Requesting please.! Need your brilliant assistance again…

Thank you. It's been a long (and not particularly fun) day, and it was somewhat of an accident that I even saw your note. I was heading off to sleep, and had to come back to the computer to look something up real quick.

That time will be fine. Thanks again.

Hi again,

The timing of the phone call request seems a bit strange, since we had just agreed to wait until morning to tackle these questions. Some customers have accidentally triggered that feature, so I'm not sure whether this was intentional or not on your part.

If you did request this service, please let me know and I'll call you in the morning.

Good night to you both. :)

Ryan

Good morning. I'm ready when you are.

Ok

Yes. I'm working on that one right now.

Ok, here's what I got:

2017: 13.1

2016: 9.7

2015: 4.6

The net income as a percent of sales increased over the three year period.

I am assuming that the given values for 2017 are relative to the 2015 values. Based on that assumption, net income increased by 11.4% going from 2015 to 2016, but was down 10.4% in 2017 (relative to 2015). Averaged over both years (2016 and 2017), net income has increased slightly.

Yes, that sounds like the correct procedure. From what I've seen though, the website can be persnickety about uploads. Sometimes it's a matter of the file format, as I don't think that all possible formats are accepted. But that shouldn't be an issue with a picture or screenshot. Other times there is no apparent explanation for why it finally worked, and simply trying repeatedly seems to be the answer.

If it refuses to cooperate, the next option would be to upload the image to a website such as mediafire.com or sendspace.com. Then you can copy the "sharing link" for your file and paste that link into your reply here. That would allow me to access and download the image.

I'll address the phone call issue in my next message.

The "phone call" offers are an additional service that the site offers. Unfortunately, such offers are often generated automatically, and are phrased to make it appear that they have been originated by the expert that the customer is working with. I didn't initiate that offer for you.

What happened on my end is that it appeared that you had requested the service. As I said last night, given the circumstances, I didn't think that you had really requested that service, but I wasn't 100% sure. Had I not accepted it, then it would have been available for some other expert to accept, and then you would have been getting a phone call (probably at that late hour too) from someone that you didn't know at all.

That service incurs an additional charge, so I can certainly understand your concern. At this point, there isn't anything that I can do to remove the offer. You would need to contact Customer Service and explain the situation. If needed, I'll attest that no phone call took place. In the event that they refuse to refund the additional charge, we'll work something out with your future questions to balance things out.

That answer seems to match what I was trying to say...net income went UP in 2016, and then DOWN in 2017.

That's ok, I understand.

Choice 4

(Sorry about the delay...my computer has decided that it doesn't want to cooperate with me today...)

There's no need for that on my account...but we can if you need to. I think it's gotten over its little temper tantrum. If not, I may have to shut it down and restart it, which might cause a little delay. We'll see how it goes.

Sure, if that works best for you. I'm good either way.

It's up to you. If you'd like to go get lunch, that's fine. It really doesn't matter to me how long this all takes, as I'm going to be sitting at my desk all day either way. Whichever is better for you (and Mom) is fine.

Ok, sounds good.

Choice 2.

"product costs", not "period costs". Ugh.

Choice 1

Choice 1

Choice 4

Choice 1

Choice 1

Time tickets: Choice 4

Choice 4

Choice 1

Choice 3

Choice 4

Choice 3

Choice 1

Choice 2

Choice 1

Choice 4

Choice 2

Choice 2

Choice 4

Choice 3

No problem.

Since each provided service is customized to meet a specific customer's legal needs, a job costing structure should be used.

No worries.

Ok

Yes, I got four links.

What I had in mind for this was:

Profitability ratio: Either "Net Profit Margin" or "Return on Equity" (I'll try to give you both if I can get all the needed data)

Liquidity ratio: "Current Ratio"

Solvency ratio: "Total Debt to Total Assets"

If you or your group wants to do something different from those, just let me know.

Ok. I have this done for you, I just need to finish typing it up.

Hang in there. :)

Awww, shucks. :)

Here you go:

Ratios

Since we don't know what your project partners will choose, I have included three ratios for each type. Hopefully by doing this you'll be able to match up with them more easily. For now, you can turn in the first one in each category.

I hope the rest of the day goes well for both of you. :)

Ok, sounds good.

One of the things that happens with the phone call offer is that the rating is automatically processed, so there isn't any need for the rating button in this case. I also didn't want to take any chances on you being charged twice if I activated the rating feature and you added a new rating. As far as the system is concerned, this answer has been rated.

My suspicion is that your account on the site was charged for the phone call offer. Depending on whether you had any funds on deposit with the site, you may or may not see a new charge for it on your credit card. I would recommend contacting Customer Service when you have the time, as they should be able to find out exactly what was charged. There should be a link on the page that you can use to contact them, or you can call them at(###) ###-####

P.S. Thank you very much for your concern about the rating though. :)

Ok, sounds good. You too.

(I try, Mom, I try.)

Hi Carol (and Mom),

Yes, I'm here.

Tomorrow would probably be better for me (and, by extension, better for you too) as I haven't had much sleep lately. :(

I'll be ok. See you tomorrow.

Hope Mom is feeling better soon.

Hi. :)

I'm ready.

Ok, no need to hurry on my end.

For the profitability ratio, the third number should be 0.030477257.

Rounded off to four decimal places, the value is 0.0305, or 3.05%.

If the practice in your course is to report these values to the nearest whole percentage point, then it would round off to 3.0%.

For the liquidity ratio, those are usually reported as decimals rather than percentages.

The value should be 0.9322 though. The 0.9332 was a typo on my part. :(

What was the second number that he has under Profitability ratio? Unfortunately the site's computer system filtered it out. (Must have looked like a phone number.)

Maybe throw in a space between some of the digits so that it doesn't filter it out again.

Yes.

I figured. :)

Ok, let's take these one at a time...

For the profitability ratio, you both have the same value, plus or minus differences in rounding.

For the liquidity ratio, you have the same values again. The difference is my typo in the final result. (Dang it.)

Recall how in the document that I sent you earlier this week there were three calculations for each type of ratio? That's because there are multiple ways of measuring each of those concepts (profitability, liquidity, and solvency).

For the solvency ratios, I gave you a Debt-to-Assets ratio, a Debt-to-Equity ratio, and a Debt-to-Capital ratio. Three different ways of looking at solvency.

Much like there are multiple ways of looking at solvency, there are multiple definitions of "Debt-to-Equity".

One formula is Debt-to-Equity = Total Debt / Total Equity.

Another is Debt-to-Equity = (Short term debt + Long term debt) / Shareholder Equity

Even within these formulas, analysts will differ on how certain quantities are accounted for. For instance, preferred stock can be considered to be a part of shareholder equity...but it can also be viewed as a type of liability for the company. Depending on which category the analyst puts preferred stock in, the Debt-to-Equity ratio will come out different.

If your course has taught you that Debt-to-Equity = Total Liabilities / Total Equity, then go with his values. Otherwise, either one is a fair way of looking at the company.

I looked around online when I was doing this to make sure that my calculations were on the mark. I'll see if I can find that page again and send you the link so you can see how the values are reported.

Here it is:

http://www.marketwatch.com/investing/stock/wmt/profile

Other than the one typo that I made, I don't see where he should be "correcting" any of your values.

As for the solvency ratio, it's just a matter of choosing which formula you both want to use. Either is legitimate, as long as you tell whoever you're communicating it to how you calculated it. (Wouldn't it be nice if we all agreed on standard formulas and names for these things?)

The difference that you have in your solvency ratio, versus his, is just a matter of looking at it in a different way. Neither is more correct than the other...except where your instructor might have an opinion about it, in which case the safe approach is to do what the instructor says.

It would seem, though, that the intent of the project was for you and your team members to look at different companies so that you could compare them. Then your report comprises a series of comparisons and judgements about which company is best to invest in.

With only one company to analyze, it becomes more of a "yes or no" decision.

And, of course, if the companies are not all in the same sector, then the best answer might be to invest some in each of them, since diversification is a good hedge against risk. :)

What you need to do at this point (and by "you" I mean "me" :) ) is to find some information about the trends for these three ratios among Walmart's competitors. (Does Walmart have any competitors???)

None of these ratios is very meaningful all by itself. Comparison against industry trends and comparable companies, however, gives a better idea of how a company is doing.

Yes, I get that ultimately you will be picking a single company.

The difference is that if you all picked different companies, then you answer is something like "We will invest in Walmart because it's profitability ratio, etc, is better than these other companies".

With only one company to consider (since you all picked Walmart), it becomes more of a "Walmart is good" type of response.

Let me see if I can find some industry info for Walmart's sector that we can use as a basis for comparison.

"animal financials"??

Autocorrect strikes again... ;)

That's ok, I knew what it was supposed to be. Just wanted to give you a chuckle.

Your teammate seems to be mixing debt-to-equity and debt-to-assets, and they're not the same thing. She's also framing that part in terms of "loaning" the company money, which is different from "investing". As an investor, you are interested in the company's ability to pay their loans because it is a measure of the health of the company, not because you yourself are expecting them to pay you back.

Oh, ok, that's more like what I was expecting. Are you all producing one group paper on this then?

Precisely.

The information on the other companies that your team looked at is the information that we need for this next part. By comparing, say, the profitability ratios of the four companies, you can say something like "Walmart is the most profitable of the companies under consideration". That gives a reason for why you are choosing Walmart.

If I ever get into the financial consulting industry, I'm definitely naming my company "Animal Financials".

Ok. You can just send the ratio values, since that will save you a bunch of typing. I don't need the intermediate values.

So, something like this:

Starbucks

P: 5.05%

L: 8.23%

S: 2.25%

Ok, let me get this all in a spreadsheet and check the calculations and then I'll get back to you.

You're welcome.

I see discrepancies with some of the values for the other companies, so I'm rechecking those numbers.

Also, it doesn't seem that United Neighborhood Health Services is a public company, so I don't seem to be able to find a balance sheet or income statement for them.

I reworked the ratios for all three companies, and I think that Starbucks is actually the better choice of the three companies. (I've discarded United Neighborhood Health Services as it seems to be a non-profit company, and therefore wouldn't represent an investment opportunity in the usual sense of the word.)

Starbucks turns out to have the highest profit margin, more than three times that of Lowes, and almost five times that of Walmart. In addition, it has the highest current ratio and the lowest debt-to-equity ratio. Based on those three ratios, Starbucks is in the strongest financial position.

Here is the spreadsheet showing the values for the three companies, and the corresponding ratios. I've included two solvency ratios, because "total liabilities / total equity" is not how most financial websites report "debt to equity". There would be confusion if one of you tried to compare the value using that formula with the value that is reported.

Ratios

I don't know if you need to share this with your team partners first or not. Let me know how you wish to proceed. I'll be around, so whenever you get back is fine.

That's what I thought. Not really an investment opportunity then.

Jeez, more rain? I have a friend who lives north of Houston...if they get any more rain there they're going to float away. Sheesh.

I definitely think that you need to pick Starbucks. I'd be hard-pressed to defend choosing Walmart based on the numbers.

Of course, in the real world, all three would be good investments, so investing in all three would be a smart move.

Something like this:

Of the companies considered, Starbucks had the highest profit margin, the highest current ratio, and the lowest debt-to-equity ratio. The higher profit margin (14.4% vs. 4.3% and 3.0%) means that Starbucks is retaining a higher percentage of their sales revenue as profit. This will allow the company to save cash for future expansion, avoid borrowing money which would lead to additional interest expenses, and potentially pay higher dividends to shareholders. The higher current ratio (119.1% vs. 100.7% and 93.2%) indicates that Starbucks is best positioned to pay off its current liabilities in the event that they were to come due in the near future. The lower debt-to-equity ratio, measured as short and long term debt divided by shareholder equity (40.3% vs. 165.3% and 59.8%) indicates that Starbuck’s shareholders are contributing a greater share to the company’s financing than creditors are, which is seen as a sign of financial health.

No problem, I understand.

Ok, sounds good. :)

Hi Carol,

That will be fine. See you then.

Ryan

You''re welcome. :)

It's not a problem. Really. Take as much time as you need.

Ok. Take care of whatever you need to. No rushing! And be careful in that traffic. :)

Ready when you are.

a) 3.29 per machine hour

Oooooooook. Then let's go with the expected numbers rather than the actual values.

Try 2.71 per machine hour.

97083

I suppose. :/

Part of the problem here is vocabulary. With the first part, it wasn't clear from the question whether they wanted the expected rate (which would be the billed rate throughout the year), or the actual rate (which would be reported at year end). It depends on the perspective.

I imagine that this particular course has taught a particular viewpoint, but some other course is probably teaching their students to look at it the other way. Since I'm not in the course myself, I'm a bit in the dark about precisely what they want sometimes. Sigh...

With part b, my expectation was that the under/over quantity would be in dollars, and would be the difference between the actual expense and the expected expense. Whether that value should be reported as positive or negative depends on whether you also have to check off (or otherwise indicate) whether it is "under" or "over".

Are "Account Titles", "Debit", and "Credit" headings for columns?

If so, is there more than one row of boxes to fill in below those headings?

Hi Mom!! :)

Ok, we'll deal with that issue in a minute.

In the meantime, could you please check the numbers given for the expected and actual overhead? What I had from before was:

Expected: $339,292

Actual: $436,375

Are those the correct values?

Ok, well based on that I still think that the under-applied overhead should have been 97083 (the difference between 436,375 and 339,292), so I don't understand why that part of part (b) was wrong. This could be an issue, as we need to use the same value here.

For the first row, enter "Cost of Goods Sold" under "Account Title and Explanation", and enter "97083" in the the "Debit" column.

For the second row, enter "Manufacturing Overhead" under "Account Title and Explanation", and enter "97083" in the "Credit" column. After you enter the value, the "Manufacturing Overhead" entry should end up being automatically indented.

Let me know what happens with that one, and then let's see if we can work out something that will allow you to send me pictures of these questions, so that we're not fighting this all afternoon, and so that you won't need to type as much.

Email was the direction that I was heading.

To do that, you'll need to do the following:

1. Open a new question on this site, and be sure to add "For Ryan" at the beginning.

2. I'll add an offer for "Premium Service" to that new question that will allow me to provide an email address that you can use. (I can't add an offer to this question page because the site only allows one offer per page, and the phone call snafu earlier used up the option on this page.)

Ok, sounds good.

(Sorry about the extra hassle, but hopefully this will make things much easier from here on out.)

:)

(Just posting a response so that the question will be moved off of the "needs your attention" list.)