Exam 6: Financial Accounting and Business Plans

Your company recently constructed a steel mill producing 600 000 tons of steel per year, for a construction cost of $12 000 000. You know that a rival company has constructed a similar mill, producing twice as much steel, at a cost of $20 900 000. Based on these figures, what is your estimate of the capacity factor for the steel industry?

What section of the business plan includes the company's human resource capabilities and the competitive advantages of the company?

Owner's equity

The Balance Sheet of YYY Ltd. is as follows: ASSETS Current Assets Cash $30 000 Accounts receivable $20 000 Raw materials inventory $50 000 Finished goods inventory $600 000 Total current Assets $700 000 Long-Term Assets Equipment $2 000 000 Buildings $1 100 000 Land $400 000 Total Long-Term Assets $3 500 000 TOTAL ASSETS $4 200 000 LIABILITIES & OWNER'S EQUITY Current Liabilities Accounts payable $10 000 Current loans $60 000 Total current liabilities $70 000 Long-Term Liabilities Long-term loans $900 000 TOTAL LIABILITIES $970 000 Owners' equity Common stock $2 130 000 Retained Earnings $1 100 000 TOTAL OWNERS' EQUITY $3 230 000 TOTAL LIABILITIES AND OWNERS' EQUITY $4 200 000 What is the current ratio of this company?

You run a software development business in Toronto. You are offered a chance to bid on a government contract that you estimate will require 600 000 lines of code, deliverable in one year. You have developed a model: Effort = 3.0(KLOC)1.2 to predict the effort, in programmer-months, required to complete a job, where `KLOC' stands for `thousands of lines of code'. On the basis of this model, how many programmers should you assign to work on the project?

How are assets defined in a Balance Sheet? What types of assets are usually included in this financial document?

What is the distinguishing feature of a limited partnership?

In a balance sheet Current Assets are $9 000; Long-term Assets are $11 000; Current Liabilities are Long-term Liabilities are $8 000; and Total Owners' Equity is $5 000. What is the equity ratio?

You are one of five partners in a general partnership. You have invested $10 000 of your own money in the business. The business is unsuccessful and is left with no assets and liabilities of $100 000. Your partners all leave the country leaving no forwarding addresses. How much of the debt are you legally responsible for?

Explain how owners' equity is defined.

A factory produces two million hand-held computers a year. The annual fixed costs of the factory are and the marginal cost of each computer is $7. What is the average cost per unit?

Describe what should be included in the Sales and Marketing section of the Business Plan.

Consider the following balance sheet: Define and calculate the acid-test ratio.

In this section of the Business Plan, information about key company employees are provided, including experience, education and qualifications for each individual.

What are the two basic summary financial statements that provide information about a firm's revenues, expenses, assets, and liabilities?

What section of the Business Plan describes the company's industry and analyzes the growth plans of the company?

You are trying to estimate the annual cost of setting up a branch of a manufacturing business in Vancouver, based on your experience of running a similar business in Halifax. The original business produces 800 units per year, whereas the Vancouver branch will produce 1 700. If the cost of setting up the Halifax operation was $9 000 000 and the capacity factor is 0.6, give an order of magnitude estimate for the cost of setting up the Vancouver operation.

The Balance Sheet of YYY Ltd. is as follows: ASSETS Current Assets Cash $30 000 Accounts receivable $20 000 Raw materials inventory $50 000 Finished goods inventory $600 000 Total current Assets $700 000 Long-Term Assets Equipment $2 000 000 Buildings $1 100 000 Land $400 000 Total Long-Term Assets $3 500 000 TOTAL ASSETS $4 200 000 LIABILITIES & OWNER'S EQUITY Current Liabilities Accounts payable $10 000 Current loans $60 000 Total current liabilities $70 000 Long-Term Liabilities Long-term loans $900 000 TOTAL LIABILITIES $970 000 Owners' equity Common stock $2 130 000 Retained Earnings $1 100 000 TOTAL OWNERS' EQUITY $3 230 000 TOTAL LIABILITIES AND OWNERS' EQUITY $4 200 000 If the sales of this company are $5 400 000, what is the company's inventory-turnover ratio?

For a given firm, the balance sheet

The strategies to penetrate the target market and gain market share are included in what section of the Business Plan?