Accounting Answers

You are reviewing a financial model prepared by someone who hasn’t taken MKM704. The proposal being analyzed requires an upfront investment of $8.0 million and the company has a hurdle rate of 12%. The output from the individual’s model shows a NPV of $1.2 million and an IRR of 10.5%. What do you conclude about the analysis and why?

A friend of yours is planning to open a unique Mexican-Lebanese fusion food restaurant in Barrie, Ontario (population 150,000). 

Given the restaurant's unique fusion food options, along with the popularity of regular Mexican and Lebanese food cuisines, your friend expects to have a slight advantage over most of the other 240 restaurants in the city, even though all restaurants have the same geographic access to the city's populace.The Canadian restaurant and food service association estimates that total industry revenues for Canada (population 37.4 million) will be $75 billion next year.

What would be the Total Addressable Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM) for this restaurant?

A friend of yours is planning to open a unique Mexican-Lebanese fusion food restaurant in Barrie, Ontario (population 150,000). 

Given the restaurant's unique fusion food options, along with the popularity of regular Mexican and Lebanese food cuisines, your friend expects to have a slight advantage over most of the other 240 restaurants in the city, even though all restaurants have the same geographic access to the city's populace.The Canadian restaurant and food service association estimates that total industry revenues for Canada (population 37.4 million) will be $75 billion next year.

What would be the Total Addressable Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM) for this restaurant?

A friend of yours is planning to open a unique Mexican-Lebanese fusion food restaurant in Barrie, Ontario (population 150,000). 

Given the restaurant's unique fusion food options, along with the popularity of regular Mexican and Lebanese food cuisines, your friend expects to have a slight advantage over most of the other 240 restaurants in the city, even though all restaurants have the same geographic access to the city's populace.The Canadian restaurant and food service association estimates that total industry revenues for Canada (population 37.4 million) will be $75 billion next year.

What would be the Total Addressable Market (TAM), Serviceable Available Market (SAM) and Serviceable Obtainable Market (SOM) for this restaurant?

Don Berry runs a news website focused on the sport of hockey. He differentiates himself from his competitors by being the fastest in sharing reactions of sports experts after each game. In order to make it quick and easy for the experts to provide their opinions, he has developed an easy-to-use app where experts quickly record and upload short audio comments from their phone after each game. He charges a monthly subscription fee for his users to access the audio content and he shares a portion of the revenues with the experts which are most popular on his website.

Identify the Business Model, the key Business Strategy, and Operational Strategy for Mr. Berry’s news business.

Explain what is a forward-looking metric and what is a backward-looking metric.

Give an example of a backward-looking metric and explain why is it importance for a business top identify, measure and monitor this metric.

STATEMENT OF FINANCIAL POSITION

Accounts Payable ₱ 600,000

Unearned Revenue 1,210,000

Salaries Payable- current 120,000

Owner’s Withdrawals 280,000

Owner’s Capital 1,500,000

Comprehensive Income 3,000,000

Total Current Assets 80% of total liabilities

Cash 250,000

Inventories 480,000

Prepaid Expenses 600,000

Property, Plant and Equipment 5,166,000

Accounts Receivable 214,000

Look for:

A. CURRENT RATION

B. QUICK RATIO

C. CURRENT ASSETS TO WORKING CAPITAL

D. DEFENSIVE INTERVAL RATIO

E. DEBT TO EQUITY RATIO

F. EQUITY TO DEBT RATIO

G. DEBT RATIO

H. EQUITY RATIO

STATEMENT OF COMPREHENSIVE INCOME

• Always apply the income tax expense as 25% of operating profit.

Gross Sales = ₱ 3,822,300

Sales Returns= ₱ 219,700

Gross Purchases = ₱ 1,000,000

Purchase Discounts = ₱ 180,000

Beginning Inventories = ₱ 920,500

Ending Inventories = ₱ 450,800

Distribution Expenses = ₱ 760,200

Administrative Expenses = ₱ 440,900

Other Comprehensive Income = ₱ 210,000

Look for:

A. NET PROFIT MARGIN

B. GROSS PROFIT MARGIN

C. OPERATING PROFIT MARGIN

3. The concept of the “smart city” has recently been introduced as a strategic device to 

encompass modern urban production factors in a common framework and, in particular, 

to highlight the importance of Information and Communication Technologies (ICTs) in 

the last 20 years for enhancing the competitive profile of a city. The demand for smart 

cities has increased in recent years. 

a. In order to meet the demand of a smart city project in a country like India, with the help 

of any smart city project, describe some of the key elements for such smart cities. 

(5 Marks)

b. Mention the importance of smart cities and challenges in managing smart cities.

3.a. Two goods have a cross-price elasticity of demand of +1.2 (a) would you describe the 

goods as substitutes or complements? (b) If the price of one of the goods rises by 5 per 

cent, what will happen to the demand for the other good, holding other factors constant?

(5 Marks)

3.b. Calculate Marginal Utility and Average Utility from the information given in the below 

table: (5 Marks)

Quantity Consumed Total Utility

1 20

2 35

3 47

4 55

5 60