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- Problem 7 (Basic Earning Power) Oriental Manufacturing recently reported the following information: Net income is P600,000, ROA is 8%, and Interest expense is P225,000. Oriental Manufacturing tax rate is 35 %. What is its basic earnings power (BEP) ratio?vi) If cost of goods sold increases 20%, fixed selling expense decreases RM10,000 and selling price decreases 10%, calculate the profit/loss for DSRSB. (CLO3, C4) vii) Calculate the additional sales volume required to meet RM 10,500 additional administrative expenses to maintain the original profit. (CLO3, C4)Question 56: When using Solver, only one variable can be adjusted. Answer: A. TrueB. False Question 57: What is the net income value at the breakeven point? Answer: A. Maximum possible amount, given sales level B. Minimum possible amount, given sales level C. $0 D. $100,000
- 1 2 3 4 Revenues 500 515 536 402 COGS 300 306 314 262 Gross Profit 200 209 222 140 SG&A 70 72 74 74 Depreciation 30 30 30 30 Operating Income 100 107 118 36 EBITDA 130 137 148 66 Debt 300 300 In year 1, $100 of COGS were fixed. 2. Now assume the largest risk to this customer is rising costs that cannot be passed along to the customers. Specifically, assume that the variable component of COGS rises in price by 30% in year 4. Project revenue, COGS and EBITDA in year 4. Calculate Debt/EBITDA and interest coverage in year 4.9. Assuming the management chooses the first option, which amount the product lines will be eliminated?a. La-Lisab. Jenniec. Jisood. Rose_____ 10. Assuming the management chooses to discontinue the unprofitable product line, what is the net impact to the Company’s overall profit?a. P 7,000b. P 17,000c. P 13,000d. P 23,000Problem 11-11 (Algo) Review problem—understanding liquidity measures LO 1 Assume that the current ratio for Arch Company is 2.5, its acid-test ratio is 1.5, and its working capital is $390,000. Answer each of the following questions independently,always referring to the original information.Required: How much does the firm have in current liabilities? (Do not round intermediate calculations.) If the only current assets shown on the balance sheet for Arch Company are Cash, Accounts Receivable, and Merchandise Inventory, how much does the firm have in Merchandise Inventory? (Do not round intermediate calculations.) If the firm collects an account receivable of $117,000, what will its new current ratio and working capital be? (Round "Current ratio" to 1 decimal place.) If the firm pays an account payable of $53,000, what will its new current ratio and working capital be? (Do not round intermediate calculations. Round "Current ratio" to 1 decimal place.) If the firm sells inventory that…
- Q.9 KARA Corporation's CFO uses this equation, which was developed by regressing inventories on sales over the past 5 years, to forecast inventory requirements: Inventories = P22.0 + 0.125(Sales). The company expects sales of P300 million during the current year, and it expects sales to grow by 25% next year. What is the inventory forecast for next year?Some doubts about calculations: 1) Profit or Loss (P&L) at the end of period without inflation would be: $150,000 - $68,000 - $50,000 - $30,000 = $2,000 (benefit) 2) With inflation adjustment, my opinion is no considered adjustments on assets and liabilites, just capital could be adjustment with 10%; so: $150,000 - $68,000 - $55,000 - $30,000 (at the end of period) = Loss of $(3,000) I think ASSETS AND LIABILITIES are closing at the end of period, so don't be adjustment by inflation rate Please confirm. ThanksP4.5 (LO 2, 3, 4, 5) (Unusual or Infrequent Items) Presented below is a combined single-step income and retained earnings statement for Nerwin Company for 2020. (000 omitted) Net sales revenue $640,000 Costs and expenses Cost of goods sold $500,000 Selling, general, and administrative expenses 66,000 Other, net 17,000 583,000 Income before income tax 57,000 Income tax 19,400 Net income 37,600 Retained earnings at beginning of period, as previously reported 141,000 Adjustment required for correction of error (7,000) Retained earnings at beginning of period, as restated 134,000 Dividends on common stock (12,200) Retained earnings at end of period $159,400 Additional facts are as follows. 1. “Selling, general, and administrative expenses” for 2020 included a charge of $8,500,000…