Showing 991–999 of 1959 results
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Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards..
$1.00Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5-year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10% and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the bank loan payment than the lease payment? Note: Subtract the loan payment from the lease payment.
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Comparative statement data for Farris Company and Ratzlaff Company
$5.00Comparative statement data for Farris Company and Ratzlaff Company, two competitors, appear below. All balance sheet data are as of December 31, 2015, and December 31, 2014.
Farris Company Ratzlaff Company 2015 2014 2015 2014 Net sales $1,549,035 $339,038 Cost of goods sold 1,080,490 241,000 Operating expenses 302,275 79,000 Interest expense 8,980 2,252 Income tax expense 54,500 6,650 Current assets 325,975 $312,410 83,336 $ 79,467 Plant assets (net) 521,310 500,000 139,728 125,812 Current liabilities 65,325 75,815 35,348 30,281 Long-term liabilities 108,500 90,000 29,620 25,000 Common stock, $10 par 500,000 500,000 120,000 120,000 Retained earnings 173,460 146,595 38,096 29,998 Instructions
(a)Prepare a vertical analysis of the 2015 income statement data for Farris Company and Ratzlaff Company in columnar form.
(b)Comment on the relative profitability of the companies by computing the return on assets and the return on common stockholders’ equity for both companies.
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10.9 STORE-DRIVEN FORECASTS
$3.0010.9 STORE-DRIVEN FORECASTS.
The Home Depot is a leading specialty retailer of hardware and home improvement products and is the second-largest retail store chain in the United States. It operates large warehouse-style stores. Despite declining sales and difficult economic conditions in 2007 and 2008, The Home Depot continued to invest in new stores. The following table provides summary data for The Home Depot.
Required
a. Use the preceding data for The Home Depot to compute average revenues per store, capital spending per new store, and ending inventory per store in 2008.
b. Assume that The Home Depot will add 100 new stores by the end of Year +1. Use the data from 2008 to project Year +1 sales revenues, capital spending, and ending inventory. Assume that each new store will be open for business for an average of one-half year in Year _1. For simplicity, assume that in Year +1, Home Depot’s sales revenues will grow, but only because it will open new stores.
Additional Files:
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FIN571 Week 4 assigment- Analyzing Pro forma statement
$5.00Decide upon an initiative you want to implement that would increase sales over the next five years, (for example, market another product, corporate expansion, and so on). Using the sample financial statements, create pro forma statements of five year projections that are clear, concise, and easy to read. Be sure to double check the calculations in your pro forma statements. Make assumptions that support each line item increase or decrease for your forecasted statements. Discuss and interpret the financials in relation to the initiative. Make recommendations on potential discretionary financing needs.
Write a 350 – 700 word analysis of the company’s short term and long term financing needs and determine strategies for the company to manage working capita
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Asset W has an expected return of 13.55 percent and a beta of 1.36
$2.00Asset W has an expected return of 13.55 percent and a beta of 1.36. If the risk-free rate is 4.61 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations. Enter your portfolio expected return answers as a percentage and round to 2 decimal places (e.g., 32.16). Round your portfolio beta answers to 3 decimal places (e.g., 32.161).) Percentage of Portfolio Portfolio Portfolio in Asset W Expected Return Beta 0% % 25 % 50 % 75 % 100 % 125 % 150 %
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Using Hatfield’s data and its industry averages
$7.00Using Hatfield’s data and its industry averages, how well run would you say Hatfield appears to be in comparison with other firms in its industry? What are its primary strengths and weaknesses? Be specific in your answer, and point to various ratios that support your position. Also, use the Du Pont equation as one part of your analysis.
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Aunt Sally’s Foods, Inc. Case
$10.00Aunt Sally’s Foods, Inc. is a full line producer and distributor of ready to use jarred food products such as gravies and sauces. Their products are well received in the marketplace competing with such brand names as Franco-American, Ragu and Heinz. Consider the following expansion opportunity for Aunt Sally’s Foods, Inc. Sally is considering expansion into a new line of all natural, cholesterol free, low sodium, low-calorie tomato sauces. Sally has paid $250,000 for a marketing study to assist in this opportunity and other potential valuations.
The study indicates that the new product will have sales of $2,100,000 per year for each of the next 6 years. However, existing product line sales will be reduced by $600,000 per year. Manufacturing plant and equipment will cost $1,200,000 and will be depreciated on the straight-line method to zero with a 15% salvage (market) value at the end of 6 years. Annual fixed costs are projected at $140,000 per year and variable costs are projected at 50% of sales. Also, an initial working capital outlay of $250,000 will be required which will be recaptured at the end of the 6 years. Sally’s tax rate is 30% and the firm requires an 18% return.
Based on the following criteria: 1) Net Present Value, and 2) Internal Rate of Return, should Sally undertake this project? (Please round to the nearest dollar on all calculations)
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Bartram-Pulley Company (BPC) Case
$10.00The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $6,750 and has an expected life of 3 years. Annual net cash flows from each project begin 1 year after the initial investment is made and have the following probability distributions:
Project A Project B Probability Net Cash Flows Probability Net Cash Flows 0.2$6,000 $6,000 0.2 $ 0 0.6 6750 0.6 6,750 0.27,500 7,500 0.2 18,000 BPC has decided to evaluate the riskier project at a 12 percent rate and the less risky project at a 10 percent rate.
a. What is the expected value of the annual net cash flows from each project? What is the coefficient of variation (CV)? (Hint: sB = $5,798 and CV B 0.76.)
b. What is the risk-adjusted NPV of each project?
c. If it were known that Project B was negatively correlated with other cash flows of the firm whereas Project A was positively correlated, how would this knowledge affect the decision? If Project B”s cash flows were negatively correlated with gross domestic product (GDP), would that influence your assessment of its risk?
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SCAMPINI SUPPLIES COMPANY CASE
$10.00The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given below. The company”s cost of capital is 10 percent.
Year Annual Operating Cash Flow Salvage Value 0 ($22,500) $22,500 1 6,250 17,500 2 6,250 14,000 3 6,250 11,000 4 6,250 5,000 5 6,250 0 a. Should the firm operate the truck until the end of its 5-year physical life, or, if not, what is its optimal economic life?
b. Would the introduction of salvage values, in addition to operating cash flows, ever reducethe expected NPV and/or IRR of a project?