a minister or nurses not turning up for work when...
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...process that the resulting enterprise budget does not represent any one particular farm and must be modified by the individual producer to fit their situation. However, the resulting budget is a reasonable estimate for the area. Producers reviewing these published budgets often state that their own costs are significantly lower than those presented in the WSU budgets. Furthermore, others outside the industry may question the cost estimates and “break-even” prices stating that “since some WSU budgets show producers are operating at a loss, how do they stay in business?” To adequately address these concerns and questions, one must understand both the difference between “economic” and “cash” budgets and also how an economic budget can be used to develop a cash budget. WSU enterprise budgets are economic budgets. The budget shown in Table 1 is a published wheat budget for the 18- to 22-inch rainfall area of Columbia County, Washington. In developing this budget, it was assumed that the representative farm includes 1,500 acres with 750 acres in winter wheat, 500 acres in peas, and 250...
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...Chapter 1: MANAGERS, PROFITS, AND MARKETS Multiple Choice 1-1 Economic theory is a valuable tool for business decision making because it a. identifies for managers the essential information for making a decision. b. assumes away the problem. c. creates a realistic, complex model of the business firm. d. provides an easy solution to complex business problems. 1-2 Economic profit a. is a theoretical measure of a firm’s performance and has little value in real world decision making. b. can be calculated by subtracting implicit costs of using owner-supplied resources from the firm’s total revenue. c. is negative when costs exceed revenues. d. is generally larger than accounting profit. 1-3 Economic profit is a. the difference between total revenue and the opportunity cost of all of the resources used in production. b. the difference between total revenue and the implicit costs of using owner-supplied resources. c. the difference between accounting profit and the opportunity cost of the market-supplied resources used by the firm. d. the difference between accounting profit and explicit costs. 1-4 When economic profit is positive, a. total revenue exceeds total economic cost. b. the firm’s owners have successfully solved the principle-agent problem. c. the firm’s owners experience an increase in their wealth. d. both a...
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...Economics I Chapter 1: Economics for business ‘David Begg and Damian Ward – Economics for business’ 1.1 What is economics? Economics how individuals, firms, governments and economies deal with the problem of infinite wants and finite resources, it is the study of how the society resolve the problems of scarcity. Microeconomics: addresses the various market influences that impact upon a firm’s revenues and costs. Macroeconomics: addresses the economy-level issues which similarly affect a firm’s revenues and costs. Infinite wants: limitless desires to consume goods and services (big house, luxury car, designer shoes). Finite resources: limited amount of resources that enable the production and purchase of goods and services (salary, consulting fees, royalties from book, generous friends). Factors of productions: are resources needed to make goods and services: land (oil, gas, base metals), labour (China/India or Europe), capital (machinery, computers, office spare, retail shops) and enterprise (brings land, labour and capital together and organize them into business units that produce goods and services with the objective of making a profit, like shareholders). Production possibility frontier it shows the maximum number of products that can be produced by an economy with a given amount of resources. This illustrative tool can be used to highlight crucial economic concepts: Finite resources with a fixed quantity of resources an infinite amount of beer, or pizzas, cannot be...
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...UNIT 24: BREWING SCIENCE Get assignment help for this unit at assignmenthelpuk@yahoo.com LO1 Understand fermentation systems Microbial groupings: microbial range and form Unicellular fungi: importance to the fermentation process especially Saccharomyces species History of fermentation advances: metabolic pathways of respiration; dynamics of anaerobic respiration/fermentation; methods of controlling fermentation (top and bottom); principal steps in the brewing process LO2 Understand the biochemistry of malting, mashing and conversions in the copper Barley physiology: choice of cereal; biochemical changes affected by the malting process Wort composition: biochemical/biophysical conversions Malting process: the enhancement of diastatic power; control of N2-content; development of colour Mashing process: the ionic balance of the liquor (Burtonization); factors affecting extraction and enzymatic conversion in the grist; importance of temperature and time controls; monitoring ‘run-off’ from the mash tun for turbidity and specific gravity Hop variety: varieties of hops available (including brief histories and geographical location); characteristic properties of each variety; hop additions to brews (biochemistry of action); hop quality (appearance, feel and aroma) Hop biochemistry: the ratio of α and β-acids; oxidative conversions to humulones and hulupones; the effect of seed content on hop property and the principle contributors to aroma The copper: inactivation of enzymes; precipitation...
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...|[pic] |Ministry of Economic Development, Trade and |Southwestern Ontario Development Fund | | |Employment |Business Stream Application | |Please read the Applicant Guide to the Southwestern Ontario Development Fund (SWODF) |Submit application and attachments via: | |Business Stream before completing this application. |Email : swodf@ontario.ca | |Visit our website or call the SWODF office at 1-800-265-4743. |OR mail: Southwestern Ontario Development Fund | |SWODF staff and OPS regional economic development staff are available to answer your |Ministry of Economic Development, Trade and | |questions. The staff contact list can be found on our website. |Employment | | |Exeter Road Complex, Lower Level | | |659 Exeter Rd. London ON N6E 1L3 ...
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... X ] c(1 t )Y 2 Recap Week 6: Short Run Equilibrium Equilibrium condition Y PAE Y [C cT I G X ] c(1 t )Y P Solve for equilibrium GDP Y [1 c(1 t )] [C cT I P G X ] Ye 1 [C cT I P G X ] [1 c(1 t )] 3 Recap Week 6: Keynesian model – recessionary gap . PAE (planned aggregate expenditure) PAE = Cd + IP + G + X 0 IP+ G + X IP + G IP Y* Y (= GDP) Starting at potential output (Y*), a fall in exogenous C, I, G, NX will lead to a recessionary gap 4 Recap Week 6: If we assume that the planned aggregate expenditure is given by the equation PAE = 960 + 0.8Y a 10-unit drop in exogenous expenditure would result in a _____________ in short-run equilibrium output. A. 50-unit decline B. 40-unit decline C. 950-unit decline D. 4-unit decline 5 Recap Week 6: Keynesian model – recessionary gap . PAE (planned aggregate expenditure) PAE = C + IP + G + NX 0 Ye Y* I P + G + NX IP + G IP Y (= GDP) Recessionary gap 6 Recap Week 6: Keynesian model – expansionary gap . PAE (planned aggregate expenditure) PAE = C + IP + G + NX I P + G + NX IP + G 0 IP Y* Ye Expansionary gap Y (= GDP) 7 Recap Week 6: Multipliers The government expenditure multiplier is greater than the tax/transfers multiplier Withdrawals – higher income taxes and imports – reduce the impact of the multipliers 8 Recap Week 6: The short-run effect...
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...ELECTRIC SUPPLY COMPANY LIMITED APRIL 2012 The Pakistan Credit Rating Agency Limited STRUCTURED FINANCE KARACHI ELECTRIC SUPPLY COMPANY LIMITED REPORT CONTENTS Summary Report Detailed Report: PAGE 1 2 2 4 7 Rating Profile Instrument Structure Assessment ANNEXURES BoD Profile Standard Rating Scale I II April 2012 www.pacra.com STRUCTURED FINANCE The Pakistan Credit Rating Agency Limited RATINGS (APRIL 2012) KARACHI ELECTRIC SUPPLY COMPANY LIMITED [KESC] RATING RATIONALE & KEY DRIVERS SECURED, RATED, LISTED TFC (I) OF PKR 300MLN TFC (II) OF PKR 1,200MLN TFC (III) OF PKR 500MLN PRELIMINARY AA AA AA TFC (I) Tenor Issue size (PKR mln) Greenshoe option Profit Rate Profit payment Principal repayment TFC (II) TFC (III) 13 months 36 months 60 months 300 13.00% Monthly Bullet 1,200 700 14.75% Quarterly Bullet 500 300 15.50% Quarterly Bullet ANALYSTS Samiya Mukhtar +92 42 35869504 samiya@pacra.com Rana Muhammad Nadeem +92 42 35869504 nadeem@pacra.com The rating primarily draws its strength from the security structure of the instrument. This includes, inter alia, first parri passu charge with 1.2x minimum throughput of receivables from specific 250 corporate consumers and first pari passu charge with 1.2x minimum throughput of excess proceeds (after meeting certain pre-agreed financial obligations) entitled to KESC relating to consumer bills collections of 495 specific entities. The amounts so received would...
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...Financial statement analysis involves the examination of the relationships among financial statement numbers and the trends in those numbers over time. Relationships between financial statement amounts are financial ratios. A ratio is to standardize the measures on financial statements to enable comparison across time and companies of different sizes. Types of financial ratios: 1. Liquidity Ratios – the ability to meet the current period obligation, measures the ability to repay debt in the short run. Rule of thumb: the current ratio should be at least 2:1 (current ratio = current assets/ current liabilities, quick ratio = current assets – inventory/current liabilities, cash ratio = cash/current liabilities) 2. Profitability Ratios – return on sales shows the profit percentage for each dollar of sales, some income measures + some balance sheet accounts (return on sales = net income/sales) return on equity is the overall measure of performance of a company. Rule of thumb is that good companies generally have a return on equity between 15 and 25 percent (return on equity = net income/stockholders’ equity) 3. Activity (Efficiency) Ratios – to evaluate the efficiency and effectiveness in managing some business resource, some income statement accounts + some balance sheet accounts, the higher the turnover ratio, the more efficient the company is at using its assets to generate sales (asset turnover = sales/total assets, inventory turnover = COGS/avg. inventory – shows how many...
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...Employee or Independent Contractor? Responsible for Knowing Content of Links Highlighted in Yellow Key Issues 1. Why is the definition of “employee” so important? 2. How does an employer distinguish between an employee and an independent contractor? 3. Which key agencies have suggested criteria for determining if a worker is an employee or an independent contractor? 4. What is the most important factor in determining a worker’s classification? 5. What are the consequences of misclassifying an employee? 6. Various federal and state agencies have established standards for determining worker status. Below are there of the more important: a. IRS common law criteria b. Darden Factors c. FLSA criteria 7. How do the standards above overlap? 8. [pic]Cases Classifications of Workers – there are two general categories of workers: independent contractor or employee. Independent Contractor: (read to Section Form SS-8) Definitions vary based on specific regulations or laws. However, in general, the “payer” has the right to control or direct only the result of the work done by an independent contractor, not the means and methods of accomplishing the result. Misclassification is common and the consequences can be significant for an organization (payer). In most cases, a worker’s status is obvious, but can be complicated. Other Worker Terms Contingent or Temporary Workers: Worker’s job with an employer...
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...principals. The principals, on the other hand, may wish that a particular vendor be selected, so they reject the selection offered by the cooperative. Not only the actions or inactions of both the agent and principal influence the outcome, but also there are random factors, beyond the control of either the principal or the agent (which influence the outcome). Moreover, there are costs borne by the agent in performing the action, and by the principal in providing compensation in addition to the costs of monitoring the behavior of the agent. As such, these tools of agency theory are an appropriate lens by which to model Cooperative Public Purchasing (CPP) for at least three reasons. First, the nomenclature developed here can apply to both public...
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...Time value of money :A time value of money calculation is one which solves for one of several variables in a financial problem. In a typical case, the variables might be: a balance (the real or nominal value of a debt or a financial asset in terms of monetary units); a periodic rate of interest; the number of periods; and a series of cash flows (in the case of a debt, these are payments against principal and interest; in the case of a financial asset, these are contributions to or withdrawals from the balance). More generally, the cash flows may not be periodic but may be specified individually. Any of the variables may be the independent variable (the sought-for answer) in a given problem. For example, one may know that: the interest is 0.5% per period (per month, say); the number of periods is 60 (months); the initial balance (of the debt, in this case) is 25,000 units; and the final balance is 0 units. The unknown variable may be the monthly payment that the borrower will need to pay. http://en.wikipedia.org/wiki/Time_value_of_money Efficient market: In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". In consequence of this, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made. http://en.wikipedia.org/wiki/Efficient-market_hypothesis Primary versus secondary market: Primary vs. secondary market...
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