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Homework answers / question archive / 1) I have a statement that I´m having difficulties to answer
1) I have a statement that I´m having difficulties to answer. Do you have any input on this?
"The only objective companies need to follow to achieve stakeholder goals is shareholder wealth maximisation."
2) Which one of the following is not a money market instrument? ??. Eurodollar account Commercial paper OB. Oc Treasury bill Certificate of deposit OD E Treasury bond prevents change.
3)Section II: Cost of Sales (Spreadsheet Only) Create an Excel spreadsheet for the cost of sales. The spreadsheet should clearly show the total cost of sales for all items as well as the cost of sales for each item. This spreadsheet should also include all necessary elements explaining how the total cost of sales is calculated. The Sales Mix/Cost Mix spreadsheet created for this section should mirror Form B from the textbook (page 99). Build the spreadsheet based on the data. Items, percentage of sales, and product cost are summarized below. Product Line % of Sales Product Cost % Hot Dogs 19% 22% Pizza 5% 30% Soft Drinks 24% 12% Draft Beer 28% 17% Hot Drinks 2% 18% Nacho Chips 7% 28% Popcorn 4% 16% Peanuts 4% 20% Ice cream 2% 21% Others 5% 23%
1)
To understand the given statement, we should first understand the meaning of shareholder and stakeholder.
A shareholder is that entity who buys shares of the company and invests his money in the company. On such investment, the shareholder expects suitable returns in the form of dividend and appreciation in the value of shares.
A stakeholder is that entity who is affected by the performance of the company. A stakeholder may be manager, director, creditor, supplier, customer etc. Each stakeholder has his own objectives. The creditors might be expected timely paymenyt of interests and principal. The customers might be expecting the good quality products at less prices.
Shareholder wealth maximization means higher dividends and increase in the market value of the share which can be possible when the company performs well in long run. The company must be able to satisfy its stakeholders i.e. creditors, suppliers, customers etc. so as to acheieve good performance in log run.
So, it can be said that if the company is able to maximize the shareholders wealth, it would have achieved the stakeholder goals automatically. Without achieveing stakeholder goals, maximize the shareholders wealth will not be achieved.
2)Money Market instruments are short term financial intsruments whose main aim is to increase liquidity of the business i.e which cane easily be coverted into cash.
Therefore, Eurodollar Account, Commercial Paper, Treasury Bill and Certificate of deposit are Money Market Instrument.
Required answer is Option E i.e. Treasury bond which is not a Money Market Instrument.
3)We have been given the % of sales of each item and also product cost % for each item as a pecentage of sales
Accordingly we can show cost of sales and cost of sales for each item as follows.
| Product Line | % of sales | Product Cost % | Cost of sales of each item % ( Formula A*B) |
| A | B | ||
| Hot Dogs | 19 | 22 | 19%*22% = 4.18% |
| Pizza | 5 | 30 | 5%*30%=1.50% |
| Soft Drinks | 24 | 12 | 24%*12%=2.88% |
| Draft Beer | 28 | 17 | 28%*17%= 4.76% |
| Hot Drinks | 2 | 18 | 2%*18% =0.36% |
| Nacho Chips | 7 | 28 | 7%*28%=1.96% |
| Popcorn | 4 | 16 | 4%*16%=0.64% |
| Peanuts | 4 | 20 | 4%*20% =0.80% |
| Icecream | 2 | 21 | 2%*21%=0.42% |
| Others | 5 | 23 | 5%*23% =1.15% |
Here let % of sales is A and %Cost of product is B. Hence cost of sales of each item will be A*B.
Total Cost of sales is the cost of sales of all items = 4.18+1.5+2.88+4.76+0.36+1.96+0.64+0.8+0.42+1.15 = 18.65%
Please note that excel formula for Cost of sales of each item is (% of sales)*(% of product cost) i.e A*B
