Market value ratios give management an indication of what investors think of the company's -Select-liquidityriskassetsItem 1 and future prospects. The market value ratios include: (1) Price/Earnings ratio, (2) Market/Book ratio, and (3) Enterprise Value/EBITDA ratio. The Price/Earnings (P/E) ratio shows how much investors are willing to pay per dollar of current -Select- 2 . Its equation is:

P/E ratios are -Select-highlowItem 3 for firms with strong growth prospects and relatively little risk but -Select-highlowItem 4 for slowly growing and risky firms. The Market/Book (M/B) ratio is another indication of how investors regard a firm. Its equation is: Companies with -Select-highlowItem 5 risk and -Select-highlowItem 6 growth have high M/B ratios. M/B ratios typically exceed -Select-onezerotenItem 7 , which means that investors are willing to pay more for stocks than their accounting book values. Unlike the P/E and M/B ratios, the EV/EBITDA ratio looks at the relative market value of all the company’s key financial claims. The EV/EBITDA ratio -Select-isis notItem 8 heavily influenced by the company’s debt and tax situations.
Enterprise value = Market value of equity + Market value of total debt + Market value of other financial claims – Cash and equivalents.

At a student café, there are equal numbers of two types of customers with the following values. the café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (i.e., she cannot price-discriminate). students with early classes students without early classes coffee 70 60 banana 51 101 the marginal cost of coffee is 10 and the marginal cost of a banana is 40. the café owner is considering three pricing strategies: 1. mixed bundling: price bundle of coffee and a banana for 161, or just a coffee for 70. 2. price separately: offer coffee at 60, price a banana at 101. 3. bundle only: coffee and a banana for 121. do not offer goods separately. assume that if the price of an item or bundle is no more than exactly equal to a student's willingness to pay, then the student will purchase the item or bundle. for simplicity, assume there is just one student with an early class, and one student without an early class. price strategy revenue from pricing strategy cost from pricing strategy profit from pricing strategy 1. mixed bundling $ $ $ 2. price separately $ $ $ 3. bundle only $ $ $ pricing strategy yields the highest profit for the café owner.

11.     before adding cream to a simmering soup, you need to a. simmer the cream. b. chill the cream. c. strain the cream through cheesecloth. d. allow the cream reach room temperature. student d   incorrect which answer is right?

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?