Question

H41 x & fx 415) The management of Edelmann Corporation is considering the following three investment Investment required Present value of cash inflows Project R $22,000 $22,520 Projects $62,000 $69,080 Project T $68,000 $76,690 Rank the projects according to the profitability index, from most profitable to least profitable: A S,T,R B. RTS C. TASR D. T.RS 53 6) How many of the following statements are true? In determining whether a company's financial condition is improving or deteriorating over time, horizontal analysis of financial statement data would be more useful than vertical analysis The acid-test ratio is usually greater than the current ratio. As the accounts receivable turnover ratio decreases, the average collection period increases All other things the same, those who hold the company's debt (ie, its creditors) would like a low debt-to-equity ratio to provide a buffer of protection A Only 1 statement is true. B. 2 statements are true. C. 3 statements are true. D. All 4 statement are true James Corp.collects 70% of sales in the month of sale, 25% in the month following sale, and 5% in the second month following sale. The data below are the budgeted sales data for the company Jan. $600,000 Feb. $700,000 March $500,000 April $300,000 Total Sales Total budgeted cash collections in April would be: A $35,000 B. $125,000 C. $210,000 D. $370,000

Answer 1

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Solution: All are individual questions, although both have been answered: Answer is highlighted in yellow: Answer: C) TSR 5) Explanation: Profitability index = Present value of cash inflow/Investment required. PL = e.g. (22520/22000) PI Rank: Project R Projects Project T 1.02 1.11 1.13 2 1 6) C) Three statements are true Statement, 1st, 3rd and 4th are true and standardized. 7) D) $370,000 For Sale in April For March For Feb Collection in April (300000*70%) (500000*25%) (700000*5%) 210000 125000 35000 370000