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Solution: 822. Identifying surfaces Consider the surfaces defined by the following

Calculus: Early Transcendentals | 2nd Edition | ISBN: 9780321947345 | Authors: William L. Briggs ISBN: 9780321947345 167

Solution for problem 22 Chapter 12

Calculus: Early Transcendentals | 2nd Edition

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Calculus: Early Transcendentals | 2nd Edition | ISBN: 9780321947345 | Authors: William L. Briggs

Calculus: Early Transcendentals | 2nd Edition

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Problem 22

822. Identifying surfaces Consider the surfaces defined by the following equations. a. Identify and briefly describe the surface. b. Find the xy@, xz@, and yz@traces, when they exist. c. Find the intercepts with the three coordinate axes, when they exist. d. Make a sketch of the surface. y = 4x2 + z2 9

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Working with financial statements Standardized financial statements ­ Problem with comparing financial statements o Size of the companies => problems with comparing even 1 companies but at different period of time o Currency used => problems with comparing 2 companies operated in 2 different countries ­ Common­size statement: work with percentages instead of total dollars in financial statement => common and useful way to comparing financial statements o A standardized financial statement presenting all items in percentage terms. Balance sheet items are shown as a percentage of assets and income statement items as a percentage of sales Ratio analysis ­ Financial ratios o Another way of avoiding problems involved in comparing companies of different sizes o Comparing and investigating the relationships between different pieces of financial information o Problems  Different people and different sources frequently don’t compute them in exactly the same way 1. Short term solvency (liquidity measures) ­ Provide information about a firm’s liquidity ­ Primary concern is the firm’s ability to pay its bills over the short run without undue stress => interested to short term lenders ­ Focus on current assets and current liabilities o Books values and market values are likely to be similar. Often, these assets and liabilities just don’t live long enough for the 2 to get seriously out of step o Can change fairly rapidly currentassets a. Current ratio = currentliabilities ­ To a creditor, particularly a short term creditor, the higher the current ratio is, the better ­ To the firm, a high current ratio indicates liquidity but also may indicate an inefficient use of cash and other short term assets ­ Normally, we would expect a current ratio of at least 1 o Current ratio <1 => net working capital is negative => unusual in a healthy firm o An apparently low current ratio may not be a bad sign for a company with a large reserve of untapped borrowing power currentassets−inventory b. Quick (acid­test) ratio = currentliabilities ­ Inventory is often the least liquid current assets, one for which book values are least reliable since the quality of inventory isn’t considered o Relatively large inventories are often a sign of short term trouble o Inventories are relatively illiquid to cash cash c. Cash ratio = currentliabilities ­ A very short term creditor might be interested in this 2. Long term solvency (financial leverage ratios) ­ Address firm’s long run ability to meet its obligations or more generally its financial leverage Working with financial statements totalassets−totalequity a. Total debt ratio = totalassets ­ Takes into account all debts of all maturities to all creditors totaldebt ­ Debt equity ratio = totalequity totalassets ­ Equity multiplier = totalequity EBIT b. Times interest earned (TIE) = interest ­ How well the company has its interest obligations covered ­ Problems: based on EBIT, which is not really a measure of cash available to pay interest because depreciation, a noncash expense, has been deducted out EBIT +depreciation c. Cash coverage = interest ­ EBIT + depreciation = abbreviated EBITD = earnings before interest, taxes, depreciation, and amortization (noncash deduction applied to intangible asset but not repayment of debt) = basic measure of firm’s ability to generate cash from operations and used as a measure of cash flow available to meet financial obligations 3. Asset management (turnover ratios) a. Inventory turnover and days’ sales in inventory COGS ­ Inventory turnover = inventory o As long as we aren’t running out of stock and thereby forging sales, the higher this ratio is, the more efficiently we are managing inventory o Measure how fast we can sell the products 365days ­ Days’ sales in inventory = = for how long the product stay in inventory before inventoryturnover sales b. Receivables turnover and days’ sales in receivables sales ­ Receivables turnover = accountreceivables 365days ­ Days’ sales in receivable = receivableturnovers = average collection period (ACP) sales c. Total asset turnover = totalassets ­ Capital intensity ratio is the reciprocal of total asset turnover = dollar investment in assets needed to generate $1 in sales o High values = capital­intensive industry 4. Profitability ratios netincome a. Profit margin = sales Working with financial statements ­ All other things being equal, a relatively high profit margin is obviously desirable. This situation corresponds to low expense ratios relative to sales netincome b. Return on (book) assets (ROA) = measure of profit per dollar of assets = totalassets c. Return on (book) equity (ROE) = return on net worth = measure of how the stockholders fared netincome during the year = totalequity 5. Market value ratios netincome ­ Earnings per share (EPS) = sharesoutstanding price pershare a. Price­earnings ratio (PE) ratio = earnings pershare price per share b. Price­sales ratio = sales per share marketvalue pershare c. Market­to­book ratio = bookvalue per share totalequity ­ Book value per share = number of shareoutstanding ­ A value less than 1 means the firm hasn’t been successful overall in creating value for its stockholders d. Enterprise value –EBITDA ratio ­ Estimate of market value of company’s operating assets o Operating assets = assets of firm except cash ­ Enterprise value = total market value of the stock + book value of all liabilities – cash o Total market value of stock + book value of all liabilities = value of the firm’s assets from balance sheet identity enterprisevalue ­ EBITDA ratio = EBITDA o Relate the value of all operating asset to a measure of operating cash flow generated by those assets The dupont identity ­ ROE = ROA * equity multiplier = ROA * (1+ debt­equity ratio) = return on assets * assets/total equity = net income/sales * sales/assets * assets/total equity = profit margin * total asset turnover * equity multiplier ­ DuPont identity: ROE = profit margin * total asset turnover * equity multiplier o Operating efficiency o Asset use efficiency o Financial leverage ­ Weakness in either operating or asset use efficiency will show up in a diminished return on asset, which means lower ROE ­ Expanded DuPont analysis o Let us examine several ratios at once Internal and sustainable growth Working with financial statements 1. Dividend payout and earnings retention ­ Dividend payout ratio = cash dividends/net income ­ Retention ratio = addition to retained earnings/net income = plowback ratio (portion of net income that s plowed back into the business) ­ Dividend payout ratio + retention ratio = 1 2. ROA, ROE, and growth ­ If sales are to growth, assets have to grow as well and vice versa to adequately finance the needed acquisition ­ A firm’s ability to grow depends on its financing policies ROA∗rententionratio a. The internal growth rate = 1−ROA∗rentationratio ­ Maximum possible growth rate for a firm that relies only on internal financing ­ Refers to what the firm earns and subsequently plows back into business ROE∗rententionratio b. The sustainable growth rate = 1−ROE∗rentationratio ­ Illustrate the explicit relationship between firm’s 4 major areas of concern: operating efficiency , assets efficiency, finance policy, and dividend policy c. Determinants of growths ­ Profit margin: an increase in profit margin will increase the firm’s ability to generate funds internally and thereby increase its sustainable growth ­ Total asset turnover: increase in firm’s total asset turnover increases the sales generated for each dollar in assets. This decreases firm’s need for new assets as sales grow and increase the sustainable growth rate o Increase total assets turnover = decrease capital intensity ­ Dividend policy: decrease in percentage of net income paid out as dividends increase retention ratio. This increases internally generated equity and increase internal and sustainable growth Using financial statement information 1. Why evaluate financial statements a. Internal uses ­ Performance evaluation ­ Planning for future b. External uses ­ Used to decide whether or not to grant credit to a new customer ­ Prime source of information about firm’s financial health ­ Evaluate main competitors ­ Identify potential target and decide what to offer 2. Choosing a benchmark a. Time trend analysis b. Peer group analysis ­ One common way of identifying potential peers is based on standard industrial classification (SIC) codes o 4­digits codes established by US government for statistical reporting purposes o First digit: general type of business o Each additional digit narrows down the industry ­ 1997, North America Classification System intended to replace the older SIC codes (but have not) ­ Aspirant group = top firm in the industry Working with financial statements 3. Problem with financial statement analysis ­ There is no underlying theory and economic logic to help us identify which items or ratios to look at and to guide us in establishing benchmark ­ Many firms are conglomerates owning more or less unrelated lines of business o Kind of peer group analysis is going to work best when firms are strictly in the same line of business, industry is competitive and there is only one way of operating ­ Major competitors and natural peer group members in an industry may be scattered around the globe. The existence of different standards and procedures makes it very difficult to compare financial statements across national border ­ Even companies that are clearly in the same line of business may not be comparable ­ Others o Different firms use different account procedures o Different firms end their fiscal years at different times o For any particular firm, unusual or transient events may affect financial performance

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Chapter 12, Problem 22 is Solved
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Textbook: Calculus: Early Transcendentals
Edition: 2
Author: William L. Briggs
ISBN: 9780321947345

The full step-by-step solution to problem: 22 from chapter: 12 was answered by , our top Calculus solution expert on 12/23/17, 04:24PM. The answer to “822. Identifying surfaces Consider the surfaces defined by the following equations. a. Identify and briefly describe the surface. b. Find the xy@, xz@, and yz@traces, when they exist. c. Find the intercepts with the three coordinate axes, when they exist. d. Make a sketch of the surface. y = 4x2 + z2 9” is broken down into a number of easy to follow steps, and 53 words. Calculus: Early Transcendentals was written by and is associated to the ISBN: 9780321947345. This full solution covers the following key subjects: . This expansive textbook survival guide covers 128 chapters, and 9720 solutions. This textbook survival guide was created for the textbook: Calculus: Early Transcendentals, edition: 2. Since the solution to 22 from 12 chapter was answered, more than 234 students have viewed the full step-by-step answer.

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Solution: 822. Identifying surfaces Consider the surfaces defined by the following