Question

You estimate that your cattle farm will generate $0.15 million of profits on sales of $3 million under normal economic conditions and that the degree of operating leverage is 2. a. What will profits be if sales turn out to be $1.5 million? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your answers in millions.) b. What

will profits be if sales turn out to be $4.5 million? (Do not round intermediate calculations. Enter your answers in millions rounded to 1 decimal place.)

Answer #1

DOL=% change in profits/% change in sales |

ie. A measure of change in profits, given the change in sales |

2.a. Profits ,be if sales turn out to be $1.5 million |

ie. Decrease by 50%----$ 1.5 mln. Is 50% of $ 3 mln. |

Given the DOL =2 |

Decrease in sales =50% |

DOL=2 |

So, decrease in profits will be 50%*2= 100% |

$ Decrease in profits=0.15*100%=0.15 |

Profits will be 0.15-0.15= $
0 mlns. |

2.b.Profits , if sales turn out to be $4.5 million |

ie. Increase by 50%----$ 4.5 mln. Is 150% of $ 3 mln. |

Given the DOL =2 |

Increase in sales =50% |

DOL=2 |

So, Increase in profits will be 50%*2= 100% |

$ Increase in profits=0.15*100%=0.15 |

Profits will be 0.15+0.15= $
0.3 mlns. |

You estimate that your cattle farm will generate $0.15 million of
profits on sales of $3 million under normal economic conditions and
that the degree of operating leverage is 2.
(Leave no cells blank - be certain to enter "0" wherever required.
Do not round intermediate calculations. Enter your answers in
millions.)
a. What will profits be if sales turn out to be $1.5
million?
b. What if they are $4.5 million?

You estimate that your
cattle farm will generate $0.10 million of profits on sales of $2
million under normal economic conditions and that the degree of
operating leverage is 5. (Leave no cells blank - be
certain to enter "0" wherever required. Do not round intermediate
calculations. Enter your answers in
millions.)
a.
What will profits be if sales turn out to be $1.6 million?
Profit will____to______million.
b.
What if they are $2.4 million?
Profit will____to
______million.

You estimate that your cattle farm will generate $.40 million of
profits on sales of $8 million under normal economic conditions and
that the degree of operating leverage is 2.(Leave no cells blank -
be certain to enter "0" wherever required. Do not round
intermediate calculations. Enter your answers in millions rounded
to 1 decimal place.)
a. What will profits be if sales turn out to be $3.3 million?
Profit will to $ million.
b. What if they are $12.0...

You estimate that your sheep farm will generate $0.9 million of
profits on sales of $10 million under normal economic conditions
and that the degree of operating leverage is 2. What will sales be
if profits turn out to be $0.5 million?

If a firm has retained earnings of $22.2 million, a common
shares account of $274.2 million, and additional paid-in capital of
$99.2 million, how would these accounts change in response to a 20
percent stock dividend? Assume market value of equity is equal to
book value of equity. (Enter your answers in dollars not in
millions. Leave no cells blank – be certain to enter "0" wherever
required. Do not round intermediate calculations and round your
final answers to the...

If a firm has retained earnings of $22.5 million, a common
shares account of $274.5 million, and additional paid-in capital of
$99.5 million, how would these accounts change in response to a 20
percent stock dividend? Assume market value of equity is equal to
book value of equity. (Enter your answers in dollars not in
millions. Leave no cells blank - be certain to
enter "0" wherever required. Do not round intermediate calculations
and round your final answers to the...

If a firm has retained earnings of $22.2 million, a common
shares account of $274.2 million, and additional paid-in capital of
$99.2 million, how would these accounts change in response to a 20
percent stock dividend? Assume market value of equity is equal to
book value of equity. (Enter your answers in dollars not in
millions. Leave no cells blank – be certain to enter "0" wherever
required. Do not round intermediate calculations and round your
final answers to the...

Consider a 4-year amortizing loan. You borrow $2,900 initially
and repay it in four equal annual year-end payments. a. If the
interest rate is 9%, what is the annual payment? (Do not round
intermediate calculations. Round your answer to 2 decimal places.)
b. Prepare an amortization schedule. (Do not round intermediate
calculations. Round your answers to 2 decimal places. Leave no
cells blank - be certain to enter "0" wherever required.)

Wildcat, Inc., has estimated sales (in millions) for the next
four quarters as follows:
Q1
Q2
Q3
Q4
Sales
$
200
$
220
$
240
$
270
Sales for the first quarter of the following year are projected
at $215 million. Accounts receivable at the beginning of the year
were $85 million. Wildcat has a 45-day collection period.
Wildcat’s purchases from suppliers in a quarter are equal to 50
percent of the next quarter’s forecast sales, and suppliers are
normally...

Total assets are $13.7million, while sales are $18.7million, and
total liabilities are $4.5 million. Profit margin equals 10%.
Requirement 1:
What is net income? (Do not round intermediate
calculations. Enter your answer in dollars, not
millions of dollars (e.g., 1,234,567).)
Net income
$
Requirement 2:
What is ROA? (Do not round intermediate
calculations. Enter your answer as a percent
rounded 2 decimal places (e.g., 32.16).)
ROA
%
Requirement 3:
What is ROE? (Do not round intermediate
calculations. Enter your answer...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 17 minutes ago

asked 37 minutes ago

asked 46 minutes ago

asked 50 minutes ago

asked 52 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago