Wk 2 Questions and problems

Wk 2 Questions and problems - Operating assets = $20...

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o 14-1 What are financial markets? What function do they perform? How would an economy be worse off without them? o 14-3 Distinguish between the money and capital markets. o 14-4 What major benefits do corporations and investors enjoy because of the existence of organized security exchanges? (Ch. 14) of Financial Management: Principles and Applications o 15-12A You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-even point in units of output for the firm. Return on operating assets = 25% Operating asset turnover = 5 times
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Unformatted text preview: Operating assets = $20 million Degree of operating leverage = 4 times o 15-13A (Ch. 15) of Financial Management: Principles and Applications Some financial data for each of three firms are as follows: OVIEDO SEEDS GAINESVILLE SOD ATHENS PEACHES Average selling price per unit $ 14.00 $ 200.00 $ 25.00 Average variable cost per unit $ 11.20 $ 130.00 $ 17.50 Units sold 100,000 10,000 48,000 Fixed costs $25,000 $100,000 $35,000 1. What is the profit for each company at the indicated sales volume? 2. What is the break-even point in units for each company? 3. What is the degree of operating leverage for each company at the indicated sales volume? 4. If sales were to decline , which firm would suffer the largest relative decline in profitability?...
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This note was uploaded on 10/18/2010 for the course FIN 370 taught by Professor Unknown during the Spring '08 term at University of Phoenix.

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