Operating and Financial Leverage
#1 Break-even analysis (LO2) Shawn Pen & Pencil Sets Inc. has fixed costs of $80,000. Its product
currently sells for $5 per unit and has variable costs of $2.50 per unit. Mr. Bic, the head of
Teaching Tool 6 - Retirement Planning Worksheet
Personal Finance: Another Perspective
The purpose of this spreadsheet is to give an Excel template for calculating
the amount of money you will need to save each month or year given the specific
Given the balance sheet and income state for Simmons Maintenance Company, compute the ratios that are also
shown for the industry average. The "right answer" refers to the question of whether a particular ratio for
Simmons is better or worse than the indu
3. American Health Systems currently has 6,400,000 shares of stock outstanding and will report
earnings of $10 million in the current year. The company is considering the issuance of
1,700,000 additional shares that will net $30 per share to the corporati
1. Why is the Time Value of Money (TVM) an essential concept for business decision
making? Cite some examples of the types of decisions where TVM concepts are used.
2. Using TVM techniques, calculate the amount of savings you will need to comfortably
AC 220 Spring-B
1) Frantic Fast Foods had earnings after taxes of $420,000 in 2012 with 309,000 shares outstanding. On
January 1, 2013, the firm issued 20,000 new shares. Because of the proceeds from these new shares and
other operating improvement
Time Value of Money
Future value (LO9-2) If you invest $8,500 per period for the following number of periods,
how much would you have?
12 years at 10 percent.
50 years at 9 percent.
(1 i ) n 1
#1 Profitability ratios (LO2) Billys Crystal Stores Inc. has assets of $5,960,000 and
turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firms
profit margin (return on sales)?
Hello everyone. Welcome to AC220 Finance at Herzing University Online. This is the first of many
recorded lectures designed to assist your understanding of finance concepts and the course learning
objectives as displayed in your syllabus.
Finance is an im
Welcome back. We now examine the role of accounting in finance. It is the responsibility of the financial
accountant to prepare reports to be used by the various stakeholders of the company. To do this, the
accountant uses GAAP, ge
AC 220 Spring-B
2. Database Systems is considering expansion into a new product line. Assets to support
expansion will cost $380,000. It is estimated that Database can generate $1,410,000 in
annual sales, with a 8 percent profit margin. What would
AC 220 Spring-B
5. Eaton Tool Company has fixed costs of $255,000, sells its units for $66, and has variable
costs of $36 per unit.
a. Compute the break-even point.
Break-even (BE) = (Fixed Costs/Contribution Margin). If you need to deter
Week 3 Lecture Notes
1. Welcome to the Week 3 Lecture. We will cover Chapters 5 and 6 in your textbook. Our
primary focus will look at the operating and financial leverage a firm employs to create
the greatest earnings per share to the investor.
2. The ke
Bond Price Calculator
Present Value Calulation
PV Par $
Present Value AnnuityCalculation
Week 2, Chapter 3, pg 78-82 AC 220
Net Income = $112,800
Return on investment = 29.7%
Profit Margin = 7.10%
15. a) 3.6x
16. a) 16.56%
17. a) Multimedia Inc
18. a. 8 x 350,000=2,800,000 x 5 = $14,000,000
b. 14,000,000 + (8 x 350,000) 13,500,000
14,000,000 + 2,800,000 13,500,000
16,800,000 13,500,000 = $3,300,000
c. There would be no dividends available to common stockholders because no
Week 4 Lecture Notes
1. Welcome to the Week 4 Lecture. We will cover Chapters 9 and 10 in your textbook. Our primary
topic regards the time value of money along with rates and returns.
2. This lecture will review time value in regards to money. We will re
Notes Chapter 4
I believe that reason financial managers base their investment decisions based off of the current assets and
current liabilities is because they need to see the financial position that the company is in before they choose to
invest their m
1. Andy approaches Roberta, who is standing on a street corner, and offers her $50 for sex. Roberta,
an undercover vice officer, arrest Andy. What crime should he be charged?
2. Is there a constitutional right to engage in homosexual conduct between matur
Peter Scray 7/13/13
. Page 50 #18, #22. Page 51 #27.
This assessment is due on Sunday at the end of Week 1.
1. Frantic Fast Foods
a. Year 2009
EPS = Earnings After taxes
b. Year 2010
Respond to each of the following questions in your initial post.
1. Financial managers often view the balances their companies have in Current Assets and Current
Liabilities the result of an investment decision. Discuss why these balances can be viewed as
In order to make ratio comparisons of multiple companies, they must be from the same industry
or provide the same service. Obviously, the profit margins are going to differ enormously
between a Heavy Duty Machinery company and a CheapO burger Company for
Peter Scray 7/20/13
Assignments: Chapter 3; Page 76, #2, #5. Page 77, #8. Page 78, #15, #16. Page 79,
#17. Page 80, #22.
This assessment is due on Sunday at the end of Week 2.
2. Database Systems
Net income = $1,200,000 * .06 = 72,000
Return on Inv
Peter Scray 7/24/13
5. Eaton Tool Company
=Fixed cost/ Contribution per unit
Contribution per unit =selling price per unit variable cost per unit
b. New Break-even point
= 150,000/ (56-34)
Payback and discounted payback provide an indication of both the risk and the liquidity
of a project. A long payback means (1) that the investment dollars will be locked up for many
years, therefore, the project is relatively illiquid, and (2)