The market believes that Crisp Cookware's stock price at the end of 3 years will be approximately $89.23.
To determine the expected stock price, we need to calculate the future dividends and the stock's expected price using the dividend discount model. The formula for the dividend discount model is as follows:
P0 = D1 / (r - g)
Where:
P0 = Current stock price
D1 = Expected dividend at the end of the first year
r = Required rate of return
g = Dividend growth rate
Given values:
D1 = $2.25
r = Risk-free rate + Beta * Market risk premium = 3.2% + 0.7 * 6% = 7.4%
P0 = $80
Now, we can rearrange the formula to solve for the growth rate (g):
g = r - D1 / P0
g = 7.4% - $2.25 / $80 = 7.4% - 2.8125% = 4.5875%
Next, we can use the growth rate to calculate the expected stock price at the end of 3 years:
P3 = D4 / (r - g)
Since the dividend is expected to grow at a constant rate, D4 can be calculated as follows:
D4 = D1 * (1 + g)^3
D4 = $2.25 * (1 + 4.5875%)^3 = $2.25 * 1.045875^3 = $2.25 * 1.144413244 = $2.59
Finally, we can calculate the expected stock price at the end of 3 years:
P3 = $2.59 / (7.4% - 4.5875%) = $2.59 / 2.8125% = $2.59 / 0.028125 = $92.363636...
Rounding the final answer to the nearest cent, the market believes the stock price will be approximately $89.23 at the end of 3 years.
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A person performs a cost-benefit analysis in order to:
A. calculate the expenses of multiple businesses competing in the
same market.
B. evaluate the possible positive and negative effects of different
economic decisions.
C. analyze economic data to reach general conclusions about a
country's economy.
D. determine the tax rates a business will pay depending on its
profits in a year.
o
Answer:
B. evaluate the possible positive and negative effects of different economic decisions.
Explanation:
Cost-benefit analysis (CBA) is used to examine and compare the cost associated with a project or task and the benefits derived from it.
Simply stated, cost-benefit analysis is a form of utilitarianism commonly used by individuals, business firms and government in the decision-making process, as all the cost incurred are determined and analyzed.
This ultimately implies that, it may be used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.
Cost-benefit analysis (CBA) sums the total cost associated with a project (activity) and compares this cost against the total benefits that would be generated. Thus, it helps in the decision-making process by comparing the net present value (NPV) of the cost of a particular project with the net present value (NPV) of its benefits.
Hence, a person performs a cost-benefit analysis in order to help him or her evaluate the possible positive and negative effects of different economic decisions with respect to an investment, project, activity, or programme.
name two methods used to measure inequality of income in a country
The most commonly used inequality measure are the Gini coefficient ( based on Lorenz curve ) and the percentile or share ratios. This measures try to capture overall dispersion of income; how were they tend to people different leavles of importantance on the bottom middle and top end of distribution .
I hope it is helpful for you .
A. arrange the steps in their proper order in determining the selling price.
. List all the ingredients.
. Make a list of operating expenses.
. Divide the total cost and the number of yield.
. Decide how much you will add to the cost of labor.
I made three to see which one's more logical. Its up to you after.
Answer:
. Make a list of operating expenses.
. List all the ingredients.
. Decide how much you will add to the cost of labor.
. Divide the total cost and the number of yield.
or
. Make a list of operating expenses.
. Decide how much you will add to the cost of labor.
. List all the ingredients.
. Divide the total cost and the number of yield.
or
. Decide how much you will add to the cost of labor.
. Make a list of operating expenses.
. List all the ingredients.
. Divide the total cost and the number of yield.
Explanation:
You really just need to understand the problem using the words in the sentences and the context of those sentences.
What do you think are the most important components of budgeting? Why?
Answer:
I would have to say figuring out ur cash flow where its going after u earn it and making sure u keep track of ur savings
Explanation:
What is advertising??
Answer:
the activity or profession of producing advertisements for commercial products or services.
Explanation:
Answer:
the activity or profession of producing advertisements for commercial products or services.
"movie audiences are receptive to advertising"
advertisements collectively.
"despite being instructed to take the signs down, he says he has no intention of removing the advertising"
Explanation:
dvertising is a means of communication with the users of a product or service. Advertisements are messages paid for by those who send them and are intended to inform or influence people who receive them, as defined by the Advertising Association of the UK.
Which of the following items are included in The Code of Professional Ethics of the American Institute of Certified Public Accountants: weigh all sides of decisions.
a. weigh all sides of decisions.
b. attending annual meetings.
c. generate innovative approaches to accounting.
d. integrity and objectivity.
Integrity and objectivity are the items are included in The Code of Professional Ethics of the American Institute of Certified Public Accountants.
What is meant by professional code of ethics?This is the term that is used to refer to the code that is used to apply to all of the people that would work in a particular organization that are meant to guide the behavior of the people in the organization and also check the ways that people would act.
Hence we can say that Integrity and objectivity are the items are included in The Code of Professional Ethics of the American Institute of Certified Public Accountants..
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With relation to a valuation practice, what are the tax implications for GST registration?
GST is a value-added tax levied on the supply of goods and services in many countries around the world. It is typically designed to be a consumption tax, meaning that it is ultimately borne by the end consumer.
For a valuation practice, if your annual turnover exceeds the threshold set by the tax authorities, you may be required to register for GST. The threshold can vary from country to country, so it's essential to consult the specific regulations in your jurisdiction.
Once registered for GST, you become a "GST-registered" business, and there are certain tax implications to consider:
Collecting GST: As a registered business, you will be required to charge and collect GST on your taxable supplies of goods and services. This means that you need to add the applicable GST rate to your invoices or receipts.Input Tax Credit (ITC): When you purchase goods or services for your business operations, you will likely pay GST on those expenses. As a GST-registered business, you can claim input tax credits for the GST paid on your business purchases. These input tax credits can be used to reduce the GST liability on your taxable supplies.GST Filing and Payment: Depending on your jurisdiction, you will have to file regular GST returns, usually monthly, quarterly, or annually. These returns require you to report the GST collected and paid during the reporting period. You may be required to make GST payments to the tax authority or receive a refund if the input tax credits exceed the GST collected.Learn more about GST:
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If Toni has an absolute advantage in both sewing and ironing when compared to Tom,thenA) they might benefit from trading, but we need more information to determine inwhich task they should specialize.B) neither Toni nor Tom can benefit from trading with each other.C) Toni should specialize in sewing and Tom should specialize in ironing.D) Toni cannot benefit from trading with Tom but Tom can benefit from tradingwith Toni.E) Tom cannot benefit from trading with Toni but Toni can benefit from tradingwith Tom.
Toni has an absolute advantage in both sewing and ironing compared to Tom, it is possible that they might benefit from trading, but more information is needed to determine in which task they should specialize.
So, the correct answer is A.
Understanding the concept of comparative advantageThe concept of comparative advantage comes into play, which means that even if Toni is better at both tasks, they can still gain from trade if they each focus on the task they are relatively better at.
By specializing in their respective tasks and trading with each other, they can potentially increase their overall productivity and efficiency, resulting in a mutually beneficial outcome.
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A new company has started to become very competitive in your geographic areas. The first step they took was to slash prices. The second was stealing some of your best sales and manufacturing personnel. As a result, they have been able to go down the learning curve a lot faster, thus increasing their overall revenue. In a meeting with some of your people, the idea is brought up that you could increase the competition's costs by tying them up through litigation and state administrative action. Some local government officials owe you favors because your company has made campaign contributions in the past. Some other sources tell you the new company has over extended themselves, meaning their debt/equity ratio is very high. They probably couldn't survive a protracted legal battle or some legislation that's been designed to negatively impact their bottom line and not yours. Many more suggestions are brought up, but the first one is the only one that has a chance of success.
You:__________.
How should you dress for a phone interview? (Site 1)
online content
Answer:
You should at least have a nice top on because only the camera will see that. If you are a girl you could just wear a dress, probably a black one because that is what I wore to my interview yesterday because there is no pattern or anything it's just a plain black one, but that was in person. if you're a guy you need to wear a suit and tie,but you could probably just wear shorts because they won't see the bottom half of you
Explanation:
I hope this helps out a little bit :-)
An interview is a formal process by which an employee is assessed for his/her performance by the employer.
For a phone interview, one should be dressed properly as the interviewer can see you through the camera.
For a girl, you should be dressed nicely and no revealing or extra shiny clothes should be wore.
In the case of a man, one should be properly dressed in suits or formal shirts.
Try to wear dark black or blue coloured clothes and sit in a properly lighted area.
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• Bank #1 • Bank name • Bank website address • Interest rate for CD, 6 months D • Interest rate for CD, 12 months . Interest rate for savings account . how do I do this?
Tickets to a fundraiser are $14 if purchased ahead of time and $25 if purchased at the door. The total amount raised from all ticket sales was $625. If eleven tickets were purchased at the door, how many tickets were purchased ahead of time?.
All of the following are true about health insurance except:
The option that's not true about health insurance is that A. People with health insurance can skip lines in emergency rooms.
What is health insurance?
It should be noted that health insurance is a contract that requires a company to pay healthcare costs in exchange for a premium.
In this case, the option that's not true about health insurance is people with health insurance can skip lines in emergency rooms.
In conclusion, the correct option is A.
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Complete question:
All of the following are true about health insurance except:
a. People with health insurance can skip lines in emergency rooms
b. Health insurance protects you financially from medical emergencies.
c. Health insurance lowers your risk of acquiring medical debt.
d. Health insurance allows some medical procedures to be covered by a low-cost co-pay.
The current industrial development is inseparable from technological advances that have entered the industrial era 4.0. On the other hand, industry is also increasingly required to be able to maintain a balance with nature or the environment. It is more commonly known the term Green Environment. With the development of industry 4.0, concern for the environment will be easier to maintain and manage. The choice of one company that you know that the company has implemented Green Supply Chain Management based on Industry 4.0 Technology.
3. Describe and Describe the Green Supply Chain Management process that has been applied to the company!
4. Describe in detail the Waste Management process that has been carried out by the company, so that it can be said that the company it has implemented Green Supply Chain Management
Green Supply Chain Management aims to integrate environmental considerations into the supply chain operations of a company. The process typically includes the following steps: Green Procurement, Green Design, Green Manufacturing, Green Distribution, Reverse Logistics, Performance Measurement and Continuous Improvement
a. Green Procurement: The company identifies environmentally friendly suppliers and incorporates environmental criteria into the procurement process, such as selecting suppliers with sustainable practices and eco-friendly products.
b. Green Design: The company focuses on designing products that are environmentally sustainable, using eco-friendly materials, reducing energy consumption, and optimizing product life cycle.
c. Green Manufacturing: Implementing energy-efficient production processes, using clean technologies, and minimizing waste and emissions during manufacturing operations.
d. Green Distribution: Employing efficient logistics strategies to reduce fuel consumption, optimizing route planning, using low-emission transportation methods, and exploring alternative energy sources for distribution.
e. Reverse Logistics: Implementing processes for the return, recycling, and proper disposal of products at the end of their life cycle, ensuring the recovery of valuable materials and minimizing environmental impact.
f. Performance Measurement and Continuous Improvement: Establishing metrics to measure environmental performance throughout the supply chain, monitoring key indicators such as carbon footprint, waste generation, and energy consumption. Regular assessment and continuous improvement efforts are undertaken to achieve sustainability goals.
Waste Management Process:
Waste management is an essential component of Green Supply Chain Management. The specific waste management processes implemented by a company can vary, but some common practices include:
a. Waste Reduction: Implementing strategies to minimize waste generation at the source, such as optimizing production processes, reducing packaging materials, and promoting recycling and reuse.
b. Recycling and Reclamation: Setting up recycling programs for various materials used in the production process and encouraging employees to separate and recycle waste. This may involve partnerships with recycling facilities or establishing in-house recycling systems.
c. Proper Disposal: Ensuring that waste that cannot be recycled or reused is disposed of properly, following local regulations and guidelines for hazardous materials disposal.
d. Waste Audits: Conducting regular waste audits to identify areas of improvement, measure waste generation, and assess the effectiveness of waste management strategies.
e. Supplier Collaboration: Working closely with suppliers to encourage sustainable practices, including waste management, and promoting the use of eco-friendly materials and packaging.
Implementing these waste management processes within the supply chain can help minimize the environmental impact of a company's operations, contribute to sustainability goals, and support the implementation of Green Supply Chain Management practices.
Remember that the specific practices and processes implemented by a company will depend on its industry, size, and specific environmental goals and regulations.
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What is 3 + 3 and 2 +2 What is 1 + 1
Answer:
3 +3 = 6
2 + 2 = 4
1 + 1 = 2
6, 4, and 2 are 3 + 3 and 2 +2, 1 + 1 respectively.
What is basic addition?Adding at least two integers together is considered basic addition. Once they have mastered counting, students can begin learning basic addition. Students can utilize an addition chart as a learning aid by starting at the row with the first addend and working their way down to it.
The addition is a mathematical operation that combines two or more numbers to give a total or sum. The symbol for addition is "+" and the numbers being added are called addends. For example, in the equation 3 + 3 = 6, 3 and 3 are the addends and 6 is the sum. The addition is one of the four basic arithmetic operations, along with subtraction, multiplication, and division. It is used extensively in many areas of mathematics, science, engineering, and everyday life.
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Addison Company experienced an accounting event that affected its financial statements as indicated below: Assets Stockholders' = Liabilities + Equity Revenue + Expense Net Income Stat + + +Which of the following accounting events could have caused these effects on Addison's financial statements? Multiple Choice O Collected cash from accounts receivableO Earned revenue on accountO Collected cash from accounts receivable O Earned revenue on account O Issued common stock O Earned cash revenue
The following accounting event that the Addison Company encountered had an impact on its financial statements: Assets Stockholders' = Revenue + Expense Net Income Statue + + +, The right response is earned income on account.
Explain Which accounting event appears on Addison's financial accounts as a result of earned revenue on account?The following accounting event appears on Addison's financial statements as a result of earned revenue on account.
Accounting is a term used to refer to the measurement, processing, and verbal transmission of economic and non-economic data about financial institutions such as corporations and agencies. Accounting, also known as the "language of business," measures the results of an organization's financial activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators.
Professionals in accounting include accountants. The terms accounting and financial reporting are frequently used synonymously. Tax accounting, fee accounting, financial accounting, and control accounting are only a few examples of the several categories into which accounting can be split.
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Is this counted in the GDP of a country ?The services of a mechanic in fixing the radiator on his own car.
Answer:
Yes this could be counted as GDP
Explanation:
The concept of limited liability
Answer: Function, The function of the concept of limited liability is to provide the owners of businesses a way to protect their personal assets. For example, if a business is sued, the person seeking compensation cannot go after the personal property of the business' owners.
Types The concept of limited liability gives rise to a variety of different types of business organizations.These include corporations and limited liability companies, all of which are created by the laws of each of the 50 states.
Significance The concept of limited liability plays a significant role in commerce. Absent the concept of limited liability, individuals would shy away from investing in businesses of any type. The vast majority of individuals would not want to put their personal property at risk by becoming involved in a business enterprise.
Features The concept of limited liability restricts the amount of money a person risks to what she invests in a business enterprise
Exception Protections normally associated with the concept of limited liability can be set aside in certain situations. For example, if a business owner co-mingles personal and business assets -- in a common bank account, for example -- an individual with a claim against the business likely can seek compensation from some, if not all, of the business owner's personal assets.
Expert Assistance A business owner facing a situation in which another individual or business makes a claim against the business should seek legal assistance. A qualified attorney not only protects the interests of the business but works to ensure that the owner's personal assets do not end up in jeopardy.
Explanation:
Your brother has asked you to help him with choosing an investment. He has $5,000 to invest today for a period of two years. You identify a bank term deposit that pays an interest rate of 4.25 percent with the interest being paid quarterly. What will be the value of the investment in two years?
How to Apply the Rule of 72. According to the Rule of 72, $1 invested at a 10% yearly constant interest rate would increase to $2 after 7.2 years ((72/10) = 7.2). In reality, a 10% investment will double in 7.3 years ((1.107.3 = 2)).
How much entertainment, compounded annually, would it take to double a fund in six years?You may also calculate it backwards: divide 6 by 72 to get that a hobby charge of roughly 12 percent will be needed if you want to quadruple your money in six years.
What hobby costs how much per year if you want to double your money in three years?How to Apply the Rule of 72. For instance, the Rule of 72 stipulates If you want to double your money in three years, your investments must provide annual returns of between 21% and 24% (72/3 years). Similar to this, if you want to double your money in five years, your assets must grow at a rate of about 14.4% per year (72/5).
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PLEASE HELP IM TIIMMMEEDD!!! 13POINTS!!
What else could Ernie put in the common section?
Collecting data and analyzing results
Designing and implementing systems
Maintaining and using diagnostic equipment
Designing and using laboratory equipment
In addition to "Creating reports" and "Communicating with patients", Ernie could add "Collecting data and analyzing results" as a common characteristic in the common section of the Venn diagram. (Option A)
A Venn diagram is a famous diagram form that depicts the logical relationship between sets. It was popularized by John Venn in the 1880s.
The diagrams are used in probability, logic, statistics, linguistics, and computer science to teach introductory set theory and to show simple set connections.
Thus, in the above analysis, Ernie could add "Collecting data and analyzing results" as a common characteristic in the common section of the Venn diagram.
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Someone copied a library video and sold the copies to friends. This is an
example of ____.
A. embezzlement
B. intellectual property theft
C. cybercrime
D. shoplifting
its be fasho cause i learned about it
Someone copied a library video and sold the copies to friends. This is an example of intellectual property theft. Hence, option B is correct.
What is intellectual property theft?Intellectual property theft occurs when a person or organization has their invention, creative expression, or idea taken from them. When someone commits IP theft, they can also be stealing trade secrets, copyrights, trademarks, or patents. Names, logos, insignia, inventions, client lists, and more fall under this category.
Manufacturing, selling, or distributing fake or stolen commodities, such as trademarks, industrial designs, literary works, or creative works, for financial benefit is considered an intellectual property crime.
Loss of client confidence. A reputational hit. reduction in revenue and expansion of the company. loss of advantage in the marketplace.
Thus, option B is correct.
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what are the 6-12 most critical non-financial resources that the venture will need to make a minimum viable product and the first sale?
It demonstrates enough future benefits to retain early adopters are the 6-12 most critical non-financial resources that the venture will need to make a minimum viable product and the first sale
A "minimum viable product," also known as an "MVP," is a product that has only enough functionality to appeal to early adopters and prove the viability of a particular product idea. In industries like software, the MVP can help the product team by facilitating early user feedback collection so they can iterate and improve the product.
A prototype of a product that includes the very minimum functionality required for early adopters to use it and subsequently provide input for the product's continued development is called a minimal viable product (MVP). Focusing on creating an MVP can help developers avoid time-consuming work that is unnecessary.
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Montana Company was authorized to issue 85,000 shares of common stock.The company had issued 30,000 shares of stock when it purchased 4,500 shares of treasury stock.The number of outstanding shares of common stock was:.........Stockholders' Equity is an item on the balance sheet composed normally of common stock, preferred stock and retained earnings account. It is the excess of total assets over total liabilities for the period.The number of outstanding shares of common stock is computed as follows:Number of shares issued 30,000 sharesLess: Treasury stock 4,500 sharesOutstanding shares 25,500 shares
There were 25,500 shares of common stock still outstanding for the Montana Company.
Define the term Stockholders' Equity?The balance sheet component known as stockholders' equity typically consists of common stock, preference shares, and retained earnings.
It is the difference between total assets and liabilities for the time period.Equity held by shareholders refers to the sum that a company's founders have contributed to the enterprise. This includes the funds they have directly invested as well as the total amount of income the business has generated and reinvested since its inception.Following is a formula for calculating the quantity of outstanding common shares:
Number of issued shares = 30,000.Treasury stock: Less = 4,500 shares.Outstanding shares = 25,500 shares.Thus, there were 25,500 shares of common stock still outstanding.
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Devonte is balancing his checking account. His account statement does not include a deposit of $107.00 that he made on November 1st. What is Devonte’s actual account balance?
Answer:
✓ $1,330.26
Explanation:
Answer:
$1,330.26
Explanation:
draw organization chart for Construction management company
organization structure type --> strong matrix
A strong matrix organization is a hybrid of a functional and a projectized organization.
A strong matrix organization is a unique blend of functional and projectized structures, where the project manager holds significant authority, and functional managers serve as technical advisors. This organizational approach focuses on project-oriented activities and aligns all efforts towards meeting project requirements effectively. This article presents the organizational structure of a Construction Management Company, highlighting the roles and responsibilities of key stakeholders within the strong matrix organization.
Organizational Structure:
At the top of the organization's structure, we find the project manager, who holds ultimate responsibility for overseeing the company's projects. Below the project manager, there are several functional managers who collaborate to ensure successful project execution.
Project Manager:
The project manager serves as the central figure in the organization, responsible for the overall planning, coordination, and successful completion of projects. They possess equal decision-making authority and resource control alongside the functional managers.
Construction Manager:
The construction manager works closely with the project manager to ensure the construction activities align with project requirements. They provide expertise and guidance related to construction methodologies, resource allocation, and project scheduling.
Finance Manager:
The finance manager plays a vital role in overseeing the financial aspects of the projects. They manage project budgets, monitor expenses, and ensure financial compliance. Collaborating with the project manager, they provide financial insights for effective decision-making.
Quality Assurance Manager:
The quality assurance manager ensures that the company's projects adhere to quality standards and industry regulations. They implement quality control processes, conduct inspections, and facilitate continuous improvement initiatives to deliver high-quality outcomes.
Procurement Manager:
The procurement manager handles the procurement and supply chain activities of the projects. They collaborate with vendors, negotiate contracts, and ensure timely delivery of materials and equipment required for project execution.
Human Resources Manager:
The human resources manager focuses on managing the company's human capital. They handle workforce planning, talent acquisition, employee development, and performance management. Collaborating with the project manager, they ensure the availability of skilled resources for project needs.
Safety Manager:
The safety manager holds responsibility for maintaining a safe working environment across the organization's projects. They develop and enforce safety policies, conduct risk assessments, and ensure compliance with health and safety regulations.
Therefore, A strong matrix organization chart for a Construction Management Company has been presented, highlighting the roles and responsibilities of key stakeholders. In this structure, the project manager and functional managers possess equal decision-making authority and collaborate to meet project objectives. This organizational approach fosters effective project execution, leveraging the expertise of functional managers while empowering the project manager with the necessary authority to drive successful project outcomes.
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What type of contract is a hire purchase agreement?
Which of the following statements about the W-2 form is TRUE? A W-2 lists all the money you spent over the last year You need a separate W-2 form from EACH of your employers in order to file your taxes The W-2 includes information about the interest you earned from your investments The total earnings from ALL jobs you worked in the previous year appear on ONE W-2 for
Answer:
w2 from each of your employers in order to do your taxes
the u.s. unemployment rate moves up and down as the economy moves in and out of recessions. but over time, the unemployment rate seems to return to a range of ____________.
Answer:
A natural range of unemployment.
50 pts! I really need help on this. Ignore the distribution part. Dont waste my points ;-; Will give Brainliest
Market Analysis: Research three countries you would like to distribute your game to and summarize the games, their prices, and how they are distributed in those markets (your competition). If you find that you might have chosen a market that is already too competitive, this is the time to identify another country and change your plan.
Countries I chose:
Japan
United States
Great Britain (UK)
Answer:
Japan 183-192billon dollars per year
USA 18.4 billion dollars
UK 5.05billion dollars
Question 2. Small Town Sweets—audit planning analytics (4%)
Small Town Sweets is based in Molong, NSW, and produces a range of high-quality confectionery for the East Coast market. Small Town Sweets operates in a low-margin environment, which typically means that large volumes are required to cover overhead costs and generate profits. It also means that overheads need to be kept under control to ensure that a net profit is generated from its operations. Debt is also kept to a minimum to ensure that interest costs are low and that there is sufficient margin to protect solvency during downturns.
The company did not reach industry profitability benchmarks in the previous year and budgeted to do better in the current year. It thought that it could do so by keeping its costs down in relation to sales while allowing its gross margin to drop, evidently planning to generate a larger volume of sales. The company also planned to better manage its working capital by reducing inventory and accounts receivable levels, indicating that it expected to produce a healthy cash flow to enable it to do so. As part of the planning process MCA has produced the following analytical information:
Ratio Actual Budgeted Prior Year Industry
Return on equity % 12.9 16.6 14.8 15.5
Return on total assets % 10.7 14.2 13.1 14.5
Gross margin % 8.5 9.0 9.5 9.0
Marketing expense/sales % 2.6 1.8 2.0 2.2
Admin expenses/sales % 1.6 1.6 1.8 2.0
Interest coverage ratio 5.4 8.1 6.4 6.0
Days in inventory 33.1 30.4 31.1 30.0
Days in accounts receivable 50.0 48.0 49.7 45.0
Current ratio 1.3 1.2 1.2 1.5
Quick asset ratio 0.81 0.77 0.77 1.0
Debt to equity ratio 0.51 0.33 0.41 0.40
Required
With reference to ASA 315 and the information above, identify and justify:
the three ratios that would be of most interest in the planning of the audit.
the account balance that is most at risk for each ratio identified in 1.
the assertion most at risk for each account balance identified in 2.
Answer this question using the following headings:
1. Ratio
2. Account balance
3. Assertion
Ratio:
a) Return on equity %
b) Days in inventory
c) Days in accounts receivable
Account balance:
a) Net income
b) Inventory
c) Accounts receivable
Assertion:
a) Existence
b) Valuation
c) Completeness
Justification:
Ratio:
a) Return on equity %: Return on equity is a key profitability ratio that measures the company's ability to generate profits for shareholders. It is of interest to auditors as it provides insight into the effectiveness of the company's management team in generating profits. A lower than expected return on equity could indicate mismanagement or fraudulent activity.
b) Days in inventory: Days in inventory is a ratio that measures the average number of days it takes for inventory to be sold. It is of interest to auditors as it provides insight into the efficiency of the company's inventory management system. A high number of days in inventory could indicate that inventory is not being managed efficiently, leading to potential overstatement of inventory and understatement of cost of sales.
c) Days in accounts receivable: Days in accounts receivable is a ratio that measures the average number of days it takes for customers to pay their bills. It is of interest to auditors as it provides insight into the efficiency of the company's accounts receivable management system. A high number of days in accounts receivable could indicate that the company is not collecting receivables in a timely manner, leading to potential overstatement of accounts receivable and understatement of bad debts.
Account balance:
a) Net income: Net income is the primary measure of a company's profitability. It is at risk if the return on equity ratio is lower than expected, as it may indicate mismanagement or fraudulent activity.
b) Inventory: Inventory is a major component of cost of sales and is at risk if the days in inventory ratio is higher than expected, as it may indicate potential overstatement of inventory and understatement of cost of sales.
c) Accounts receivable: Accounts receivable represent amounts owed to the company by customers. They are at risk if the days in accounts receivable ratio is higher than expected, as it may indicate potential overstatement of accounts receivable and understatement of bad debts.
Assertion:
a) Existence: The existence assertion is at risk for net income if the return on equity ratio is lower than expected, as it may indicate mismanagement or fraudulent activity.
b) Valuation: The valuation assertion is at risk for inventory if the days in inventory ratio is higher than expected, as it may indicate potential overstatement of inventory and understatement of cost of sales.
c) Completeness: The completeness assertion is at risk for accounts receivable if the days in accounts receivable ratio is higher than expected, as it may indicate potential overstatement of accounts receivable and understatement of bad debts.
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