Tag: Economics

Q1:

Al-Amal Company’s contribution format income statement for the most recent month on a sales volume of 20,000 units is given below (the relevant range of production is 10,000 units to 30,000 units):

(Answer each question independently and always refer to original data unless instructed otherwise)

1. Compute the break-even point in unit sales, and in sales revenue.
2. “The Sales manager was afraid that if sales drop to 10,000 units, the net operating income would decrease by 50%”, comment on the appropriateness of his thoughts? Explain in details showing calculations (hint: reproduce the contribution income

Net operating income
The company has a large amount of unused capacity and is studying ways of improving profit

statement to reflect the changes on the net operating income)

1. a. Compute the Degree of operating leverage.
   b. Using the degree of operating leverage computed above, what is the estimated percent decrease in net operating income if sales drop by 50%? Show calculations to support your argument in (2) above.
2. New equipment has come on the market that would allow the company to automate a portion of its operations. Variable expenses would be reduced by AED 12 per unit. However, fixed expenses would increase to a total of AED 432,000 each month. Prepare a contribution format income statements to show how operations would appear if the new equipment is purchased.
3. Refer to the data in (4) above. As a manager, what is the risk associated in deciding whether to purchase the new equipment? Assume that ample funds are available to make the purchase, when would you recommend that the company automate its operations? Explain without calculations.

Question 2:

Max Company is a clothing manufacturer. One of its products is a plain T-shirts that normally sells for AED 20 per T-shirt. Max Company currently sells 4,000 T-shirts which is 80% of its overall capacity (5000 units). Following are the details of producing 4000 T-shirts:

refer to the second uploaded document Q2.Required:

1. Prepare a contribution format income statement (marginal costing)

Read carefully the below case and answer the following special-order questions accordingly:

The Emirates Airlines is the official sponsor of the tennis tournament and wanted to distribute a T-shirt holding its logo in special promotion throughout the tournament. Therefore, the Emirates Airlines approached Max Company to buy 1,000 T-shirts and offered a special price of AED 16 per T-shirt.

Max Company will have to incur an additional printing material cost of AED 2 per T- shirt to add the Emirates Airline logo, and would also require acquisition of a special tool costing AED 1,500 that would be used for this order only, there is no assurance that Emirates Airline will purchase additional units in the future. However, Max Company will get a quantity discount from its cloth (material) supplier of AED 1.5 per T-shirt for the additional T-shirts order.

There would be no sales commissions on this order which constitute one-third of the current variable selling expenses. However, a special packing is required that will increase the selling cost (variable) by AED 1.75 per T-shirt.
The manager of Max Company turned down the offer, saying, “If we sell at AED 16, and our cost is AED 19, we lose money on every T-shirt we sell”.

2. Compute the amount by which the operating income of Max Company will change (increase or decrease) if the Emirates Airlines offer is accepted. Do you agree with the manager in rejecting the offer?

1. In addition to considering the quantitative impact computed in requirement 2 above; list some qualitative considerations that would influence your decision.
2. If Emirates Airlines requested 2000 units instead of 1000 units, how this would affect your answer, explain briefly, no calculation is required.

Question 3:

Kamel Company has $600,000 to invest and wishes to evaluate the following three projects.

1. which project(s) would you recommend using:

1. Payback Period (PP)
2. Net Present Value (NPV)
3. Profitability Index (PI)
4. The Internal Rate of Return (IRR) (hint: use 20% as cost of capital

[Notes: Present value of 1 = 1 / (1+ r)n , where: r = the discount rate, n = the number of years]
2. What are the advantages and disadvantages of the Payback Period Method?

1.Provide an explanation and an example of when futures contracts might have negative prices. (600 words)

2.Explain what is a ‘short squeeze’ and provide a real example of it. (300-500 words)

Prior to beginning work on this assignment, read  Financial Statement Analysis in Mergers and Acquisitions (Links to an external site.) online resource. Carefully review the Company Profile and Due Diligence Guidelines document. You will support your findings and recommendations with evidence from at least four scholarly and/or professional sources in addition to the required annual reports for your chosen acquiring and target companies. Be sure to include any links to professional websites used as references or to access company information.

In this assignment, you will prepare a financial analysis for a merger or acquisition based on the acquiring and target companies you identified in the Week 2 assignment. This analysis will include items 3, 5-8, and 10 from the Company Profile and Due Diligence Guidelines document.(See Attached Document)

The completed report must include the following elements:

• Analyze business valuation techniques, and compute, summarize, and identify trends for the following financial ratios for the target company:
  • Inventory turnover for the past three years
  • Price to book value for the past three years
  • Price to earnings for the past three years
  • Sales to accounts receivable for the past three years
  • Sales to inventories for the past three years
  • Sales to fixed assets for the past three years
  • Earnings to book value for the past three years
• Create sales profiles for both the acquiring and target companies, including the following:
  • Description of the market
  • Gross and net sales for the past three years
  • Comparative advantages and disadvantages
  • New developments and industry trends
  • Research program, cost history, and scope results
  • Analyze the earnings and dividends for both companies, including the following:
  • Earnings records for the last three years
  • Earnings comparisons with the industry for the past three years
  • Dividends and earnings records for the past three years in total and per share
  • Potential economies
  • Analyses of selling and general administrative expenses
  • Evaluate the short-term and long-term assets for both the acquiring and target companies, including the following:
• Relationships of cash to current liabilities
• Pricing methods
• Accounting methods and procedures
• Analyses of investments
• Evaluate the short-term and long-term liabilities for both the acquiring and target companies, including the following:
  • Long-term loans outstanding and terms
  • Dividend and interest arrearages
  • Contingent liabilities: warranties, patent infringements, loss contracts, and compensation for services
  • Pensions
  • Commitments for new buildings, machinery, and inventories
• Evaluate three-year projected financial data for the target company, including the following:
  • Assumptions for the projected pro forma financial statements
  • Projected earnings forecast, including income statements and statement of cash flows

I’m trying to learn for my Micro Economics class and I’m stuck. Can you help?

you create your own company and talk about it as Irie parts servicies. This is becasue i would be like an autozone for 18 wheeler parts,t

he directions are as follow:

you develop a specific business good or service. You should use this specific good or service for all of the remaining weeks, please do not change your good or service.

If the market for your good were to suddenly become perfectly competitive.

1. Indicate what happens to the firm’s demand curve.
2. Describe the perfectly competitive equilibrium price and quantity.
3. Discuss the prospects for your small business in the long run.

1. Describe Fedex, so that the IMD has a comprehensive understanding of its operations and risks.

2.Present a table of a current “stock quote” with the following characteristics: (1) Current Price (2) 52 Week Range (3) Market Cap (4) Beta (5) P/E Ratio (6) EPS (7) Earnings Date (8) Forward Dividend and Yield, (9) Ex-Dividend Date, and (10) 1 year Target Estimate for your chosen company. Define and interpret each characteristic.

3.Select an appropriate government-issued bond. The choice must be suitably justified to be used as a risk-free rate proxy. Graph the bond rate over the time period 2010-2019. How have interest rates changed over this period? Why do you think this has occurred? Do you think interest rates will go up or down in the future? Discuss with references to appropriate academic literature.

4.Calculate the required rate of return on equity for your chosen company using the Capital Asset Pricing Model (CAPM), with the stock’s beta value (from part 2) and the rate identified as a proxy for the risk-free rate (from part 3). Assume that an appropriate return on the market is 8% p.a. over the same period.

Please prepare an essay of about 400-550 words in length to
give two examples -different from the readings- of how the prospect theory
influences the policymaking of central banks.

You may come up with a well-crafted hypothetical example. The examples
may be from the areas of, but not limited to, macro stability, monetary stability, payment
systems, regulation and supervision, as well as legal decisions. The examples can also be from
the perspective of fiscal policymakers and other agencies that are related to the central bank.

Be sure to point to the specific characteristics of this theory that are being applied to the
situation. It is recommended that your two examples draw from different aspects of this
preference.

The prospect-theory investors don’t earn utility from the final wealth but from gains and losses
relative to a reference point. The aversion to loss is steeper than the joy from gain of an equal
size (loss aversion). The preference builds in “subjective probability” which means that
investors put their own belief into evaluating how likely the events occur, and more often than
not, the belief does not match with the objective probability. For example, the subjective
probability leads to an overemphasis on small-probability events, while under-weigh the likely
ones.

-What are the policy implications to different involved parties? If
applicable, what would the policy decisions have been like under the expected
utility framework? What are the welfare implications?

These are only some of the guiding questions. You do not have to address all of them. At the
same time, you are also encouraged to go above and beyond these.

The writing style should be a memo report to your directors and your senior colleagues, who
have background in economics but may not have heard of the prospect theory and are curious
about how it can be applied to policy decisions. Please cite all references.

-Reference

Barberis, Nicholas C. (2013). Thirty Years of Prospect Theory in Economics: A Review and
Assessment. Journal of Economic Perspectives 27(1), 173-196.

Kahneman, Daniel and Amos Tversky (1979). Prospect Theory: An Analysis of Decision under
Risk. Econometrica 47(2), pp. 263-291.
Available at https://www.uzh.ch/cmsssl/suz/dam/jcr:00000000-64a0-5b1c-0000-
00003b7ec704/10.05-kahneman-tversky-79.pdf

In a critical essay, select a developing country of your choice (other than Saudi Arabia) and discuss its main trade characteristics and trade problems. What trade reforms should the government implement? What would be the role of the IMF and the World Bank in these reforms? What policies should the government pursue to achieve strong economic growth?

Directions:

• Your essay is required to be four to five pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements.
• Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources.
• Use Saudi Electronic University academic writing standards and follow APA style guidelines.
• Required:Chapter 7 in International EconomicsCruz, M., Milet E., & Ollareaga, M. (2020). Online exports and the skilled-unskilled wage gap. PLoS One, 15(5). Retrieved from https://doi-org.sdl.idm.oclc.org/10.1371/journal.pone.0232396
• 
  
• Recommended: Chapter 7 PowerPoint slides Chapter 7 PowerPoint slides – Alternative Formats – International EconomicsNaz, A., Shaista, A., & Noman, S. (2019). The determinants of income distribution, an empirical analysis of developing countries. Public Finance Quarterly, 64(4), 494-510.Small, O., Brown, L., & Canavire-Bacarreza, G. (2020). The fiscal policy response to public debt in developing countries. Contemporary Economic Policy, 38(1), 155-165.

The Saudi Arabia Vision 2030 stated SMEs (Small-Medium Size Enterprises) struggles to access adequate funding from the financial institutions. Offer two recommendations specific to how this struggle should be effectively addressed and be in alignment with Saudi Vision 2030.

Readings

Required:

https://www.vision2030.gov.sa/

chapter 12 in Foundations of Finance – Determining the Financing Mix

Hamrouni, A., Boussaada, R., & Toumi, N. B. (2019). Corporate social responsibility disclosure and debt financing. Journal of Applied Accounting Research, 20(4), 394-415. https://doi.org/10.1108/JAAR-01-2018-0020

Li, Z., Li, Q., & Zeng, Y. (2020). Contraction flexibility, operating leverage, and financial leverage. Journal of Management Science and Engineering. https://doi.org/10.1016/j.jmse.2020.02.002

Recommended:

Chapter 12 PowerPoint slides SEU_FIN500_PPT_Mod07_Ch12.pptx – Alternative Formats in Foundations of Finance – Determining the Financing Mix

Yan, C., & Huang, K. X. D. (2020). Financial cycle and business cycle: An empirical analysis based on the data from the U.S. Economic Modelling. https://doi.org/10.1016/j.econmod.2020.01.018

1. These should be organized like an annotated bibliography with the reference information followed by the summary for each journal article.
2. Organize articles alphabetically.

Please find the attached files.