Stine Co. is a retail store operating in a state with a 6% retail sales tax. The retailer may keep 2% of the sales tax collected

Response:

The return on equity (ROE) would be altered by 8.52%

Clarification:

Initially, we determine the existing ROE utilizing the Dupont Formula, yielding ROE as follows:

ROE = Net Income/Sales * Sales/Total Assets * Total Assets/Equity

or

ROE = Net Profit Margin * Total Assets Turnover * Equity Multiplier

• Current ROE = 10600/295000 * 1.4 * 1.75 = 0.0880 or 8.8%

The condition states that net income might rise to 20850 while other factors remain unchanged. Therefore, to find the new ROE, we compute the updated Net Profit margin, keeping the total assets turnover and the equity multiplier constant due to the absence of sales, assets, or capital structure changes.

• New ROE = 20850/295000 * 1.4 * 1.75 = 0.17316 or 17.32%
• The ROE would have shifted by 17.32 - 8.80 = 8.52%

Answer: $36,000 loss

Explanation:

Initial cost = $250,000

Shipping fees = $3,500

Setup fees = $2,500

Annual maintenance = $5,000

Depreciation amount = $25,000

Proposed selling price = $200,000

Total costs involved = $(250,000 + 3,500 + 2,500 + 5,000)

Total costs involved = $261,000

Depreciation amount = $25,000

Equipment's book value = $261,000 - $25,000 = $236,000

Calculating gain/loss = Book value - selling price

Gain/loss = $236,000 - $200,000

$36,000 loss

Answer:

A total of $600,000 is needed for financing to support the cash conversion cycle

Explanation:

To determine the financing requirement, we start by calculating the cash conversion payable illustrated as follows:

Cash conversion cycle = Average inventory age + Average collection duration - Average payment time

= 65 + 60 - 65

= 60 days

Next, we must utilize the financing equation shown below:

= Total annual operating cycle outlays × cash conversion cycle ÷ total days in a year

= $3,650,000 × 60 days ÷ 365

= $3,650,000 × 0.16438

= $600,000

Hence, a financing amount of $600,000 is essential to sustain the cash conversion cycle.

Answer:

The true statements regarding the market are:

1) The cupcakes are priced below their equilibrium level. This is evident as excess demand exists, which wouldn't be the case at the equilibrium price.

3) Customers getting cupcakes are those who value them the most, seen through their willingness to queue before the bakery opens.

4) The bakery does not rely solely on price for distributing cupcakes. Timing plays a role; only those who arrive early get them.

Statements (2) and (4) are incorrect because those conditions only hold true at the equilibrium point.