When a firm uses debt financing, the organization providing financing receives an ownership share in the company.
Answer the following statement true (T) or false (F)
False
Rather than sell stock, some firms prefer debt financing-borrowing money based on a promise to repay the loan, usually within a fixed time period and with a specific interest charge. People or institutions that loan the money typically do not get an ownership share in the company, and they are usually even less willing to take a risk than are investors who buy stock.
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A cost accounting system is a system for accumulating detailed information about all of the costs of a company
Indicate whether the statement is true or false
Explain why having strong writing skills is important in today's digital world
The following summaries from the income statements and balance sheets of Kouris Company and Brittania, Inc. are presented below.(1) For both companies for Year 2, compute the:(a) Current ratio(b) Acid-test ratio(c) Accounts receivable turnover(d) Inventory turnover(e) Days' sales in inventory(f) Days' sales uncollectedWhich company do you consider to be the better short-term credit risk? Explain.(2) For both companies for Year 2, compute the:(a) Profit margin ratio(b) Return on total assets(c) Return on common stockholders' equityWhich company do you consider to have better profitability ratios?Kouris Company Consolidated Balance Sheets(in millions)?May 31?Year 2Year 1AssetsCurrent assets:?? Cash and cash equivalents$ 634.0$575.5 Accounts receivable, net of
allowance2,101.11,804.1 Inventories1,514.91,373.8 Other current assets 429.9 401.3 Total current assets 4,679.9 4,154.7Property, plant, and equipment, net1,620.81,614.5Other long term assets 413.2 670.8 Total assets$6,713.9$6,440.0???Liabilities and Stockholders' EquityCurrent liabilities:?? Current portion of long-term debt$ 205.7$ 55.3 Notes payable75.4425.2 Accounts payable572.7504.4 Accrued liabilities1,054.2765.3 Income taxes payable 107.2 83.0 Total current liabilities2,015.21,833.2Long term liabilities 708.0 767.8 Total liabilities 2,723.2 2,601.0Stockholders' equity:?? Common stock2.82.8 Contributed capital in excess of par value589.0538.7 Unearned stock compensation(0.6)(5.1) Accumulated other comprehensive loss(239.7)(192.4) Retained earnings 3,639.2 3,495.0 Total stockholders' equity 3,990.7 3,839.0 Total liabilities and stockholders' equity$6,713.9$6,440.0Kouris CompanyConsolidated Statement of IncomeMay 31, Year 2(in millions)Revenues$10,697.0Cost of sales 6,313.6Gross profit4,383.4Operating expenses 3,137.6Operating income1,245.8Interest expense42.9Other revenues and expenses 79.9Income before tax1,123.0Income taxes 382.9Income before effect of accounting change740.1Cumulative effect of accounting change, net of tax 266.1Net income$ 474.0??Brittania, Inc.Consolidated Balance Sheets?Jan. 3,Jan. 4,?Year 2Year 1AssetsCurrent assets:?? Cash and cash equivalents$34.5$22.2 Accounts receivable, net of allowance15.514.7 Inventories27.228.4 Other current assets 3.5 4.2 Total current assets80.769.5Property, plant, and equipment, net5.77.0Other long term assets 1.1 1.5 Total assets$87.5$78.0???Liabilities and Stockholders' EquityCurrent liabilities:?? Accounts payable$ 8.5$ 6.6 Accrued liabilities 7.8 5.6 Total current liabilities16.312.2Long term liabilities 2.5 2.6 Total liabilities 18.8 14.8Stockholders' equity:?? Common stock2.32.3 Contributed capital in excess of par value17.817.4 Unearned stock compensation(0.1)(0.5) Accumulated other comprehensive loss(0.9)(1.3) Treasury stock(6.3)(5.4) Retained earnings 55.9 50.7 Total stockholders' equity 68.7 63.2 Total liabilities and stockholders' equity$87.5$78.0Brittania, Inc.Consolidated Statement of IncomeJanuary 3, Year 2(in millions)Revenues$133.5Cost of sales 87.3Gross profit46.2Operating expenses 37.3Operating income8.9Interest expense(0.1)Other revenues and expenses 0.3Income before tax9.1Income taxes 3.9Net income$ 5.2 What will be an ideal response?
Determine the Lagrange multiplier
A) 80.34 B) 90.34 C) 17.96 D) 5.17