Criticize the following statement: “In our business, we maxi-mize profits by closing any department that does not show a responsibility margin ratio of at least 15 percent.”
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Criticize the following statement: “In our business, we maxi-
mize profits by closing any department that does not show a
responsibility margin ratio of at least 15 percent.”
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- “Since break even analysis focuses on making Zero profit, it is of no value in determining the units a company must sell to earn a targeted profit”, Do you agree or disagree with this statement? Why or why not?Walkin Inc. is considering the write-down of its longtermplant because of a lack of profitability. Explain tothe management of Walkin how to determine whether awrite-down is permitted.Please select the option that best analyzes the PROFIT MARGIN for our example company. The profit margin indicates the amount of sales that are ultimately realized as income after all expenses are considered. Profit margin is not a good measure of how well a company performs, so this information does not indicate how well our company is performing financially. The profit margin indicates the amount of sales that are ultimately realized as income after all expenses are considered. Our company retains between 15-20% of its sales as income, which is a comfortable profit margin. The profit margin indicates the amount of sales that are ultimately realized as income after all expenses are considered. Our company retains between 80-85% of its income as sales, which is a very high profit margin. The profit margin indicates the amount of sales that are ultimately realized as income after all expenses are considered. Our company retains between 80-85% of its income as sales, which…
- If a division has negative net operating income, the company's profits might not increase even if the division is discontinued. O True O FalseWhen a Dupont analysis reveals that a company has much higher than average asset turnover and much lower than average profit margin, what can be concluded about the companys strategy? a. It is a product differentiator. c. It has no strategy. b. It needs to concentrate on improve- d. It is a low-cost provider ing its profit margins.Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please explain. Discuss the components of the Contribution Margin Income Statement, how does management use this in the decision making process?
- A business that is below the operating break-even point: a) has positive operating profit b) has zero operating profit c) has negative operating profit d) operating profit cannot be calculatedCompanies have found that offering discounts to customers in return for early payment can be counterproductive in terms of the resulting adverse effect on profitability. This is when the reduction in profitability outweighs any marginal improvements gained from the benefit of a reduction in the working capital requirement. Required: Given the above critically discuss the alternative measures to offering discounts to customers that could prove more effective in reducing the working capital requirement for a company with only minimal potential reductions in profitability.Th e information provided by a low-quality fi nancial report will most likely :A . decrease company value.B . indicate earnings are not sustainable.C . impede the assessment of earnings quality.
- Which of the following statements is false? (You may select more than one answer.)a. The same cost can be traceable or common depending on how the segment isdefined.b. In general, common fixed costs should be assigned to segments.c. If a company eliminates a segment of its business, the costs that were traceable tothat segment should disappear.d. If four segments share $1 million in common fixed costs and one segment is eliminated, the common fixed costs will decrease by $250,000.Which of the following items will not cause the company's ROA to increase? Multiple Choice O O Reducing costs. Reducing company assets without impacting sales. Increasing company assets. Increasing the selling price per unit. $If Bohol Branch were eliminated, then its traceable fixed expenses could be avoided. The total common fixed expenses are merely allocated and would be unaffected. 1. What will be the new company profit (loss) if Bohol Branch is eliminated? 2. What will be the decrease in company profit if Bohol Branch is closed and 20% of its traceable fixed expense would remain unchanged while Cebu’s sales would decrease by 20%? SHOW SOLUTIONS FOR EACH REQUIREMENT.