A division of a global multinational company reports sales of $1 075 000, variable costs of $500 000, traceable fixed costs of $387 500, allocated regional common costs of $75 000 and allocated corporate costs of $37 500. Prepare a divisional performance report.
> What impact does taxation have on investment decisions?
> List the formulas for the three basic financial performance indicators to measure divisional performance.
> Compare the calculation of the ARR with the NPV. What advantages does the NPV have compared with the ARR?
> How does inflation impact on the setting of discount rates?
> Define the term ‘discount rate’ and explain how entities set their rates.
> Discuss the factors that would lead to an investment being selected with a shorter PP.
> What factors are taken into consideration in determining an appropriate ARR?
> Define the ARR. What are the two components of the investment that must be known in order to perform this calculation?
> What factors must be taken into consideration in determining the discount rate used in investment decisions?
> What is the difference between risk and return in finance?
> Eloise Tan, a student, recently received a digital SLR camera for her 18th birthday. Over the summer months she has been busy experimenting with the lenses and taking photos of Brisbane attractions such as the Brisbane River, the Gabba, Southbank, Suncor
> Chang De Silva Ltd, an Australian entity, is offered three projects for which the cash flows are as follows in thousands of dollars. The directors work on 14 per cent as their required rate of return (RRR). Assume all cash flows occur at the end of the r
> List some typical goals and performance measures for a balanced scorecard.
> (a) Discuss the advantages and disadvantages of both the ARR and the PP. (b) Examine the practical issues in making capital investment decisions. (c) Distinguish between the net present value (NPV) of an investment and its future value (FV). Provide an e
> What is the balanced scorecard framework?
> Why measure organisational performance?
> CEO remuneration packages have courted much controversy. These packages are normally divided into a base salary and incentive payments. The incentive payments are usually aligned with the financial performance of the company, and are made up of bonuses a
> Beginning with the June 28, 2007 issue, Rolling Stone magazine became the first mass-marketed magazine to print on carbon-neutral paper. The special June issue of the magazine included a series of features devoted to the climate change issue, including a
> Fit Solutions is a provider of personal exercise equipment. One division of Fit Solutions produces a product called Fab Abs, a specialised piece of equipment that exercises the abdominal region. Most of the components for the Fab Abs are sourced from var
> Enviro Solutions Pty Ltd operates three divisions that supply products and services relating to water. The two older divisions produce and supply water hardware such as pumps, pipes and tanks. The new division is a service division. It supplies consultan
> ‘Information management is an essential component of an environmental and social performance measurement system.’ Discuss whether you agree with this statement.
> For each of the scenarios below, indicate the effect (increase, decrease or no effect) it would have on ROI, RI, profit margin and asset turnover. (a) Equipment is sold for $20 000. It is currently valued on the books at $25 000 and was originally acquir
> Refer to the information supplied in problem 14.41. The management of Pineapple Plantations Pty Ltd have come across a further investment opportunity. They do not want to develop a separate division, so one of the existing divisions would need to take re
> What are the three purposes of preparing divisional performance reports?
> Suggest indicators that could be used to assess an improvement in efficiency in each of the following areas. (a) Reducing the amount of energy used in production of goods and services. (b) Reducing the material intensity of the production of goods and se
> Susan is a divisional manager with the Generator Company. Her performance report shows a positive divisional margin, but a loss for the year. Susan has complained to the CEO about the common costs that were charged to her division and she has questioned
> Global Enterprises is a division of an international conglomerate. The following information relates to its performance. Target profit margin …………………………………………….. 12% Target asset turnover ………………………………….. 1.34 times Charge for capital …………………………………………………
> Pineapple Plantations Pty Ltd is located on the Sunshine Coast in Queensland and manufactures sustainable, pineapple-based products for three different markets. The business has grown from a backyard hobby for the owner, Dave Geitz, to quite a large manu
> You have been assigned a consulting job with a medium-sized agricultural company that specializes in supplying seedlings to nurseries. The entity is divided into divisions based on geographical location. Currently the management of each division are eval
> You work for a fruit and vegetable manufacturer that has three divisions: juice, canned and fresh. Rewarding performance has been on the agenda for the last few management meetings and it has been proposed that the company would benefit from creating an
> The statement of financial position and the statement of profit or loss for Lavender Plantations Pty Ltd are presented below. LAVENDER PLANTATIONS PTY LTD Statement of financial position as at 31 December 2021 Current assets Cash on hand â€&br
> The four perspectives of the balanced scorecard are internal operations, innovation and improvement, financial and customer. A list of goals and measures is presented below. Match each goal with one of the four perspectives, then match each measure with
> Information for the three divisions of the Hampton Corporation follows. Required Assuming that the tax rate is 30 per cent, calculate the EVA for each division.
> Critique the two approaches to incorporating environmental and social performance in the balanced scorecard.
> What are the terms used interchangeably for a business unit? What is the responsibility of the manager of the business unit?
> Refer to the company you selected in exercise 14.33 and investigate the environmental and social information it provides. This may be in its annual report, in its CSR report or on its website. What are the company’s environmental and social concerns? How
> Select a company in your region and search its website for its mission statement. Investigate the information on the website to discover what factors drive the company’s success and any related information about its overall performance. Further review it
> The data below have missing values. Determine the missing values indicated by the letters (a) to (i).
> A family business has built a chain of coffee shops. The basic underlying principles of the chain, which has helped it to grow, are cost effectiveness, quality of service and product innovation. Determine two performance measures for each of these succes
> One common objective is quality. Listed below are businesses that regard quality as a strategic objective. For each business, list two performance measures that could help capture the strategic objective of quality. (a) A bus company (b) A day care centr
> For each of the five perspectives of the balanced scorecard, list two possible objectives, a measure and a driver. Arrange your answer as follows.
> A segment of Canine Holdings reports sales of $280 000 and a profit of $60 000. The data below also relate to this segment of Canine Holdings. Total assets ………………….………………………… $650 000 Accumulated depreciation ……………….………. $150 000 Net assets book value ……
> A division has profit of $20 250, sales of $247 500 and an investment base of $112 500. If the required charge for capital is 20 per cent, determine the: (a) Profit margin (b) Asset turnover (c) Return on investment (d) Relationship between the three mea
> A division reports divisional margin/profit of $180 000, residual income of $36 000 and investment for the period of $1 440 000. What is the minimum return being required by management?
> For each of the following stakeholder groups, give an example of an eco-efficiency indicator. (a) Shareholders (b) Government (c) Top management (d) Site management (e) Project management (f) Divisional management (g) Product management
> Discuss the four types of responsibility centres.
> The following data relate to the Chinese Division of Hangzhou Incorporated. Sales …………………………………………………… $360 000 Direct variable costs ……………………………... $120 000 Direct fixed costs …………………………………… $80 000 Average invested capital ………………………. $400 000 Required
> You have been presented with a proposal to invest $200 000 into a company (using $100 000 of borrowed funds). In the first year of operations, the net operating profit after tax is expected to be approximately $46 000 in total. No shift in debt or equity
> Feather Pillows Ltd has three divisions: Hard, Medium and Soft. Corporate expenses of $72 000 are allocated to divisions based on sales. Data for the current quarter are as follows. Required Prepare a division performance report using a format similar t
> Discuss the basic principles in choosing non-financial performance indicators.
> Outline the advantages and disadvantages in using non-financial performance indicators.
> JB Hi-Fi Ltd’s focus is on creating shareholder value. In its 2018 preliminary final report, the company states that the cornerstone of its success is its ability to consistently offer everyday low prices through economies of scale, hig
> Which of the following entities do you think would have the greatest proportion of working capital held as accounts receivable? Why? (a) Local butcher (b) Hardware store (c) Stallholder at a weekend market selling handicrafts
> Which of the following entities do you think would have the greatest proportion of working capital held as cash? Why? (a) Local butcher (b) Hardware store (c) Stallholder at a weekend market selling handicrafts
> Differentiate between working capital and net working capital. Provide examples of both current asset and current liability accounts that would be taken into consideration to determine net working capital for a bakery.
> Pozible is a crowdfunding site for creative, community and passion projects. Go to the website at www.pozible.com. Required (a) What are the benefits of joining a crowdfunding community like Pozible? (b) How much money has been raised in pledges? (c) Ch
> Plush Cruiser Ltd builds luxury houseboats. The entity needs funds for expansion. It could take out a fixed-rate or variable-rate business loan over, say, 25 years. An alternative is issuing new shares to investors in the form of a rights issue. Explain
> Base Company buys in sand, gravel, cement powder and steel reinforcement. These raw materials cost about $15 million most years. Base Company has recently enjoyed a surge in sales after it liberalised its credit policies. The result of the change in cred
> Katelyn Ltd arranges a 91-day commercial bill: 91 days because the 90th day was a Sunday. The face value is $200 000 and Katelyn receives $197 010. What is the yield?
> Outline the reason for implementing a team-based reward structure and the disadvantages in doing so.
> JB Hi-Fi Ltd’s 2018 statement of financial position provides the following data. In 2018, JB Hi Fi Ltd earned record revenue (increased by 35.3 per cent) and the EPS (earnings per share) increased by 31.5 per cent. JB Hi-Fi Ltdâ&
> Rosedale Ltd is a listed company with 30 million shares issued. It wants to raise more capital by means of a rights issue. The current market price is $6 and the subscription price is $5. The rights will be issued on the basis of 1:5. How much will Rosed
> Advantage Tennis Coaching (ATC) in Brisbane offers coaching for junior, elite and mature tennis players. Nicholas Cash, the sole proprietor, has identified that the business cycle will be seasonal, with most activities in the spring and summer months. As
> Toowong Ltd has been growing relatively slowly in a mature industry. Its trade creditor and credit sales data for the last five years (in $ million) are shown below. Required (a) Compute the creditors turnover for Toowong Ltd’s trade c
> Lavender Plantations Pty Ltd manufactures Lavender-based products and commenced operations in 2019. Production and sales have grown consistently. Here are data for the last four years (in $ thousand). Required (a) Compute the creditors turnover for Lave
> Baxter Ltd reported $200 million in credit sales in 2017–18 and 2018–19. Average accounts receivable dropped from $25 million to $20 million over the two periods. Required (a) Assuming 220 trading days each year, how has debtors turnover changed? (b) Ex
> Volley Ltd has $1 million spare cash from commissions earned during the busy pre-Christmas season. Staff are paid a retainer, as well as part of the commissions earned through sales. Volley Ltd is aware from past experience that sales fall off during win
> CuteIT makes smartphone covers. The employee payroll averages $600 000 per week. CuteIT would like to extend the pay cycle to fortnightly. The manufacturing workers union argues that the company is saving payroll-handling costs of $10 000 and receives ot
> Coconut Plantations Pty Ltd manufactures sustainable, coconut-based products for sale to wholesalers and retailers around Australia and New Zealand. Jo Geter, the manager, has a goal of increasing the market share of the company. Strategies to achieve th
> A friend is thinking about starting a company manufacturing small robots for household chores. Explain to your friend the different types of finance that would be available to him.
> Outline a typical executive performance compensation package.
> Explain what is meant by an ICO. Differentiate between IPOs and ICOs.
> Explain the trend in crowdfunding over the past five years. What types of businesses are commonly financed by crowdfunding?
> Explain the advantages to all parties of a novated lease.
> Before reforms were put in place during the 1980s, many entities allowed their overdraft accounts to remain continually overdrawn. Banks reformed the situation by advising these clients to contract for longer term funding. Provide an example of a company
> Give examples of inventories of retail products that would incur high costs for each of the following. (a) Storage and display (b) Insurance (c) Deterioration or obsolescence (d) Theft
> After thinking about how this could be done, explain the processes an entity might use to collect its debts.
> Explain, with numerical examples, four aspects of an entity’s credit policies and how decisions regarding each impact on the value of accounts receivable at any time.
> ‘Entities must juggle the costs of holding cash with the costs of not having enough.’ Explain the issues involved.
> Pineapple Plantations Pty Ltd manufactures sustainable, Pineapple-based products for sale to wholesalers and retailers around Australia and New Zealand. Dave Geitz, the manager, has a goal of increasing the market share of the company. Strategies to achi
> Mike and Andy has on average $150 000 of employees’ pay, tax withheld and superannuation contributions in its hands at all times. What use should it make of these funds?
> Explain the concept of eco-efficiency.
> How can a profitable, fast-growing entity such as Mike and Andy be chronically short of cash?
> Mike and Andy is a clothing store for teenagers. It is chronically short of cash, so arranges a 120-day commercial bill (BAB). According to the theory of management of assets, what use should it put this money to?
> Distinguish between rights and options.
> Summarise the advantages and disadvantages of owning ordinary shares in a company compared with financing the company through a loan.
> What is a novated lease? How is it markedly different from other leases?
> If you had just started a business and were in the early development phase, which forms of short-term credit would you try to maximise? Why?
> As inventory manager in a retail-chain warehouse, how would you react regarding your inventory levels in the following circumstances? (a) Sudden volatility in sales. (b) Continual short deliveries by suppliers. (c) Managerial suggestions to reduce the nu
> As production manager for a hoodie manufacturing company, how would you react regarding your inventory levels in the following circumstances? (a) Continual breakdowns in the machine used to weave the fabric for the hoodies. (b) Unreliable outsourced fina
> Which of the following entities do you think would have the greatest proportion of working capital held as inventory? Why? (a) Local butcher (b) Hardware store (c) Stallholder at a weekend market selling handicrafts
> The following table illustrates key figures from Robertson Ltd’s statement of profit or loss and statement of financial position for the five-year period ending 30 June 2020. Calculate the creditors turnover (in days) for Robertson Ltd
> List the principles espoused by the United Nations Division for Sustainable Development when designing an environmental performance system.
> What is the main criticism of the balanced scorecard framework?
> The Fair fold family decided to buy a super ski and water sports boat. They took out an $80,000, 5-year, 6% per year, compounded semiannually loan with monthly payments from First Bank and Trust (FB&T). After making only two payments, a banker frie
> How has the capital recovery amount changed for the Lloyd’s protectors with these new estimates?
> With these new estimates, what is the recalculated AW for the Lloyd’s protectors? Use the old first cost and maintenance cost estimates for the first 3 years. If these estimates had been made 3 years ago, would Lloyd’s
> Plot a graph of the newly estimated maintenance costs and repair savings projections, assuming the protectors last for seven more years.
> Economically, what is the best combination of plans for Brad and Sheryl, assuming they both live to be 85 years old?
> Plot the future worth values for all four plans on one spreadsheet graph.
