11. The operating income as % of total assets of Hudson's Bay Co Ltd. for 2012 was:
a) 2.5%; b) 2.9%; c) 4.1%; d) 8.3%; e) none of the above.
12. If you wanted to increase the operating income as % of total assets %, you could do so by:
a) borrowing more money; b) issuing common shares; c) paying a smaller dividend; d) reducing the inventory; e) none of the above.
13. The return on shareholders' investment for Hudson's Bay Co Ltd. for 2012 was:
a) 2.5%; b) 2.9%; c) 4.1%; d) 8.3%; e) none of the above.
14. If you were told that the dividend paid in 2012 was $ 38, the retained earnings balance of Hudson's Bay Co Ltd. as at 1st January 2012 would have been:
a) $ 780; b) $ 669; c) $ 634: d) $ 558; e) none of the above.
15. If you were told that Hudson's Bay Co Ltd. was going to issue a convertible debenture, carrying interest at 7%, and convertible into common shares of the company, your advice to an investor would be: a) do not buy this debenture: the company already has too much debt; b) do not buy this debenture: 7% is an unreasonably low return; c) buy this debenture: the company is profitable and liquid; d) buy this debenture: it gives a reasonable interest return as well as the possibility of a high return from the conversion into equity; e) none of the above.
16. If you were told that the amortization expense for Hudson's Bay Co Ltd. for 2012was $202, your best estimate of cash flow from operations for 2012 would be: a) $ 192; b) $ 265; c) $1,920; d) $2,000; e) none of the above.
Finance and Management Accounting 2014
Hudson's bay Co. Ltd' is thinking about adding a car tire depot to one of its stores. The tires would be sold for an average of $75 each. The tires would cost $30 each, and the variable costs of fitting the tires would be $20 each. Fixed costs would be $25,000 per month. Use this information to answer questions 17 - 22.
17. 17: Break-even for the tire depot would be:
a) 1,000 tires per month; b) 1,400 tires per month; c) 1,500 tires per month; d) 2,000 tires per month; e) none of the above.
18. 18: If they wanted to make a profit of $10,000 per month they would have to sell:
a) 1,000 tires per month; b) 1,400 tires per month; c) 1,500 tires per month; d) 2,000 tires per month; e) none of the above.
19. 19: They are forecasting to sell 1,500 tires per month. Their expected operating profit will be:
a) $ 5,000; b) $10,000; c) $12,500; d) $25,000; e) none of the above.
20. They are forecasting to sell 1,500 tires at a price of $75 each. If they reduce the price by $5 it is expected that sales will rise to 2,000 tires per month. The result of this decision would be to:
a) decrease operating profit by $5,000; b) operating profit would stay the same; c) operating profit would increase by $2,500; d) operating profit would increase by $5,000; e) none of the above.