The Wyoming Boot, Co

question 11

Multiple Choice

The Wyoming Boot, Co. has paid a regular dividend of $0.25 quarterly for the last several years. The company has 1 million shares outstanding. Over the next year, the company will have to spend $600,000 to service its debt and spend $500,000 in capital expenditures. The company has $600,000 of cash and cash equivalents. Over the next year, how much cash must be provided from operations to continue to make the same quarterly dividend payment and still have $250,000 in cash at the end of the year?

• A) 1,000,000
• B) 1,100,000
• C) 1,750,000
• D) 2,100,000

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Definitions:

CVP Analysis

Cost-Volume-Profit Analysis, a management accounting methodology used for understanding the relationship between costs, volumes of sales, and profit.

Variable Cost

Costs that vary in proportion to the level of activity or volume of production in a business.

Annual Fixed Costs

Expenses that a business incurs that do not fluctuate with changes in production level or sales volume, such as rent or salaries, benchmarked on a yearly basis.

Graphical Approach

A method of solving problems or representing data using charts, graphs, or diagrams.