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You've been asked to assess certain risks of an organization and quantify their potential impact on the organization's profitability. As a result of your inquiry you have determined that the firm is exposed to two primary risks. One is a commodity price risk, namely the cost of oil, which is a large component of the organization's production costs. The second risk is sovereign risk because the organization maintains significant facilities in another country that is considering imposing new taxes on foreign owned businesses. You have further determined that there is a 25% chance that oil prices will increase, which would reduce profits by $25,000. However, there is a 25% chance that oil prices will fall significantly, which would increase profits by $50,000. There is also a 50% chance that oil prices will only fall slightly, improving profits by $5,000. With regard to the sovereign risk, there is a 50% chance that the country's government will impose a new tax, which would reduce profits by $50,000, and a 50% chance that no change will be made to the tax code. Quantitatively evaluate this data by calculating the expected impact, the standard deviation and the coefficient of variation for each risk. What do these statistics tell you about the possible risks?
Why is it important to properly value a business's assets and how does asset valuation impact the financial statements of an organization?
Prepare the necessary general journal entries for the month of October for Stringer Company for each situation given below.
If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
If Primrose could lower its inventories and receivables by 10 percent each and increase its payables by 10 percent, all without affecting either sales or cost of goods sold, what would the new CCC be, how much cash would be freed up, and how would..
Thorpe's president has asked your consulting firm to make a recommendation as to whether the banolide should be sold at the split-off point or processed further. Explain your answer.
Charley Company's Assembly Department has materials cost at $3 per unit and conversion cost at $6 per unit. There are 9,000 units in ending work in process, all of which are 70% complete as to conversion costs. How much are total costs to be assig..
Lechter Co. is preparing to issue stock. Its revenues for last year were $85,000,000, and it had $52,000,000 in stock held by nonaffiliates.
If Clark initiates a price increase for both product lines, how will customer demand change? How will the price increase affect operating profits
A mining company declared a liquidating dividend. the journal entry to record the declaration must include a debit to:
the sales revenue generated throughoutnbsp the normal course of business would be an example of which type of business
Slagle Corporation is a large manufacturing organization. Over the past several years, it has obtained an important component used in its production process exclusively from Harrison, Inc., a relatively small company in Topeka, Kansas. Harrison ch..
1. Problem 10- 4B Computing and revising depreciation; selling plant assets C2 P1 P2 York Instruments completed the following transactions and events involving its machinery. 2012 Jan. 1 Paid $ 107,800 cash plus $ 6,470 in sales tax for a new..
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