Page 429 - Business Principles and Management

C HAPTER 15 A SSESSMENT

MAKE CONNECTIONS

24. Math As the budget director, you presented the following realistic
yearly expense budget to your boss. After studying the figures, she
asks you to prepare a flexible set of budget estimates because certain
conditions might cause a 15 percent increase in sales, whereas cer-
tain other conditions might cause a 5 percent decrease in sales. The
amounts budgeted for rent and insurance will not change under any
circumstances.

Sales salaries $300,000
Office salaries 60,000
Supplies 80,000
Advertising 48,000
Rent 36,000
Insurance 8,000
Prepare a new flexible budget showing three columns of figures:
5 percent Decrease, Expected, and 15 percent Increase.
25. Communications You have been hired as a financial consultant by the
Crown Corporation to analyze the financial statements shown in the
chapter. Calculate three financial ratios that you believe offer a realis-
tic picture of the company’s financial health. Prepare three computer
slides and use them for a three-minute presentation to Crown’s man-
agers on what the information means to them.
26. Technology Use a computer spreadsheet to prepare an end-of-year
balance sheet for the Starboard Corporation, using the following
information and the format shown in lesson 15-3.
Cash $5,000
Accounts receivable 8,000
Merchandise inventory 15,000
Land and buildings 120,000
Accounts payable 12,000
Mortgage payable 90,000
Stockholders’ net worth 46,000
27. Math Use the following financial information from the Waterwing
Company to calculate: (a) inventory turnover, (b) current ratio,
(c) return on owners’ equity, and (d) return on investment.
Revenue from sales $600,000
Cost of goods sold 320,000
Net profit 25,000
Current assets 36,000
Total assets 200,000
Current liabilities 15,000
Owners’ equity 50,000
Average inventory 20,000

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