An insurance company’s projected loss ratio is 73%, its commission payments and dividends to policyholders is 12%, and its yield on investments is 6%. If it has a positive (profitable) operating ratio, what can you say about its loss adjustment expense ratio?
Yield on Investment should be 6%. So Combined Ratio = 100+6 = 106%.
Combined Ratio = Loss Ratio + Loss Adjustment expense Ratio + Dividends to Policy holders.
ie, 106 = 73+ ?? + 12
loss adjustment expense ratio =106% - 73% - 12% = 21%
An insurance company’s projected loss ratio is 73%, its commission payments and dividends to policyholders is...
An insurance company’s projected loss ratio is 73%, its commission payments and dividends to policyholders is 12%, and its yield on investments is 6%. If it has a positive (profitable) operating ratio, what can you say about its loss adjustment expense ratio?
An insurance company’s projected loss ratio is 78.9 percent, and its expense ratio is 13.2 percent. It estimates that dividends to policyholders will add another 16 percent. What is the minimum yield on investments required in order to maintain a positive operating ratio?
A major French insurer is in a position to take over an Irish-based insurance company called Farm Insure Ltd. Farm Insure has a particular focus on agricultural insurance which may complement the French insurer’s expertise in this sector. Using some preliminary information on Farm Insure, they can consider whether to continue their investigation into the financial position and examine whether the Irish insurer is a suitable take-over prospect. 1. With total assets of €242 million and total liabilities of €275...
Carolyn is senior vice president of finance and chief
actuary
PART TWO / The Private Insurance Industry The the resc tios А CASE APPLICATION Carolyn is senior vice president of finance and chief actu ary for Rock Solid Insurance Company (RSIC). Lonnie 3 3. Rock Solid's net underwriting result last year was . Rock Solid's net is double-majoring in finance and mathematics at State $540,000 loss. Explain how it is possible that Rock University. Lonnie applied for an internship with...
volts Company manufactures and sells a telephone answering machine. The company’s contribution format profit and loss account for the most recent year is given below: Total Per unit % of sales Sales (20,000 units) ₤1,200,000 ₤60 100% Less variable expenses 900,000 ₤45 ?% Contribution margin 300,000 ₤15 ?% Less fixed expenses 240,000 Profit ₤60,000 Management is anxious to improve the company’s profit performance and has asked for several items of information. Required: 1. Compute the company’s Contribution/margin ratio and...
The times-interest-earned (TIE) ratio shows how well a firm can cover its interest payments with operating income. Compare the income statements of Lost Pigeon Aviation and Purple Panda Importers and calculate the TIE ratio for each firm. Lost Pigeon Aviation Income Statement For the Year Ended on December 31 (Millions of dollars) Net Sales 1400 Variable costs 560 Fixed costs 490 Total Operating Costs $1,050.00 Operating Income (or EBIT) 350 Less interest 50 Earnings before Taxes (EBT) 300 Less taxes...
Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 780,000 Less: Operating expenses Raw materials purchases $ 264,000 Direct labor cost 190,000 Advertising expense 90,000 Selling and administrative salaries 75,000 Rent on factory facilities 60,000 Depreciation on sales equipment 45,000 Depreciation on factory equipment 31,000...
Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 794,900 Less: Operating expenses Raw materials purchases $ 264,100 Direct labor cost 189,300 Advertising expense 91,400 Selling and administrative salaries 76,100 Rent on factory facilities 61,600 Depreciation on sales equipment 45,000 Depreciation on factory equipment 32,500 ...
Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 794,900 Less: Operating expenses Raw materials purchases $ 264,100 Direct labor cost 189,300 Advertising expense 91,400 Selling and administrative salaries 76,100 Rent on factory facilities 61,600 Depreciation on sales equipment 45,000 Depreciation on factory equipment 32,500 ...
Q1. Calculate the 2011 current and quick ratio based on the
projected balance sheet and income statement data.
Q2. What can you say about the company's liquidity position in
2009, 2010, and projected in 2011?
Q3: Calculate the 2011 inventory turnover, days sales
outstanding, fixed assets turnover and total assets turnover. How
does Computron's utilization of assets stack up against other
firms?
Q4: Calculate the 2011, debt, times interest earned and EBITDA
coverage ratios. How does Computron compare with industry...