RAK, Inc., has no debt outstanding and a total market

Question: RAK, Inc., has no debt outstanding and a total mar…

RAK, Inc., has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBIT, are projected to be $36,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 25 percent lower. RAK is considering a $125,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 11,000 shares outstanding. RAK has a tax rate of 35 percent.

a-1 Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Recession $

Normal $

Expansion $

b-1 Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Recession $

Normal $

Expansion $

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jagguarpaw January 24, 2017 0 Comments

Perform a horizontal analysis and a vertical analysis of Apple, Inc

Question: Perform a horizontal analysis and a vertical analysis…

Perform a horizontal analysis and a vertical analysis of Apple, Inc.

Apple Inc.
Income Statement
For the Years Ending 2015 and 2016
Sep 16 Sep 15
Revenue 215,639.00 233,715.00
Cost of Goods Sold 131,376.00 140,089.00
Gross Profit 84,263.00 93,626.00
Gross Profit Margin 39.08% 40.06%
SG&A Expense 14,194.00 14,329.00
Depreciation & Amortization
Operating Income 60,024.00 71,230.00
Operating Margin 27.84% 30.48%
Nonoperating Income 1,348.00 1,285.00
Nonoperating Expenses 1,348.00 1,285.00
Income Before Taxes 61,372.00 72,515.00
Income Taxes 15,685.00 19,121.00
Net Income After Taxes 45,687.00 53,394.00

 

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jagguarpaw January 19, 2017 0 Comments

SkyChefs, Inc., prepares in-flight meals for a number of major airlines

Question: SkyChefs, Inc., prepares in-flight meals for…

SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 4,800 of these meals using 1,400 direct labor-hours. The company paid these direct labor workers a total of $18,200 for this work, or $13.00 per hour.

According to the standard cost card for this meal, it should require 0.30 direct labor-hours at a cost of $12.50 per hour.
Required:

  1. According to the standards, what direct labor cost should have been incurred to prepare 4,800 meals? How much does this differ from the actual direct labor cost? (Round labor-hours per meal and labor cost per hour to 2 decimal places.)
Number of meals prepared
Standard direct labor-hours per meal
Total direct labor-hours allowed
Standard direct labor cost per hour
Total standard direct labor cost
Actual cost incurred
Total standard direct labor cost
Total direct labor variance $0
  1. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).)
Labor rate variance
Labor efficiency variance  

 

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jagguarpaw January 19, 2017 0 Comments

Ramakrishnan, Inc., reported 2015 net income of $70 million and depreciation

Question: Ramakrishnan, Inc., reported 2015 net income of $7…

Ramakrishnan, Inc., reported 2015 net income of $70 million and depreciation of $3,200,000. The top part of Ramakrishnan, Inc.’s 2015 and 2014 balance sheets is reproduced below (in millions of dollars). 2015 2014 2015 2014 Current assets: Current liabilities: Cash and marketable securities $ 75 $ 22 Accrued wages and taxes $ 39 $ 31 Accounts receivable 90 88 Accounts payable 84 75 Inventory 222 136 Notes payable 75 70 Total $ 387 $ 246 Total $ 198 $ 176

Calculate the 2015 net cash flow from operating activities for Ramakrishnan, Inc. (Enter your answer in dollars not in millions.) Net cash flow $

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jagguarpaw January 17, 2017 0 Comments

Ramakrishnan, Inc., reported 2015 net income of $80 million and depreciation

Question: Ramakrishnan, Inc., reported 2015 net income of $8…

 

Ramakrishnan, Inc., reported 2015 net income of $80 million and depreciation of $3,300,000. The top part of Ramakrishnan, Inc.’s 2015 and 2014 balance sheets is reproduced below (in millions of dollars). 2015 2014 2015 2014 Current assets: Current liabilities: Cash and marketable securities $ 85 $ 24 Accrued wages and taxes $ 43 $ 33 Accounts receivable 94 90 Accounts payable 58 50 Inventory 234 140 Notes payable 50 45 Total $ 413 $ 254 Total $ 151 $ 128 Calculate the 2015 net cash flow from operating activities for Ramakrishnan, Inc. (Enter your answer in dollars not in millions.) Net cash flow $

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jagguarpaw January 16, 2017 0 Comments

The stock of Bruin, Inc., has an expected return of 13 percent

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Question: The stock of Bruin, Inc., has an expected return o…

The stock of Bruin, Inc., has an expected return of 13 percent and a standard deviation of 43 percent. The stock of Wildcat Co. has an expected return of 11 percent and a standard deviation of 37 percent. The correlation between the two stocks is .37. Calculate the expected return and standard deviation of the minimum variance portfolio.

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jagguarpaw January 11, 2017 0 Comments

Borges Machine Shop, Inc., has a 1-year contract

Question: Borges Machine Shop, Inc., has a 1-year contract

Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:

Question: Borges Machine Shop, Inc., has a 1-year contract

If the contract for the second and third years is pending, for demand below 37,500 units, option is the best alternative for Luis.
For demand above 275,000 units, option   is the best alternative for Luis.

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jagguarpaw January 7, 2017 0 Comments