Vicks Inc. Produced and sold 240,000 bags of organic fertilizer as follows: Sales revenue P1,896,000 Fixed costs: Manufacturing margin 1,092,000 Manufacturing P520,000 Contribution Margin 912,000 Selling & administrative 270,000

Vicks Inc. Produced and sold 240,000 bags of organic fertilizer as follows: Sales revenue P1,896,000 Fixed costs: Manufacturing margin 1,092,000 Manufacturing P520,000 Contribution Margin 912,000 Selling & administrative 270,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Compare current performance of firms to its past performance is called cross-sectional. Select one:…

A: The financial statements of the business are analyzed using various financial ratios.

Q: Question # 6 The total risk of a firm is determined by the combined effect of operating and…

A: Operating Leverage: It measures the degree to which a firm or project can increase operating income…

Q: 3. How does operating leverage impact the operating risk and profit levels of a company?

A: Operating leverage measures the percentage increase in operating income which is a result of change…

Q: A company that reached operating breakeven was able to cover: a) the cost of equity b) the costs…

A: In case of a company which has reached its operating break even point it able to recover the…

Q: Which statement is least indicates the benefit of leverage ratio O a. The ability to borrow money O…

A: This statement actually indicates a potential benefit of leverage. A higher leverage ratio can…

Q: a. What is meant by a company's cost of capital? b. Why is the company's cost of capital critical…

A: Company needs fund to purchase the assets and for operations. Companies finance with Debt and…

Q: The objectives of financial management are Select one: O a. None of the options O b. Profit…

A: Financial or money management is done to maximize wealth in long term and profit in short term…

Q: Evaluate the effect of gearing on cost of capital and firm value taking into consideration the…

A: The term “gearing” can be defined as the tool to gauge company’s financial leverage by emphasizing…

Q: operating

A: Operating leverage is a leverage which helps us to know the cost structure of a company & also…

Q: Looking at a Dupont Financial Template, how do I tell what strategy the company used (low-cost, Blue…

A: DuPont Analysis is used to evaluate the component parts of a company's return on equity (ROE):…

Q: Financial leverage is always beneficial to a company. Yes /No

A: In a scenario when a firm borrows funds or procures debt to help improve its performance and…

Q: The higher the _____________, the higher the financial risk, and the higher the ____________. a.…

A: Interest rates and price of bonds has reverse relationship. With increase in interest rates, the…

Q: The ability of a company to meet its long-term obligations is termed: A) Profitability B) Solvency…

A: As we basically know that ,there are different types of companies are formed, some of them are ,…

Q: What is critical information to review when assessing a company's overall leverage position

A: Financial leverage refers to a company's ability to repay its obligations in order to continue…

Q: Can you please give some examples of firms whereby a positive relationship exists between operating…

A: Leverage: The term leverage, in general, refers to a relationship between two interrelated…

Q: What does it mean if the companies operating leverage is higher or lower than another company!

A: Operating leverage is used to determine the efficiency of the firm to utilize fixed operating…

Q: If a firm is using financial leverage successfully, the ROE should be a. higher than the profit…

A: Answer is option b) Higher than ROA Financial leverage = Earnings Before Interest and Taxes /…

Q: Is it true or false that for a given profit margin and turnover ratio, a greater leverage ratio will…

A: According to DUPONT Analysis, ROE is the function of three ratio. ROE=net profit margin×asset…

Q: Which of the following is Return on equity. O Economic value. O Market capitalization. O Firm…

A: There are many tools to measure the performance and compare with other firms and that will help in…

Q: how to assess a company's success in using leverage to increase returns?

A: Leverage refers to the risk involved and the borrowed capital that is used to undertake a project…

Q: Required: 1. Calculate the 9 financial ratios listed below for Lewis and Ramsey 2. Indicate which…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: starting a business, is it okay to start with having debt during the early stages? What dictates the

A: Answer A company needs a financial capital to operate its business. For that many companies,…

Q: How can an unlevered firm uptain financial leverage

A: Unlevered firm is a firm with no debt in its capital structure. It does not have any financial…

Q: ccording to Miller and Modigliani, it is at really determines a firm's value.

A: According to M&M, value of firm is the sum of present value of all future cash flows.

Q: What will happen if a company has a higher P/E ratio? Please answer this thoroughly.

A: P/E ratio is price to earnings ratio. Formula for P/E ratio=Market value per shareEarnings per…

Q: Indicate the correct statements: The solvency margin of a company is represented by the capital…

A: Solvency margin is the difference between assets and liabilities i.e., the excess of assets over…

Q: The degree of operating leverage (DOL) is interpreted as the ratio of the percentage change in net…

Q: 3. How large is the gap between Beta(Asset) and Beta(Leverage)? What is the impact of their…

A: Beta is a metric used by shareholders to correlate the uncertainty of a securities or portfolio to…

Q: company's Degree of Financial Leverage (DFL) is primarily influenced by decisions about:…

A: Financial leverage indicates how business is depending on its debt.

Q: The price/earnings ratio is commonly used by investors to OA. evaluate their ability to earn a…

A: The investor uses multiple financial ratios to evaluate the company and its performance. These…

Q: Can a firm maximize its profit if it is only managed to meet shareholders' interests? (Own words…

A: The shareholders of the company measn the people that purchase the shares of the company. There are…

Q: Explain what the companies should do with their profits, conditional to the availability or absence…

A: Profit is the remaining sales after the company has recorded all expenses and is also called income.…

Q: Does the successful investment decision increase a company's market value?

A: Meaning of Market Value of a Company The value of a company in connection with the financial markets…

Q: Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The…

A: We have formula,Degree of operating leverage(DOL) = % change in operating income/% change in sales

Q: What leverage and the various debt ratios are used by an organization? What are the benefits and…

A: Leverage refers to the company's borrowed capital (debt) for various purposes such as new projects,…

Q: Briefly describe happens to the cost of equity as leverage increases in a firm.

A: Financial leverage is a condition wherein a company raises funds through the issue of additional…

Question

Required:

1. The company's margin of safety in unite is closest to?
2. The company's degree of operating leverage is closest to?

Vicks Inc. Produced and sold 240,000 bags of organic fertilizer as follows:
Sales revenue
P1,896,000
Fixed costs:
Manufacturing margin
1,092,000 Manufacturing
P520,000
Contribution Margin
912,000
Selling & administrative
270,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How does the Triple Bottom Line (TBL) reflect the holistic performance of a company?
want answer for this question
Everything else equal, an industry with more leverage will have a: higher return on assets. higher return on equity. lower return on equity. Both A & B
1. Leverage involves using fixed costs to magnify the potential return to a firm. Explain the hedging (maturity matching) approach to financing 2. Illustrate the relationship between profitability, liquidity, and risk in the management of working capital.
Sargassum Caribbean Incorporated Balance Sheet as at December 31, 2020 Assets Liabilities Current Assets: Current Liabilities: Cash Accounts Payable 600,000 300,000 200,000 400,000 Notes Payable 900,000 1,500,000 Total Current Liabilities Accounts Receivable Inventory Total Current Assets 900,000 Fixed Assets: Long-Term Liabilities: Property, Plant & Equipment Less: Accumulated Depreciation 1,200,000 Long-Term Debt 1,000,000 Total Long Term Liabilities 200,000 300,000 300,000 Net Fixed Assets Owners' Equity: Common Stock ($1 Par) Capital Surplus Retained Earnings Total Owners' Equity 100,000 300,000 100,000 500,000 1,700,000 Total Liabilities & Owners' Equity Total Assets 1,700,000 Sargassum Caribbean Incorporated Income Statement for Year Ending December 31, 2020 Sales Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and 2,500,000 800,000 100,000 104,000 1,496,000 Тахes Less: Interest Expense Taxable Income 20.000 1,476,000 663,000…
The primary goal of financial management is Select one: a. Increasing the owners wealth b. Reducing risk c. None of these d. Increasing profit
If youre a financial managers, what do you think is the importance of a proper capital structure.? What is Degree of Operating Leverage and its importance.
which ratio can be easily identifiable to maximize the value of a firm
a) Define financial leverage.b) What is the effect on earnings?c) When is the use of financial leverage advantageous and disadvantageous?
(3) Which size of firm, large or small, is moreprone to business failure? Why?
Which of the following statements are true about the interest-burden ratio? Check all that apply: It can be expressed as EBIT/Interest Expense. If the company has no financial leverage, the interest-burden ratio will be equal to 0. A company with higher financial leverage will have a lower interest-burden ratio. If the company has no financial leverage, the interest-burden ratio will be equal to 1. It can be expressed as Net profits/Pretax profits.
Indicator operational leverage is defined as a. A ratio of variable costs over total costs of respective business entity b. A ration of total costs over fixed costs of respective business entity c. A ratio of fixed costs over total costs of respective business entity d. A percentage amount of total costs that are employed for the operational act