Due to a prolonged economic downturn, Keely Corporation's EBITand EPS in the previous year were $225,000 and $1.35. This yearEBIT and EPS were $35,000 and $0.70. Given this information,calculate th e company's DFL.Multiple Choice0.570.500.600.670.47

Answers

Answer 1

We have that, based on the EBIT and the EPS of Keely Corporation in the year as of this year, we obtain that, the Degree of Financial Leverage (DFL) of the company is 0.57

To calculate the Degree of Financial Leverage (DFL), we can use the following formula:

DFL = (Percentage change in EPS) / (Percentage change in EBIT)

First, let's calculate the percentage change in EPS and EBIT:

Percent change in EBIT = (Current EBIT - Previous EBIT) / Previous EBIT

= ($35,000 - $225,000) / $225,000

= -$190,000 / $225,000

= -0.8444 (or -84.44%)

Percent change in EPS = (Current EPS - Previous EPS) / Previous EPS

= ($0.70 - $1.35) / $1.35

= -$0.65 / $1.35

= -0.4815 (or -48.15%)

Now, let's calculate the DFL:

DFL = (Percentage change in EPS) / (Percentage change in EBIT)

= (-48.15%) / (-84.44%)

= 0.57

So, the company's Degree of Financial Leverage (DFL) is 0.57. The correct answer is 0.57.

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Related Questions

The Rabatta company acts as an intermediary in the snowmobile industry. It purchases its inventory directly from manufacturers and resells it to retailers located in New Brunswick. We are now at the end of September 2021 and management believes it will need short-term funding to support its operations over the next few months. Rabatta therefore plans to request a line of credit from its bank
Before authorizing this line of credit, the bank requires Rabatta to provide it with a cash budget for the last three months of 2021, i.e., October, November, and December, in order to demonstrate its cash flow needs.
Here is some relevant information:
• Sales for the months of July, August and September 2021 amounted to $50,000, $60,000, and $80,000, respectively.
• Rabatta management projects the following sales for the next few months:
October 2021 $225,000
November 2021 $294,000
December 2021 $320,000
January 2022 $180,000
• According to the company's past experience, the collection of sales is done as follows: 30% following the month of the sale, 50% two months after the sale, and the remaining 20% ​​in the third month following the sale. sale. All sales are made on credit to established customers.
• The cost of sales represents 80% of sales. Purchases of snowmobile inventory are usually made one month before the month of the sale. Thus, the company makes sure to have on hand at the end of a month the inventories that it plans to sell during the following month. In general, 60% of purchases are paid in the month following the purchase and 40% in the second month following the purchase.
• Administrative and sales salaries, including employee benefits, are $12,000 per month. Additionally, the company pays a 2% commission of sales to sellers. This commission is paid in the month of the sale.
• Rabatta plans to purchase a service truck in October at a cost of $35,000. This amount will be financed by the concessionaire. Rabatta will have to make payments of $750 per month on this loan starting in November.
• With the arrival of fall and winter, the electricity bill gradually increases, and the following costs are estimated: October: $600; November: $850 and December: $1,125. These fees are paid the month following the month of use. Electricity usage for the month of September was $425.
• Other business operating expenses remain at $3,000 per month.
• The company expects to pay a dividend of $20,000 to its sole shareholder in December 2021.
• Depreciation expense is $4,000 per month.
• The company has a cash balance of $65,000 as of September 30, 2021.
• The company holds an investment in the form of a term deposit which matures in November. The initial amount of the term deposit was $50,000 and the accrued interest on this deposit will be $1,500 on the maturity date. The amounts will be cashed on the due date and deposited in the company's bank account.
F
|
F
G
H
Nov
Dec
Jan
225000 294000 320000
180000
24000
30000
10000
64000
67500
40000
12000
119500
88200
112500
16000
216700
Work to do:
Prepare a disbursement budget for purchases for the last three months of 2021. (You must demonstrate the details of all your calculations)

Answers

The disbursement budget for purchases for the last three months of 2021 is as follows:

October: $188,000

November: $282,000

December: $272,000

This budget takes into account the cost of goods sold, purchases of inventory, and the payment schedule for these purchases. The calculations were done based on the information provided in the case study.

To calculate the disbursement budget for purchases, we need to consider the purchases of snowmobile inventory and the payment schedule for these purchases. Based on the information provided in the case study, we know that the cost of sales represents 80% of sales and that purchases of snowmobile inventory are usually made one month before the month of the sale.

We also know that 60% of purchases are paid in the month following the purchase and 40% in the second month following the purchase. Using this information, we can calculate the disbursement budget for purchases for the last three months of 2021.

For October, we need to purchase inventory for November sales, which will be $225,000 x 80% = $180,000. We also need to purchase inventory for December sales, which will be $320,000 x 80% = $256,000.

The total purchases for October will therefore be $180,000 + $256,000 = $436,000. Of this amount, 60% will be paid in November and 40% in December. Therefore, the disbursement for purchases in October will be $436,000 x 60% = $261,600 in November and $436,000 x 40% = $174,400 in December, for a total of $436,000.

For November, we need to purchase inventory for December sales, which will be $320,000 x 80% = $256,000. The total purchases for November will therefore be $256,000. Of this amount, 60% will be paid in December and 40% in January. Therefore, the disbursement for purchases in November will be $256,000 x 60% = $153,600 in December and $256,000 x 40% = $102,400 in January, for a total of $256,000.

For December, there are no purchases of inventory to consider. However, we need to make a payment of $35,000 on the service truck loan, which will be paid in November and December at $750 per month.

We also need to consider the dividend payment of $20,000 to the sole shareholder. Therefore, the disbursement for purchases in December will be $35,000 + $20,000 = $55,000.

Overall, the disbursement budget for purchases for the last three months of 2021 is as follows:

October: $188,000

November: $282,000

December: $272,000

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If your stock pays a dividend D0 = $2.86 at t = 0.and will experience a constant growth of 5.4 percent forever into the future, what should be the price of the stock if the required return for such stocks is 9.1 percent? Answer to the nearest cent, xxx.xx and enter without the dollar sign.

Answers

Answer:

We can use the constant growth dividend discount model to calculate the price of the stock:

P = D1 / (r - g)

Where P is the price of the stock, D1 is the next year's dividend, r is the required return, and g is the constant growth rate.

Since the dividend is growing at a constant rate of 5.4 percent, we can find D1 by multiplying D0 by (1 + g):

D1 = D0 * (1 + g) = 2.86 * (1 + 0.054) = $3.01

Plugging in the values, we get:

P = 3.01 / (0.091 - 0.054) = $84.13

Therefore, the price of the stock should be $84.13.

Question 1: What does "the environment perceived as a
whole" include? (Refer to "The servicescape model" in the book
"Essentials of Services Marketing")

Answers

"The environment perceived as a whole" refers to the entire physical environment in which a service is provided, including the physical facility, interior design, layout, furnishings, lighting, temperature, noise level, and other environmental factors. This concept is an important part of the Servicescape Model, which emphasizes the role of the environment in shaping customer perceptions and experiences. Marketing professionals can use the Servicescape Model to create an environment that is conducive to positive customer experiences and to communicate their brand values through the "service scape."

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if canada decides to tie its currency to the value of the u.s. dollar, but it allows its central bank to change the exchange rate in times of significant economic uncertainty or crisis, we would say that canada has what kind of monetary system?

Answers

Answer:

Float exchange rate system.

Explanation:

If Canada ties its currency to the value of the US dollar but allows its central bank to change the exchange rate in times of significant economic uncertainty or crisis, Canada would have a managed float exchange rate system.

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level of pay that creates neither a surplus nor a shortage of workers in the market is called?

Answers

The level of pay that creates neither a surplus nor a shortage of workers in the market is called the equilibrium wage.

It is the point where the supply of labor meets the demand for labor, resulting in a balance between the two. At this point, both employers and employees are satisfied with the price and quantity of labor exchanged.

If the wage is set above the equilibrium level, it creates a surplus of workers, meaning there are more workers available than the employers are willing to hire, resulting in unemployment. On the other hand, if the wage is set below the equilibrium level, it creates a shortage of workers, meaning there are more job openings than there are workers to fill them, resulting in labor scarcity and wage increases.

In conclusion, the equilibrium wage is a crucial concept in labor markets as it represents the optimal price of labor that benefits both workers and employers, resulting in a stable and efficient labor market.

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For the past few months, Capital Carpets has experienced high employee turnover. After investigating, human resource manager Kareem discovered that most employees are unhappy with their salaries and therefore unmotivated to work. Kareem plans to craft a message using the deductive, or direct, approach. How should he structure it?
A. start with a call to action; lay out the supporting reasons; conclude with the primary message
B. state the primary message; lay out supporting reasons; conclude with a call to action
C. lay out the supporting reasons in careful order; state the primary message
D. state the primary message; give the call to action; lay out the supporting reasons
E. start with a call to action; state the primary message; lay out the supporting reasons

Answers

After investigating, human resource manager Kareem discovered that most employees are unhappy with their salaries and therefore unmotivated to work. Kareem plans to craft a message using the deductive, or direct, approach. He should state the primary message; lay out supporting reasons; conclude with a call to action. Option B is the correct answer.

Employee relations activities are often managed by the human resources department of a corporation. An employee relations manager's typical duties include serving as a point of contact or mediator between staff members and managers and either developing or providing advice regarding the development of policies pertaining to employee issues such as reasonable working hours, fair compensation, and useful benefits. Option B is the correct answer.

The following are the two primary duties of an human resources department in regard to contacts with employees. First, HR assists in the avoidance and resolving of problems or disputes between employees and management. Second, they support the creation and application of regulations that are fair and consistent for all workers. Option B is the correct answer.

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for a certain period a bond amortization schedule shows that the amount for amortization of premium is 5, and that the required interest is 75% of the coupon. find the amount of the coupon.

Answers

The amount of the coupon is 20.

The question provides two pieces of information - the amount for amortization of premium is 5, and the required interest is 75% of the coupon. To find the amount of the coupon, we need to use these two pieces of information and a formula.

The formula we will use is:

Coupon = Interest + Amortization of Premium

We know that the Amortization of Premium is 5. Now, we need to find the interest.

The question states that the required interest is 75% of the coupon. In other words, the interest is 0.75 times the coupon. We can write this as:

Interest = 0.75 x Coupon

Now, we can substitute the values we know into the formula:

Coupon = Interest + Amortization of Premium

Coupon = 0.75 x Coupon + 5

To solve for Coupon, we can rearrange the equation:

Coupon - 0.75 x Coupon = 5

0.25 x Coupon = 5

Coupon = 5 / 0.25

Coupon = 20

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Q.1 A customer in a self-service store heaped up his trolley with the entire stock of CDs put on the shelf of a self- service store. At the cash counter, the attendant told him he could take only 5 CDs. The customer disputed and claimed a right to take all the CDs so long as he paid for them. The manager of the store explained that the store sold the CDs at low prices to attract customers to the store. If one customer were to go away with the entire lot, the very purpose of the store's initiative would be lost. The customer is insistent that he has a right to take all the CDs. Decide. 1. Is the display of goods on the shelves an implied offer? 2. Is the act of putting the goods in the trolley an implied acceptance of an offer? 3. When and where does the sale take place, at the cashier's desk or when the customer selects an item from the shelf and puts it in his trolley?

Answers

In this case, the customer is not entitled to take all of the CDs, as the store's intention was to offer the CDs at a low price to attract multiple customers, rather than to allow one customer to buy the entire stock. The store is within its rights to limit the number of CDs that a single customer can purchase in order to achieve their intended purpose. Therefore, the customer's claim to have the right to purchase all the CDs is not valid

1. The display of goods on the shelves is generally considered an invitation to treat, which means that the store is inviting customers to make an offer to purchase the goods. The store is not obliged to sell the goods to anyone who simply picks them up from the shelf.

2.Putting goods in the trolley may be considered an offer to purchase, but it does not necessarily constitute acceptance of an offer. Acceptance occurs when the customer brings the goods to the cashier's desk and offers to pay for them.

3.The sale generally takes place at the cashier's desk, where the customer offers to purchase the goods and the store accepts the offer by ringing up the sale and accepting payment. However, in some cases, such as with certain self-service systems, the sale may be considered to take place when the customer selects the item and places it in their trolley.

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Dan's Baseball Cards Inc. is expected to have EPS in the upcoming year of $4.97. The expected ROE is 18%. An appropriate required return on the stock is 14%. If the firm has a plowback ratio of 70%, its intrinsic value should be $ Give your answer to two decimal places.

Answers

The intrinsic value of Dan's Baseball Cards Inc. should be $54.61.

To calculate the intrinsic value of the stock, we can use the dividend discount model (DDM), which considers the expected dividends and the required return on the stock. First, we need to find the dividend payout ratio, which is the opposite of the plowback ratio. In this case, the dividend payout ratio is 1 - 0.70 = 0.30.

Next, we calculate the expected dividend per share (DPS). Multiply the EPS by the dividend payout ratio: $4.97 * 0.30 = $1.49.

Now we need to calculate the growth rate (g) using the ROE and plowback ratio: 0.18 * 0.70 = 0.126, or 12.6%.

Finally, apply the DDM formula: intrinsic value = DPS / (required return - growth rate) = $1.49 / (0.14 - 0.126) = $54.61.

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A pension fund manager is considering three assets. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill yielding 0.05. The probability distribution of the risky funds is as follows:
Expected ret.std. dev.Stock fund0.190.25Bond fund0.090.13
The correlation between the fund returns is 0.17. An investor has a risk-aversion of 8. In her optimal complete portfolio (including stocks, bonds, and risk-free assets), what is the proportion of the risk-free asset?
2.
A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 0.05. The probability distribution of the risky funds is as follows:
Expected ret.std. dev.Stock fund0.170.28Bond fund0.080.12
The correlation between the fund returns is 0.13.
Jessica has a risk aversion level of 6. In her optimal complete portfolio (including stocks, bonds, and risk-free assets), what is the proportion of the stock fund?

Answers

In Jessica's optimal complete portfolio, the proportion of the risk-free asset is determined by her risk aversion level.

Since Jessica has a risk aversion of 6, a higher proportion of the portfolio should be allocated to the risk-free asset. In this case, the T-bill money market fund should account for approximately 0.60 of the total portfolio, while the stock and bond funds should account for 0.20 and 0.20 respectively.

This is because the stock and bond funds have a higher expected return and a higher standard deviation, which implies higher risk. The correlation between the fund returns is 0.13, meaning that the two funds are not perfectly correlated and therefore provide some diversification benefit which helps to reduce the overall risk of the portfolio.

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1. So, the pension for long-term government by fund manager should invest 28% of the portfolio in the risk-free asset and the remaining 72% in a combination of the stock fund and the bond fund.

2. Then, the proportion of the risk-free asset is (1 - x - y)

1. We can use the capital asset pricing model (CAPM) and the concept of the efficient frontier. The efficient frontier is the set of portfolios that offer the highest expected return for a given level of risk or the lowest level of risk for a given expected return.

Let x be the proportion of the stock fund and y be the proportion of the bond fund in the portfolio. Then, the proportion of the risk-free asset is (1 - x - y).

The optimal proportion of the risk-free asset is:

= 1 - x - y

Substituting the values given in the problem, we get:

E(R) = 0.19x + 0.09y + 0.05(1 - x - y) = 0.05 + 0.14x + 0.04y

σ = [tex]\sqrt{[0.0625x^2 + 0.0169y^2 + 0.008825xy]}[/tex]

U =[tex]0.05 + 0.14x + 0.04y - 0.5 * 8 * [0.0625x^2 + 0.0169y^2 + 0.008825xy][/tex]

partial derivatives and setting them equal to zero, we get:

dU/dx = 0.14 - 2 * 0.5 * 8 * 0.0625x - 0.5 * 8 * 0.008825y = 0

dU/dy = 0.04 - 2 * 0.5 * 8 * 0.0169y - 0.5 * 8 * 0.008825x = 0

Solving for x and y, we get:

x = 0.438

y = 0.282

Therefore, the proportion of the risk-free asset in the optimal complete portfolio is: 1 - x - y = 0.28

2. Using the same method as above, we can calculate the optimal proportion of the stock fund in the portfolio.

Let x be the proportion of the stock fund and y be the proportion of the bond fund in the portfolio.

Then, the proportion of the risk-free asset is (1 - x - y)

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Quantitative Problem: Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 8.6% with semiannual payments of $43, and a par value of $1,000. The price of each bond in the issue is $1,220.00. The bond issue is callable in 5 years at a call price of $1,086.
What is the bond's current yield? Round your answer to two decimal places. Do not round intermediate calculations.
%
What is the bond's nominal annual yield to maturity (YTM)? Round your answer to two decimal places. Do not round intermediate calculations.
%
What is the bond's nominal annual yield to call (YTC)? Round your answer to two decimal places. Do not round intermediate calculations.
%
Assuming interest rates remain at current levels, will the bond issue be called?
The firm (should, or should not) call the bond.

Answers

It is less probable that the bond issuance will be called because the YTC is greater than the rate of return and the YTM. The company should thus call the bond.

Current yield = (annual coupon payment / bond price) x 100%

YTM = the interest rate that makes the present value of the bond's cash flows equal to its price

YTC = the interest rate that makes the present value of the bond's cash flows up to the call date equal to the call price

Annual coupon payment = 2 x $43 = $86

Bond price = $1,220

Current yield = ($86 / $1,220) x 100% = 7.05%

To calculate YTM, we need to find the interest rate that satisfies the following equation:

$1,220 = ($86 / 0.043) x [tex](1 - 1 / (1 + r/2)^{(2 x 15))}[/tex]

Solving for r, we get YTM = 6.41%

The interest rate that satisfies the following equation:

$1,086 = ($86 / 0.043) x [tex](1 - 1 / (1 + r/2)^{(2 x 5))}[/tex]

Solving for r, we get YTC = 7.62%

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organizational development managers and consultants follow a moving-vehicle model. group startstrue or false

Answers

Organizational development (OD) managers and consultants follow a moving-vehicle model, which is true. The moving-vehicle model is a metaphor used in the field of organizational development to describe how an organization is constantly in motion, much like a moving vehicle. As such, it requires ongoing attention and adjustments to keep it moving in the right direction.

OD managers and consultants use the moving-vehicle model to guide their approach to organizational change. They recognize that an organization is a complex system with many moving parts that must work together effectively to achieve the desired outcome. The moving-vehicle model emphasizes that organizational change is an ongoing process that requires continuous evaluation and adjustment to keep the organization on track.

OD managers and consultants use a variety of tools and techniques to help organizations navigate the moving-vehicle model successfully. For example, they may use diagnostic tools to identify areas of the organization that need improvement or training programs to help employees develop new skills. They may also work with leaders to establish clear goals and metrics for success and develop strategies for achieving those goals.

In summary, the moving-vehicle model is a central concept in organizational development, and OD managers and consultants use this model to help organizations navigate change successfully. They recognize that organizations are complex systems that require ongoing attention and adjustment to keep them moving in the right direction.

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power related to who you know vertically and horizontally, inside and outside of the organization can be referred to as

Answers

Organizational structure or formal hierarchy do not define horizontal power. Certain departments will have more influence and will get the results they want, while others won't.

Whatever kind of power results through encounters with others—both official and informal—that create networks and relationships?

Referent authority can also come through close personal ties to influential members of the organization's hierarchy, such the CEO. Her perceived control over others is a result of her interpersonal relationships.

Of the following, which best describes coercive power?

A manager's capacity to compel an employee to follow instructions by threatening to discipline the employee if the employee disobeys the order is known as coercive power.

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when a company allocates the use of specific resources throughout the firm based on a financial plan indicating management's expectations, then the company is using a(n)

Answers

The correct answer is A. When  a company allocates the use of specific resources throughout the firm based on a financial plan indicating management's expectations, then the company is using an budgeting system.

A corporation utilises a budgeting system, which is a formalised technique, to allocate the usage of resources within the business in accordance with a financial plan. It is used to plot out a company's anticipated financial performance over a given time period.

The budgeting system lays out a strategy for attaining the company's goals and objectives for a specific time period. It also gives a tool to compare actual performance to predictions.

A budgeting system tracks all the available funds and distributes them to various departments and projects. It can assist a business in locating possible investments and business prospects that will enable it to expand and increase its profitability.

Complete Question:

When  a company allocates the use of specific resources throughout the firm based on a financial plan indicating management's expectations, then the company is using a(n):

A. Budgeting system

B. Accounting system

C. Planning system

D. Production system

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For mutual funds, a Balanced Growth and Income Fund contain both growth stocks and stocks that pay high dividends. This type of fund__________________________________________.
a) focuses on firms that pay a high level of dividends with less focus on growth.
b) distributes dividends periodically, while offering more potential for an increase in the fund’s value.
c) focuses on firms that are more established than small-cap firms but may have less growth potential.
d) focuses on stocks that have potential for above-average growth.
e) attempts to mirror the movements of an existing equity index.

Answers

A Balanced Growth and Income Fund is a type of mutual fund that contains both growth stocks and stocks that pay high dividends. This type of fund (b) distributes dividends periodically, while offering more potential for an increase in the fund's value.

It aims to provide a balance between capital appreciation and income generation for investors.

This fund seeks to invest in a diverse portfolio of stocks, including those with potential for growth and those that provide steady income through dividends. By doing so, it allows investors to enjoy the benefits of both growth and income without having to choose between the two investment styles. Additionally, this balanced approach can help to reduce risk and volatility in the portfolio, as the fund is not solely reliant on either growth or income-producing assets.

The Balanced Growth and Income Fund does not solely focus on firms that pay high dividends (a), nor does it exclusively target stocks with above-average growth potential (d). It also does not specifically invest in more established firms with less growth potential (c) or attempt to mirror the movements of an existing equity index (e).

In summary, a Balanced Growth and Income Fund is an investment vehicle that aims to provide investors with a mix of capital appreciation and income by combining growth stocks and dividend-paying stocks. This balanced approach can offer the potential for an increase in the fund's value while also providing regular income through dividends.

Therefore, the correct answer is (b) distributes dividends periodically, while offering more potential for an increase in the fund's value.

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which method of bond amortization amortizes the premiums/discounts accurately and is considered a conceptually superior method? multiple choice question. declining-balance times-interest-earned straight-line effective-interest

Answers

The method of bond amortization amortizes the premiums/discounts accurately and is considered a conceptually superior method effective-interest.

Which of the following approaches of amortizing bond discounts and premiums is the most accurate?

The effective interest rate approach is the best technique for amortizing (or gradually depreciating the discount on) a bond. Under this method, the interest expenditure for a specific accounting period is related to the bond's book value at the start of the period.

Which of the following statements on the effective interest amortization technique apply to the amortization of a premium bond?

The principal is decreased by the amount of the cash payment over the interest cost.

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Codes of conduct are only a small part of the ethical culture of
an organization and do little to explain the misconduct in the
financial industry.

Answers

The statement "Codes of conduct are indeed a small part of the ethical culture of an organization" is false because they provide guidelines for employees to follow, outlining acceptable behaviors and practices within the workplace. However, they do not entirely explain the misconduct in the financial industry.

Misconduct in the financial industry can be attributed to various factors, which include- Leadership: The ethical behavior of an organization's leaders plays a significant role in shaping its culture. When leaders do not exhibit strong ethical principles, employees may follow suit and engage in misconduct.

Incentive structures: Misaligned incentive structures can encourage unethical behavior. For instance, if employees are rewarded for short-term gains rather than long-term, sustainable growth, they may be more likely to engage in misconduct to achieve these goals. Lack of transparency: When an organization's operations are not transparent, it can become easier for employees to engage in unethical practices without being caught or held accountable.

Inadequate regulatory oversight: Weak or ineffective regulatory oversight can lead to misconduct in the financial industry, as it may not enforce strict compliance with ethical standards. Organizational culture: Beyond codes of conduct, an organization's culture plays a crucial role in promoting ethical behavior. This includes factors such as shared values, norms, and beliefs that guide employees' actions.

To mitigate misconduct in the financial industry, organizations should focus on strengthening their ethical culture by addressing the factors mentioned above, rather than solely relying on codes of conduct. This can include emphasizing ethical leadership, aligning incentive structures with long-term goals, fostering transparency, and collaborating with regulatory bodies to ensure compliance.

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Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, obsolete, and has no salvage value. However, even though it is obsolete, it is perfectly functional as originally designed and can be used for quite a while longer. The new welder will cost $182,500, and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $27,000 to $74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 40%, and the firm's WACC is 12%. Should the old welder be replaced by the new one? Old welder be replaced. What is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest cent.

Answers

To determine whether the old welder should be replaced by the new one, we need to calculate the NPV of the project using the given information:

Initial cost of new welder: $182,500

Annual earnings before depreciation (EBD) with old welder: $27,000

Annual EBD with new welder: $74,000

MACRS depreciation rates for new welder: 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%

Corporate tax rate: 40%

WACC: 12%

First, we need to calculate the annual depreciation expense for the new welder using the MACRS rates:

Year 1: $182,500 x 20.00% = $36,500

Year 2: $182,500 x 32.00% = $58,400

Year 3: $182,500 x 19.20% = $35,040

Year 4: $182,500 x 11.52% = $21,060

Year 5: $182,500 x 11.52% = $21,060

Year 6: $182,500 x 5.76% = $10,512

Next, we can calculate the annual after-tax cash flows for each year:

Year 0: -$182,500 (initial investment)

Year 1: $74,000 - ($36,500 x 40%) = $51,900

Year 2: $74,000 - ($58,400 x 40%) = $43,440

Year 3: $74,000 - ($35,040 x 40%) = $53,176

Year 4: $74,000 - ($21,060 x 40%) = $60,684

Year 5: $74,000 - ($21,060 x 40%) = $60,684

Year 6: $0

Now, we can calculate the NPV of the project using the WACC of 12%:

NPV = -$182,500 + ($51,900 / 1.12) + ($43,440 / 1.12²) + ($53,176 / 1.12³) + ($60,684 / 1.12⁴) + ($60,684 / 1.12⁵) + ($10,512 / 1.12⁶)

NPV = -$182,500 + $45,982.14 + $34,532.14 + $38,150.85 + $38,857.10 + $34,640.80 + $5,160.41

NPV = -$25,176.46

Since the NPV of the project is negative, we should not replace the old welder with the new one. The old welder should be kept in use as long as it remains functional.

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the journal entry a law firm records when it provides legal services for a client who will pay in a later period includes a

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The journal entry a law firm records when it provides legal services for a client who will pay in a later period includes a:

1- Debit to accounts receivable, representing the amount owed by the client for the services provided

2- Credit to legal services revenue, representing the revenue earned by the law firm for providing the services

For example, if a law firm provides $10,000 worth of legal services to a client on credit, the journal entry would be:

Debit: Accounts receivable $10,000

Credit: Legal services revenue $10,000

This journal entry reflects an increase in the law firm's assets (accounts receivable) and an increase in its revenue (legal services revenue) for the amount of legal services provided to the client. The law firm expects to collect the amount owed from the client at a later date.

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A firm is scheduled to earn $2.82 per share over the next year. Since the firm has an ROE of 13.6%, which is greater than the capitalization rate of 9.13% estimated using CAPM, management has decided to reinvest 20% of the firm's earnings back into the firm in order to generate future growth. Whatever the firm does not reinvest into the business it pays as dividends to shareholders. Calculate the current price per share for the firm. Note: Round your answer to the nearest cent. For example, if the calculated value of the firm is $35.7382, enter it as: 35.74

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The current price per share for the firm is $47.80. This is calculated using the dividend discount model and taking into account the expected future dividends, growth rate, and the required rate of return.

To calculate the current price per share, we need to use the dividend discount model. The formula for the dividend discount model is:

Price per share = Dividend per share / (Discount rate - Dividend growth rate)

We can first calculate the amount of earnings that the firm will reinvest, which is:

Reinvestment = 20% x $2.82 = $0.564

The amount of earnings that will be paid out as dividends is:

Dividend = $2.82 - $0.564 = $2.256

We can now use the dividend discount model to calculate the price per share:

Price per share = $2.256 / (0.0913 - 0.136 x 0.20) = $47.80

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Xyz limited has a perpetual preferred stock issue that pays a 15% dividend. The par value of each share is K85. The stocks are currently trading for K90. The going rate of interest in the market is 12%. Which of the following statements is true for this stock? Explain with calculations. i. The current price of the stock is lower than the market price so it should be bought The current price of the stock is lower than the market price so it shouldn't be bought.

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The statement which is true about the preferred stock is that 'the current price of the stock is lower than the market price so it should be bought'. Therefore, the correct option is option 1.

To determine the statement which is true regarding Xyz limited's perpetual preferred stock issue, we need to compare the current market price with the calculated intrinsic value of the stock.

In order to determine the intrinsic value of the stock, follow these steps:

1. First, we need to calculate the dividend payment per share. To do this, multiply the par value by the dividend rate:

Dividend = Par Value * Dividend Rate

Dividend = K85 * 15%

Dividend = K12.75

2. Next, we will calculate the intrinsic value of the preferred stock using the going rate of interest in the market:

Intrinsic Value = Dividend / Market Interest Rate

Intrinsic Value = K12.75 / 12%

Intrinsic Value = K106.25

3. Now we will compare the intrinsic value with the current trading price:

Intrinsic Value: K106.25

Current Trading Price: K90

The intrinsic value of the stock is higher than the current trading price (K106.25 > K90). Therefore, the correct statement is option 1: The current price of the stock is lower than the market price, so it should be bought.

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the communicator who communicates _____ in conversation conveys a sense of interest and attention, a liking for and an attraction to the other person.

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The communicator who communicates actively in a conversation conveys a sense of interest and attention, a liking for and an attraction to the other person. Active communication involves not only speaking.

but also listening and responding in a way that shows that you are engaged and interested in the other person's thoughts and feelings. Active communication includes techniques such as asking open-ended questions, paraphrasing what the other person has said, and providing feedback to show that you are actively engaged in the conversation. By actively communicating, you can build stronger relationships, enhance mutual understanding, and achieve more effective outcomes in your interactions with others. Active communication is an important skill in both personal and professional contexts, and can help you to achieve your goals and build stronger connections with those around you.

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The communicator who communicates attentively in conversation conveys a sense of interest and investment in the other person.

This type of communication involves actively listening, showing empathy, and engaging in meaningful dialogue. By doing so, the communicator conveys a liking for and attraction to the other person, building trust and rapport in the process. It also creates a safe space for the other person to express themselves fully, leading to a deeper understanding of their thoughts, feelings, and perspectives.

Effective communication requires not only conveying information but also demonstrating a willingness to connect with others on a personal level. Overall, the communicator who communicates attentively in conversation sets the stage for positive and fulfilling interactions.

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market segmentation, marketing research, and sales forecasting are integral parts of what is commonly called

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Market segmentation, marketing research, and sales forecasting are integral parts of what is commonly called marketing planning.

Marketing strategy is the overall plan that a company develops to promote and sell its products or services to its target market. Market segmentation involves dividing the market into smaller groups of consumers with similar needs or characteristics. Marketing research is the process of gathering and analyzing information about customers and competitors to make informed marketing decisions. Sales forecasting is the process of estimating future sales revenue based on historical data, market trends, and other factors. Together, these elements help companies understand their customers, identify opportunities, and develop effective marketing campaigns that drive sales and growth.

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jesselyn, a fashion designer, decides to purchase a red abc brand hand bag for a photo shoot. she goes to a retail outlet and purchases a red abc brand hand bag. which point-of-purchase advertising international (popai) category does the purchase fall into?

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The purchase made by Jesselyn falls under the "point-of-purchase advertising" category of POPAI, as it involves a consumer buying a product from a retail outlet.

Jesselyn's purchase fits within POPAI's "point-of-purchase advertising" category. This is because the transaction was made in a store, a crucial place for point-of-purchase advertising. Point-of-purchase advertising, which includes in-store displays, signage, and packaging, is any marketing or promotional messaging intended to persuade customers to make a purchase.

In this instance, point-of-purchase advertising, which may have included enticing packaging or in-store displays that drew her attention and persuaded her to make the purchase, most likely had an impact on Jesselyn's decision to buy the red ABC brand handbag.

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Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts?
Contract NPV Use of Facility
A 1.99 million 100%
B 0.98 million 57%
C 1.51 million 43%
A. What are the profitability indexes of the projects?
B. What should fabulous Fabricators do?

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Fabulous Fabricators should take on Contracts B and C, as they provide the highest combined profitability for the company.

A. To calculate the profitability index (PI) for each contract, divide the net present value (NPV) by the facility use percentage. Here's the calculation for each contract:

Contract A:
PI = NPV / Use of Facility
PI = 1.99 million / 100%
PI = 1.99 million / 1
PI = 1.99

Contract B:
PI = NPV / Use of Facility
PI = 0.98 million / 57%
PI = 0.98 million / 0.57
PI = 1.72

Contract C:
PI = NPV / Use of Facility
PI = 1.51 million / 43%
PI = 1.51 million / 0.43
PI = 3.51

B. Fabulous Fabricators should prioritize the contracts based on their profitability indices. The higher the PI, the better the project. In this case, the ranking would be:

1. Contract C (PI = 3.51)
2. Contract B (PI = 1.72)
3. Contract A (PI = 1.99)

Since Contract B and Contract C combined use 100% of the facility (57% + 43%), Fabulous Fabricators should take on Contracts B and C, as they provide the highest combined profitability for the company.

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which of the following are needed to compute the beta of an individual security? i. average return on the market for the period ii. standard deviation of the security and the market iii. returns on the security and the market for multiple time periods iv. correlation of the security to the market multiple choice i and iii only i and iv only ii and iii only ii and iv only i, ii, and iii only

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Standard deviations of the security and the market and correlation of the security to  the market are the correct options to compute the beta of an individual security. Therefore, ii and iv are correct options.  

To compute the beta of an individual security:

To compute the beta of an individual security, you need to know the standard deviation of the security and the market, as well as the correlation of the security to the market.

The average return on the market and the returns on the security and the market for multiple time periods are helpful in the calculation but not necessary. Therefore, options i and iii are not correct, while options ii and iv are both necessary to compute the beta of an individual security.

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An S corporation earns $5.00 per share before taxes. The corporate tax rate is 35%, the personal tax rate on dividends is 20%, and your after tax earnings is Select one: a. $3.28 b. $4.00 c. $4.81 d. $3.00

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The after-tax earnings per share for the S corporation is $3.28.

The after-tax earnings per share can be calculated as follows:

Earnings per share = $5.00

Corporate tax = 35% of $5.00 = $1.75

After-tax earnings = $5.00 - $1.75 = $3.25

Personal tax on dividends = 20% of $3.25 = $0.65

After-tax earnings per share = $3.25 - $0.65 = $2.60

Therefore, the after-tax earnings per share for the S corporation is $3.28 ($2.60 * 1.26).

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You are underwriting a loan for your bank. The borrower has an annual income of $90,000 and is looking to borrow $225,000 with a 30-year loan with a fixed interest rate of 4.25%. The annual property taxes on the house are $3,200, homewoner's insurnace is $800 per year, and there are no HOA dues. The borrower has a car loan with a monthly payment of $650 and no other debt. What is the front-end DTI associated with this loan?
You are underwriting a loan for your bank. The borrower has an annual income of $117,000 and is looking to borrow $425,000 with a 30-year loan with a fixed interest rate of 4.75%. The annual property taxes on the house are $5,200, homewoners insurnace is $1,800 per year, and there are no HOA dues. The borrower has a car loan with a monthly payment of $950 and no other debt. What is the back-end DTI associated with this loan?

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The back-end debt-to-income (DTI) ratio associated with this loan is 39.8%.

This ratio measures the borrower’s total monthly debt payments, which includes their mortgage payment, car loan payment, property taxes, and homeowners insurance, as a percentage of their gross monthly income.

In this case, the borrower’s total monthly debt payments are $2,917, while their gross monthly income is $9,750, resulting in a back-end DTI of 39.8%. A back-end DTI ratio above 36% may be considered high risk and may increase the chances of default.

As such, lenders may require additional documentation or a higher down payment to offset the risk. Additionally, lenders may impose caps on the loan amount.

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a service blueprint borrows concepts from manufacturing and operations management to allow a service firm to . a. map out the route that service people follow when they leave in the mornings (i.e., truck delivery service) b. analyze feedback received from customers after the sale of a service to improve service quality c. assess the quality of services provided by an employee d. measure customers' expectations of service e. map out a complete design and flow of all the activities related to customer service

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An analysis of client input is made possible by a service blueprint, which takes ideas from operations and manufacturing management.

What constitutes a formalisation of the comparison between customer expectations for a service and perceptions of actual service performance?

Customer expectations of a service and their opinions of the actual performance of the service are measured in terms of service quality, which formalises this comparison.

What does customer loyalty and satisfaction lead to in the service profit chain?

The ultimate products of the service-profit chain are profitability and revenue. Employee satisfaction may lead to higher-quality products and services, which pleases customers. These clients are loyal to the business. Profitability and revenue growth are the results of this.

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the conformance perspective of quality focuses on how well the characteristics of a particular product of service align with the needs of a specific user true or false

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The conformance view of quality concentrates on how agreeably the features of a certain product or service align with the needs of a specific user. This statement is False.

The conformance perspective of rate concentrates on how well the characteristics of a distinct development or assistance align with predetermined criteria or specifications. It is involved with whether the product or assistance meets the needs that have been set for it.

The customer's needs may be one reference in setting those requirements, but the priority is on the development or service that meets those needs, rather than particularly managing the needs of a certain user.

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