Question: Why is an industry analysis of stocks

> Last year, Able Co. recorded sales revenues of $1,260,000, variable costs of $570,000, and fixed costs of $480,500. Required (a) At what sales dollar level will Able earn a before-tax target profit of $250,000? (b) At what sales dollar level will Able b

> Patterson Parkas Company’s sales revenue is $30 per unit, variable costs are $19.50 per unit, and fixed costs are $147,000. Required (a) Compute Patterson’s contribution margin per unit and contribution margin ratio. (b) Determine the number of units Pa

> Morton Medical Institute operates a 300-bed hospital and offers a number of specialized medical services. Morton’s hospital facility and equipment are leased on a long-term basis. The hospital charges $2,000 per patient day. On the basis of past cost dat

> Klear Camera Company is considering introducing a new video camera. Its selling price is projected to be $1,000 per unit. Variable manufacturing costs are estimated to be $500 per unit. Variable selling costs are 10% of sales dollars. The company expects

> Percy’s is a small hamburger shop catering mainly to students at a nearby university. It sells hamburgers and vegetarian burgers and is open for business from 11:00 A.M. until 11:00 P.M., Monday through Friday. The owner, Percy Luk, employs two cooks, on

> Classify each of the following as a variable or fixed cost with respect to a unit of product that is sold: a. Commissions paid to sales personnel. b. Advertising expenses. c. Salaries of staff processing orders. d. Salary of the chief executive officer.

> Boyd Wood Company makes a regular and a deluxe grade of wood floors. Regular grade is sold at $16 per square yard, and the deluxe grade is sold at $25 per square yard. The variable cost of making the regular grade is $10 per square yard. It costs an extr

> Superstore is a large discount supermarket. Profits have declined, so the manager has collected data on revenues and costs for different food categories. The following data pertain to some of the frozen foods that Superstore sells. To facilitate comparis

> The manufacturing capacity of Ritter Rotator Company’s plant facility is 60,000 rotators per quarter. Operating results for the first quarter of this year are as follows. Sales (36,000 units at $10) $360,000 Variable manufacturing and selling costs

> Shorewood Shoes Company makes and sells a variety of leather shoes for children. For its current mix of different models and sizes, the average selling price and costs per pair of shoes are as follows: Shoes are manufactured in batch sizes of 100 pairs.

> How does productivity (the ratio of sales to investment) affect return on investment?

> McGee Corporation’s Olympia plant produces a module used in automobile manufacturing. The company’s practical capacity is 4,000 modules per week. The selling price is $900 per module. Production this quarter is 3,000 modules per week, and all of the modu

> George’s Grill analyzes profitability of three operating units: restaurant, bar, and billiards room. Revenues, variable costs, and attributable fixed costs (which can be avoided if the unit is eliminated) for each unit are as follows:

> Fab Motors has manufactured compressor parts at its plant in Pitcairn, Indiana, for the past 25 years. An outside supplier, Superior Compressor Company, has offered to supply compressor model C38 at a price of $200 per unit. Current unit manufacturing co

> Premier Company manufactures gear model G37, which is used in several of its farm-equipment products. Annual production volume of G37 is 20,000 units. Unit costs for G37 are as follow: Direct materials costs………………………………………….$55 Direct labor costs ……………

> Kane Company is considering outsourcing a key component. A reliable supplier has quoted a price of $64.50 per unit. The following costs of the component when manufactured in-house are expressed on a per unit basis: Direct materials……………………$23.40 Direct l

> The assembly division of Davenport, Inc., is bidding on an order of 50,000 smart phones. The division is eager to get this order because it has a substantial amount of unused plant capacity. The variable cost for each smart phone is $140 in addition to t

> Joyce Printers, Inc., is considering replacing its current printing machines with newer, faster, and more efficient printing technology. The following data have been compiled: The existing machines can be disposed of now for $40,000. Keeping them will c

> McKinnon Company’s plant manager is considering buying a new grinding machine to replace an old grinding machine or overhauling the old one to ensure compliance with the plant’s high-quality standards. The following da

> Don Baxter’s 6-year-old Impala requires repairs estimated at $5,400 to make it roadworthy again. His friend Aaron Bloom suggested that he buy a 6-year-old Ford Escort instead for $5,400 cash. Aaron estimated the following costs for the

> Healthy Hearth specializes in lunches for health-conscious people. The company produces a small selection of lunch offerings each day. The menu selections may vary from day to day, but Healthy Hearth charges the same price per menu selection because it a

> How does efficiency (the ratio of income to sales) affect return on investment?

> What is the assigned responsibility in a revenue center?

> Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150. Joel recently sold the stock for $32 per share. What was Joel’s return on the stock?

> Jenna purchased a 5-acre parcel of land for $28,000 and sold it two years later for $41,000. What was her return on that investment?

> Peter is married and has two children. He wants to be sure that he has sufficient life insurance to take care of his family if he dies. Peter’s wife is a homemaker but attends college part-time pursuing a law degree. It will cost approximately $40,000 fo

> Shortly after Steve graduated from college, he considered a whole life insurance policy that would provide $10,000 in life insurance protection and accumulate a cash value of twice his current annual income by age 65. Two years later, after Steve’s marri

> Bart is a college student. Because his plan is to get a job immediately after graduation, he determines that he will need about $250,000 in life insurance to provide for his future wife and children (Bart is not married yet and does not have any children

> Considering the information in the previous problem, how much life insurance should they purchase for Mary?

> Marty and Mary have jobs and contribute to the household expenses according to their income. Marty contributes 75% of the expenses, and Mary contributes 25%. Currently, their household expenses are $30,000 annually. Marty and Mary have three children. Th

> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Recall that Brad is 30 years old. He also has a driving

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> Brad Brooks listened to your advice about reducing the use of his smartphone (which saves him $250 per month) and reducing his entertainment expenses by $200 per month. He still rents the condo for $1,000 per month. However, now Brad has the urge to upgr

> What is an amortization table? What does each mortgage payment represent?

> What are the two financial components you must consider before purchasing a home? Why should you consider them?

> Explain how stronger economic conditions affect the values of homes.

> Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an additional $300 per month over the last year for their chil

> Assume that the Sampsons have paid off their credit card debt and have also achieved their goal of saving $5,000 that they will use as a down payment on a new car. (They have also been saving an additional $300 per month over the last year for their chil

> What are stock exchanges? How do they facilitate the trading of stocks?

> The top managers of a publicly traded manufacturing company are reviewing the projected fourth quarter financial results in late November. Based on the projected sales, the company will fall short of its yearly profit goals. This will result in the compa

> What are some limitations of stock analysis?

> What is technical analysis? What is fundamental analysis?

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> What determines stock price? How do investors use this information to make buy or sell decisions?

> What is the OTC? What is the role of a market maker?

> How can another country’s economic conditions affect a U.S. firm and therefore its stock price?

> What is a short sale? When would this strategy be used?

> What is inflation? How is inflation measured? How does inflation affect stock prices?

> How do interest rates affect economic growth? Why do interest rates affect some stock prices more than others? Which federal agency influences interest rates?

> Explain how economic growth is measured. How does economic growth affect stock prices? What are some popular indicators of economic growth? How does the government’s fiscal policy affect economic growth?

> Why may the top managers of a firm be tempted to use misleading estimates of revenues and expenses? How may managers be able to boost the reported earnings of their firm?

> List the characteristics of a firm that investors analyze by using the balance sheet and the income statement.

> Recall that the Sampsons have a goal of saving about $300 per month ($3,600 per year) for their children’s college education. They want to estimate how this money would grow over time if they invest it in stock. Dave and Sharon have never owned stock bef

> Why is it necessary to analyze a firm? What is an annual report? What information does it contain to aid the analysis?

> What is buying a stock on margin? What may happen if the value of the stock bought on margin declines? What are the advantages to investors and brokerage firms when stocks are bought on margin?

> Discuss the differences between a market order, a limit order, and a stop order.

> What information must you provide when placing an order to buy or sell stock? What is a ticker symbol, and why is it important?

> What are some advantages of using online brokerage services? Describe how an investor would set up and use an online brokerage account.

> How is the market for a stock created? How do brokerage firms expedite this process? Compare the two types of brokerage services.

> What are electronic communications networks (ECNs)? How are ECNs used?

> Describe a typical stock transaction at the New York Stock Exchange (NYSE). What are floor traders? What are specialists? What other exchanges trade stocks in a similar manner to the NYSE?

> What are stocks? How are stocks beneficial to corporations? Why do investors invest in stocks?

> How does your personal tolerance for risk impact your investment decisions?

> How is investing related to your personal financial goals?

> What is an IPO? What are the risks associated with buying IPOs?

> What is a growth stock? What is an income stock? Why would investors prefer one type over the other?

> What is an exchange traded fund? How does it differ from a mutual fund?

> How is investing related to liquidity? Give some examples of liquid investments.

> Describe common investment mistakes made by individuals.

> How can you limit your risk through diversification?

> Describe the return-risk trade-offs among bonds, mutual funds, and real estate investments.

> What is the return-risk trade-off? What types of stock investments are particularly tempting for stock investors? What other factors must individual investors consider before making this type of investment?

> Why do investors measure risk? Describe the two common measures of risk.

> Define the risk of an investment. What types of firms are particularly risky?

> Describe how economic conditions might affect certain investments.

> How can investments in stock increase your wealth? How would you calculate the value of a stock investment of a single sum over time? How would you calculate the value of a stock investment of a specific amount over several periods?

> What is the difference in tax rates on long-term versus short-term capital gains?

> What is the formula for estimating returns on dividend-paying stocks? Describe each element of the formula. How do you calculate the dollar amount of your returns?

> In what geographic areas is the price of land relatively high? What components make up the return from investing in real estate?

> How do mutual funds operate? Who manages mutual funds? How are coupon or dividend payments handled by the mutual fund? Can investors incur capital losses with mutual funds?

> What are bonds? How do bonds provide a return to investors?

> Discuss the differences between common stock and preferred stock.

> What type of firm typically pays dividends? What are growth stocks? What are income stocks?

> How do shareholders earn returns from investing in stocks? How is the market value of a firm determined? What determines the market price of a stock?

> Classify and describe the two types of investors. What are day traders?

> What are dividends? Do all firms pay them?

> Distinguish between the primary and secondary stock markets. Why does the price of a stock change each day in the secondary market?

> What is the dollar amount of Joel’s return (see problem 1)? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend checks amounting to $150. Joel recently sold the stock for $32 per share. What

> Thomas purchased 400 shares of stock A for $23 a share and sold them more than a year later for $20 per share. He purchased 500 shares of stock B for $40 per share and sold them for $53 per share after holding them for more than a year. Both of the sales

> Bob purchased stock in a new social media company for $40 per share shortly after the stock’s IPO. The stock had been heavily publicized on the Internet. Over the next three years, the stock price declined by 15% each year. What is the company’s stock pr

> How much would Joel (from problem 1) save in taxes if he held the stock for more than a year, assuming he sold it for the same amount? Data from Problem 1: Joel purchased 100 shares of stock for $20 per share. During the year, he received dividend chec

> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa

> The Sampsons have one remaining insurance need: life insurance. They have decided to purchase term life insurance. They want a life insurance policy that will provide for the family in the event of Dave’s death because he is the major breadwinner. The Sa

> What are living benefits? When might a policyholder use this option?

> What is a beneficiary? Why is it important to periodically review your beneficiaries?

> What is an installment payments settlement? When would an insured individual choose this option?

> What is a lump-sum settlement? What kind of beneficiary would benefit the most from this option?

> What is mortgage life insurance? Is mortgage life insurance a good buy? Why or why not?