Finance rocks had decided to reduce its fixed costs by seller some of its manufacturing facilities and assigning the production of certain parts to a group of predecessors suppliers, by doing so the company is trying to adjusts its operating leverage, financial leverage or tax burden?
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- When a Dupont analysis reveals that a company has much higher than average asset turnover and much lower than average profit margin, what can be concluded about the companys strategy? a. It is a product differentiator. c. It has no strategy. b. It needs to concentrate on improve- d. It is a low-cost provider ing its profit margins.Technology firms, pharmaceutical firms, oil and gas companies, and other ventures inevitably incur costs on unsuccessful investments in new projects (e.g., new technologies or new drugs). For oil and gas firms, a debate continues over whether those costs should be written off as a period expense or capitalized as part of the full cost of finding profitable oil and gas ventures. However, GAAP in the United States is clear that R&D costs are to be expensed when incurred. Luther Technologies, an automotive supplier, has been writing R&D costs off to expense as incurred for both financial reporting and internal performance measurement. However, this year a new management team was hired to improve the profit of Luther's Self-Driving Division. The new management team was hired with the provision that it would receive a bonus equal to 12.5 percent of any profits in excess of base-year profits of the division. However, no bonus would be paid if profits were less than 15 percent of…Is this statement true or false? and the explanation to why? An investment in machinery for an assemble-to-order production strategy is best financed by an investment from equity. Can you also explain when a company uses the investment from the equity in comparison to a loan for example or the use of the company's own assets? like how do they decide which method of investment is appropriate to use for something?
- What are some examples of fixed costs and variable costs for sony corporation? Some examples include the cost of sales, interest expenses, foreign exchange loss, and more.JJ King Ltd is a building contractor with a varying workload. In order to compensate for the irregularity of its contracted building projects, JJ King also purchases large vacant blocks of land that it later subdivides for the construction of houses and units. JJ King then sells these on its own account. Your analysis strongly suggests that the apportionment of costs to houses and units sold has been kept low to boost profits. In your opinion, this has resulted in the overvaluation of the unsold properties. The directors of the company do not agree and hold to their view that the stock of properties is correctly valuedA paper published in the Harvard Business Review points out a new way to calculate economic profit that could be more appropriate for service firms and other people-intensive companies. Instead of focusing on investment and return on investment, the focus is on employee productivity, in terms of both generating revenues and reducing costs. The approach is to first determine economic profit in the conventional way, except that we ignore taxes, so that economic profit is before tax, as follows: Economic profit = Operating profit − Capital charge Assume the following information for a hotel chain that wishes to adopt the new method. The firm has $100 million in operating profit, has $1 billion in investment, and uses a cost of capital rate of 5%, so the capital charge is $50 million and the economic profit is $50 million. Relevant calculations are contained in Part 1 of the following schedule: Part 1: Economic Profit (in thousands, except cost of capital rate) Revenue $…
- Which of the following statements is most accurate? A. Financial leverage is directly related to operating leverage. B. Increasing the corporate tax rate will not affect capital structure decisions. C. A firm with low operating leverage has a small proportion of its total costs in fixed costs. D. Total costs can be calculated as net income minus total revenue.A paper published in the Harvard Business Review points out a new way to calculate economic profit that could be more appropriate for service firms and other people-intensive companies. Instead of focusing on investment and return on investment, the focus is on employee productivity, both in terms of generating revenues and reducing costs. The approach is to first determine economic profit in the conventional way, except that we ignore taxes, so that economic profit is before tax, as follows: Economic profit = Operating profit − Capital charge Assume the following information for a hotel chain that wishes to adopt the new method. The firm has $100 million in operating profit, has $1 billion in investment, and uses a cost of capital rate of 5%, so the capital charge is $50 million and the economic profit is $50 million. Relevant calculations are contained in Part 1 of the following schedule: Part 1: Economic Profit (in thousands, except cost of capital rate)…Hong Publishing has purchased Lang Publishing. After reviewing titles from both companies, a decision must be made to determine what titles must be dropped. The following information is available to make the decision. A. What Is the total income if all titles were produced? B. If Title X was dropped, what would be the effect on Net Income? C. How much did Title X Contribute to Fixed Costs? D. Determine the cost and the amount that will remain even it Title X is dropped? E. Which costs and amount will be eliminated if Title X is dropped?
- A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?The high-low method and least-squares regression are used by managers to _____________________. A. decide whether to make or buy a component part B. minimize corporate tax liability C. maximize output D. estimate costsMariana Manufacturing and Bellow Brothers compete in the same industry and in all respects their products are virtually identical. However, most of Marianas costs are fixed while Bellows costs are primarily variable. If sales increase for both companies, which will realize the greatest increase in profits? Why?
