Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.5WUE
Learning Goal 5
E4-5 Rimier Corp.
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7-23A Compute breakeven and project income (Learning Objectives 1 & 2)Grover’s Steel Parts produces parts for the automobile industry. The company hasmonthly fixed expenses of $630,000 and a contribution margin of 70% of revenues.Requirements1. Compute Grover’s Steel Parts’ monthly breakeven sales in dollars.2. Use the contribution margin ratio to project operating income (or loss) if revenues are$520,000 and if they are $1,010,000.3. Do the results in Requirement 2 make sense given the breakeven sales you computedin Requirement 1? Explain.
he Schrödinger Science Store operates a retail store in a local shopping mall. The results of operations for the fourth quarter of 2020 are as follows:
Sales
$350,000
Less cost of sales
205,000
Gross margin
145,000
Less selling, general, and administrative expenses
50,000
Income before taxes
95,000
Less taxes on income
19,000
Net income
$ 76,000
Additional information:
Sales are expected to increase by 10 percent and cost of sales are expected to increase by 12 percent in each of the next two quarters.
75 percent of sales are collected in the quarter of sale, and 25 percent are collected in the quarter following sale.
The balance in accounts receivable at the end of 2020 relates to sales in the fourth quarter of 2020.
Inventory purchases in the fourth quarter of 2020 are $200,000.
The balance in accounts payable at the end of 2020 relates to purchases in the fourth quarter of 2020.
Inventory at the end of 2020 is $150,000. For 2021, the company plans to hold…
The Florida Division of Garner Furniture reported the following results for 2020:
Invested capital $800,000
Profit margin 5%
Return on investment 8%
Given this information, how much was sales?
Chapter 4 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 4.1 - Prob. 4.1RQCh. 4.1 - Prob. 4.2RQCh. 4.2 - Briefly describe the first four modified...Ch. 4.2 - Describe the overall cash flow through the firm in...Ch. 4.2 - Prob. 4.5RQCh. 4.2 - 4-B Why is depreciation (as well as amortization...Ch. 4.2 - Prob. 4.7RQCh. 4.2 - Prob. 4.8RQCh. 4.2 - Prob. 4.9RQCh. 4.3 - Prob. 4.10RQ
Ch. 4.3 - Prob. 4.11RQCh. 4.3 - Prob. 4.12RQCh. 4.3 - What is the cause of uncertainty in the cash...Ch. 4.4 - Prob. 4.14RQCh. 4.5 - Prob. 4.15RQCh. 4.5 - Prob. 4.16RQCh. 4.6 - Prob. 4.17RQCh. 4.6 - What is the significance of the plug figure,...Ch. 4.7 - Prob. 4.19RQCh. 4.7 - Prob. 4.20RQCh. 4 - Opener-in-Review The chapter opener described a...Ch. 4 - Learning Goals 2, 3 ST4-1 Depreciation and cash...Ch. 4 - Prob. 4.2STPCh. 4 - Prob. 4.3STPCh. 4 - Prob. 4.1WUECh. 4 - Prob. 4.2WUECh. 4 - Learning Goal 3 E4-3 Determine the operating cash...Ch. 4 - Prob. 4.4WUECh. 4 - Learning Goal 5 E4-5 Rimier Corp. forecasts sales...Ch. 4 - Prob. 4.1PCh. 4 - Learning Goal 2 P4-2 Depreciation In early 2019,...Ch. 4 - Prob. 4.3PCh. 4 - Learning Goals 2, 3 P4-4 Depreciation and...Ch. 4 - Learning Goal 3 P4-5 Classifying inflows and...Ch. 4 - Prob. 4.6PCh. 4 - Learning Goal 4 P4-8 Cash receipts A firm has...Ch. 4 - Learning Goal 4 P4-9 Cash disbursements schedule...Ch. 4 - Learning Goal 4 P4-10 Cash budget: Basic Grenoble...Ch. 4 - Prob. 4.11PCh. 4 - Learning Goal 4 P4-12 Cash budget: Advanced The...Ch. 4 - Prob. 4.13PCh. 4 - Prob. 4.14PCh. 4 - Learning Goal 4 P4-15 Multiple cash budgets:...Ch. 4 - Learning Goal 5 P4-16 Pro forma income statement...Ch. 4 - Learning Goal 5 P4-17 Pro forma income statement:...Ch. 4 - Learning Goal 5 P4-18 Pro forma balance sheet:...Ch. 4 - Learning Goal 5 P4-19 Pro forma balance sheet...Ch. 4 - Learning Goal 5 P4-20 Integrative: Pro forma...Ch. 4 - Learning Goal 5 P4-21 Integrative: Pro forma...Ch. 4 - Prob. 4.22PCh. 4 - Prob. 1SE
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- The pictures is the formula and example. Compute the additional funds needed. JHOPE "I am your hope" Company has 10% net profit margin on sales in previous years and expects to maintain the same next year. The Business is expected to increase its sales level from P1,000,000 to P1 255 000. The percentages of current sales and current liabilities that have direct relationship with sales are 60% and 35%, respectively. Out of the total earnings at are expected to be realized next year, 25% will be retumed to the shareholders in the form of dividends. Compute the following: 5. Projected increase in current assets 6. Spontaneous increase in current liabilities 7. Increase in retained earings 8. Additional fund needed.arrow_forwardThe sales and profit for two years are as below: Sales Profit 2019 50000 15000 2020 90000 35000 Calculate Margin of safety at a profit of OMR 30000: Select one: a. OMR 60000 b. OMR 52000 c. OMR 70000 d. OMR 65000arrow_forwardProblem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below: Sales 800,000 Cost of Goods Sold 560,000 Gross Margin 240,000 Less: Operating Expenses Selling Expenses 105,000 Administrative Expenses 105,000 210,000 Net Income 30,000 On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed. The contribution margin for the U Store for the first quarter of 2020 is?arrow_forward
- Problem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below: Sales 800,000 Cost of Goods Sold 560,000 Gross Margin 240,000 Less: Operating Expenses Selling Expenses 105,000 Administrative Expenses 105,000 210,000 Net Income 30,000 On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed. 4. If 25,000 books are sold during the second quarter of 2020, the company’s contribution margin would equal:arrow_forwardProblem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below: Sales 800,000 Cost of Goods Sold 560,000 Gross Margin 240,000 Less: Operating Expenses Selling Expenses 105,000 Administrative Expenses 105,000 210,000 Net Income 30,000 On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed. 3. The cost formula for operating expenses with “x” equal the number of books sold is:arrow_forwardProblem IV. The U Store, Inc. is the major supplier of books for the four area colleges. An income statement for the first quarter of 2020 is presented below: Sales 800,000 Cost of Goods Sold 560,000 Gross Margin 240,000 Less: Operating Expenses Selling Expenses 105,000 Administrative Expenses 105,000 210,000 Net Income 30,000 On average, a book sells for P40. Variable selling expenses are P3 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder is fixed. 2. The net income computed using the contribution approach for the first quarter of 2020 is:arrow_forward
- (Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units ofmerchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 duringFebruary. Further, assume the store made two large purchases during February as follows:Feb 10 10,000 units @ $3.10 = $31,00021 25,000 units @ $2.20 = $55,000Requirements1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.2. What caused the FIFO and LIFO gross profit figures to differ?arrow_forwardIn your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Last year's sales = S0 $200,000 Last year's accounts payable $50,000 Sales growth rate = g 40% Last year's notes payable $15,000 Last year's total assets = A0* $115,000 Last year's accruals $20,000 Last year's profit margin = PM 20.0% Target payout ratio 25.0% Select the correct answer. a. - $23,970 b. - $24,030 c. - $24,000 d. - $24,060 e. - $24,090arrow_forwardIn your internship with Lewis, Lee, & Taylor Inc. you have been asked to forecast the firm's additional funds needed (AFN) for next year. The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Last year's sales = S0 $200,000 Last year's accounts payable $50,000 Sales growth rate = g 40% Last year's notes payable $15,000 Last year's total assets = A0* $152,500 Last year's accruals $20,000 Last year's profit margin = PM 20.0% Target payout ratio 25.0% Select the correct answer. a. - $9,000 b. - $9,010 c. - $9,030 d. - $9,020 e. - $8,990 Icon Keyarrow_forward
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