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In November 2007, for example, General Motors (GM) announced that it would take a write-off of about $39 billion, meaning that it was reducing net income for the third quarter of the year by that amount. Discuss why General Motors’ stockholders probably didn’t suffer as a result of the reported loss. What do you think was the basis for our conclusion?
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- e) The recession in the economy in 2021 is expected to result in a reduction of the number of units sold.Assuming that Greek is operating at normal capacity, by how much can sales decline in units and salesdollars in 2021 without the company making a loss?f) The President of Greek Manufacturing is under pressure from shareholders to increase operatingincome by 30% in 2021. Management expects per unit data and total fixed costs to remain the same in2021. Using the equation method, compute the number of units that would have to be sold in 2021 toreach the shareholders desired profit level. Is this a realistic goal?g) Greek’s management team is concerned about the selling expenses associated with the product andwants to reduce the variable selling expense per unit by 30%, which will see a simultaneous reduction inthe total fixed selling expenses by $30,000. If they are able to accomplish this feat, it is expected thatsales volume for the year will fall by 16⅔% below normal capacity. What…Last month, Central Virginia Power Company, which had been having trouble with cost overruns on a nuclear power plant that it had been building, announced that it was “temporarily suspending payments due to the cash flow crunch associated with its investment program.” The company’s stock price dropped from $28.50 to $25 when this announcement was made. How would you interpret this change in the stock price (that is, what would you say caused it)? Write a detailed responseGreek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business eamed Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit.. Production Costs: Direct Materials Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead.. Fixed Selling & Administrative Expenses.. Variable selling expense per unit $50.00 $10.00 $8.00 $7.00 $450,000 $300,000 $10.00 Required:
- IBM reported a 3 percent increase in income for its first quarter of 2000, beating analysts' estimates. But it also reported a decline in revenue. Its stock price dropped in response to the report. What explanation would you give for the drop in stock price on an earnings increase? What is your prediction of the change in IBM's asset turnover over the quarter? Kindly answer the question with introduction and conclusion based on the concept of the question. Explain the answer properly considering the accounting aspect of it.2. Does the company have enough cash and liquidity to survive an economic slowdown? Enhance the answer with a clear conclusion Ans. The financials of WeWork doesn't seem to be much profitable, we can assume that is because of the pandemic. In the year 2022, the revenue of the first quarter was $765 million which is an increase of 6-7% in a quarter. Net loss was $504 million. Because of the increase in interest rates, it is hard for WeWork to get more loans to finish off its debt and the investors are not much interested as they can interpret the future outcomes by looking at the current balances of the company. The revenue in the third quarter was $817 million which is an increase of 24% year-over-year. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million. As the cash and liquidity of WeWork…The Board of Directors were worried over the dwindling financial performance and precarious financial position of the Company. The company products were ageing; the economic depression biting harder as a result of the fluctuating exchange rate due to Brexit. The Company imports 60% of the goods sold in Garden City. The fluctuating exchange rate had affected the company’s importation. Consequently, the revenue of the Company dropped significantly. You are required to: A) Calculate the following ratios for the year ended September 30, 2015 and 2016 in Columnar form: i)Return on Capital employed ii) Total assets turnover iii)Quick Ratio iv) Debt Equity Ratio v)Fixed interest cover vi)Earnings Yeld vii) Price Earnings Ratio Viii) Dividend Yield
- The Board of Directors were worried over the dwindling financial performance and precarious financial position of the Company. The company products were ageing; the economic depression biting harder as a result of the fluctuating exchange rate due to Brexit. The Company imports 60% of the goods sold in Garden City. The fluctuating exchange rate had affected the company’s importation. Consequently, the revenue of the Company dropped significantly. You are required to: A) Calculate the following ratios for the year ended September 30, 2015 and 2016 in Columnar form: iv) Debt Equity Ratio v)Fixed Interest cover vi)Earnings Yield vii) Price Earnings Ratio Viii) Dividend YieldData on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365 day year. Do not round yourData on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365-day year. Do not round your intermediate calculations. Sales $103, 000 Accounts receivable $16,000 Days Sales Outstanding (DSO) 56.699 Benchmarks' Days Sales Outstanding (DSO) 19.000 a. $9,805 b. $11,471 c. $10, 638 d. $4,529The following information pertains to Striker Corporation, together with its DSO of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO/ACP to the benchmarks’ average. If this were done, by how much would receivables decline? Use a 365-day year. Sales=P110,000; Accounts receivable= P16,000; Days sales outstanding (DSO/ACP)=53.09; Benchmark days sales outstanding (DSO/ACP)=20.00 *
- Last year Urbana Corp. had $197,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE?2. The ABC Company has opened 10 new stores. It has incurred a great deal of expenses associated with opening the stores, and the stores have not yet built up enough clientele to be profitable. On the other hand, the stores are operating at profit levels exceeding expectations, and there are indications that they will be very profitable in the future. It is obvious that the stock market has not yet digested this latter fact, and the stock of the company is currently depressed compared to management's appraisal of value. The company has the opportunity to acquire an additional 50 stores this year, but to do so will require new stockholder capital acquired from the market (it has borrowed all it feels it is prudent to borrow and cannot obtain more capital from its current stockholders). Without the new capital, the stockholders can expect to earn an equivalent annual return of 0.15 on the current market value of their investment (assume there is $100 million or 1 million shares of stock…Kiley Corporation had the following data for the most recent year (in millions). The new CFO believes (1) that an improved inventory management system could lower the average inventory by $4,000, (2) that improvements in the credit department could reduce receivables by $2,000, and (3) that the purchasing department could negotiate better credit terms and thereby increase accounts payable by $2,000. Furthermore, she thinks that these changes would not affect either sales or the costs of goods sold. If these changes were made, by how many days would the cash conversion cycle be lowered? Original Revised Annual sales: unchanged $110,000 $110,000 Cost of goods sold: unchanged $80,000 $80,000 Average inventory: lowered by $4,000 $20,000 $16,000 Average receivables: lowered by $2,000 $16,000 $14,000 Average payables: increased by $2,000 $10,000 $12,000 Days in year 365 365
