This year Andrews achieved an ROE of 14.7%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Andrews's ROE?
Andrews ROE will remain the same
Andrews ROE will decrease
Andrews ROE will increase
On the income statement, which of the following would be classified as a Period cost?
Direct Labor Expense
Direct Material Expense
Inventory Carry Expense
Chester's turnover rate for this year is 6.39%. This rate is projected to remain the same next year and no further downsizing will occur from automating. What would the total recruiting cost be for Chester, assuming it spends the same amount extra above the $1,000 recruiting base as they did this year?
Next year Baldwin plans to include an additional performance bonus of 0.5% in its compensation plan. This incentive will be provided in addition to the annual raise, if productivity goals are reached. Assuming the goals are reached, how much will Baldwin pay its employees per hour?
It is January 2nd. Senior management of Chester meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 50,000 shares of stock plus a new bond issue. The CFO happily notes this will raise their Leverage (=assets/equity) to a new target of 2.8. Assume the stock can be issued at yesterday’s stock price ($27.49). Which of the following statements are true? Check all that apply.
The Chester Working Capital will be unchanged at $13,312
Total Assets will rise to $215,187,000
Total investment for Chester will be $3,848,600
Long term debt will increase from $83,393,783 to $84,768,283
Chester will issue stock totaling $1,374,500
The Chester bond issue will be $2,474,100
The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin’s accounts payable goes down:
It is a source of cash, and will be shown in the operating section as an addition.
It is a use of cash, and will be shown in the financing section as a subtraction.
It is a use of cash, and will be shown in the operating section as a subtraction.
It is a source of cash and will be shown in the financing section as an addition.
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