Question 1
CASE CC?1: Comprehensive Financial Analysis Select a company from a nonregulated industry for which you can obtain complete financial statements for at least the most recent six years. The company is International Game Technology Required: Based on these financial statements, the company?s background, industry statistics, and other market and company information, prepare a financial statement analysis report covering the following points: a.Executive summary of the company and its industry. Body: 8-12 pages b.Detailed evaluation of:(1)Short-term liquidity (current debt-paying ability). (2)Cash forecasting and pro forma analysis. (Prepare a forecast of the income statement, balance sheet, and statement of cash flows for a five-year horizon and a terminal year in Year 6.x) (3)Capital structure and solvency. (4)Return on invested capital. (5)Asset turnover (utilization). (6)Profitability and equity analysis. Note: You are expected to use a variety of financial analysis tools in answering (b). Your analysis should yield inferences for each of these six areas. c.Comment on the usefulness of the financial statements of this company for your analysis. d.How did accounting principles used in the financial statements affect your analytical measures? e.Prepare a forecast of the income statement, balance sheet, and statement of cash flows for a five-year horizon and a terminal year in Year 6. f.Estimate the value of your company?s common stock per share using the valuation analysis and procedures described in the Comprehensive Case. ? Conclusion and Recommendation(s) ? References For the final project this term, we will be looking at a manufacturing company in the gaming industry. The company is (drum roll) International Game Technology. Ticker symbol IGT. Please take some time this week and find out as much about this company as you can. You will need this information as we will be diving into the company's financial statements this whole term. As a start, go to the SEC web site and pull down the company's last five years of financial statements, and also find out who IGT competes against in this industry. WMS Industries Inc. is the competitor of choice. You will need this information to complete your final project. MT482 ? Unit 9 Final Project: Comprehensive Case Analysis Areas to be evaluated Points Possible Points Earned Executive summary of the company and its industry. 15 Detailed evaluation of: 30 Comment on the usefulness of the financial statements of this company for your analysis. 10 How did accounting principles used in the financial statements affect your analytical measures? 10 Prepare a forecast of the income statement, balance sheet, and statement of cash flows for a five-year horizon and a terminal year in Year 6.x 30 Estimate the value of your company?s common stock per share using the valuation analysis and procedures described in the Comprehensive Case. 30 Responses to all questions exhibit strong critical thinking and appropriate analysis. 75 Sentences are clear, concise, and direct; tone is appropriate. Grammatical skills are strong with almost no errors per page. Paper follows APA format and follows the criteria given: 50 Total Points Earned 250
Question 2
Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning, and to evaluate the company's performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance department of a Fortune 500 company since then. S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and sold light airplanes over this period, and the company's products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own airplanes. The company has two models, the Birdie, which sells for $53,000, and the Eagle, which sells for $78,000. While the company manufactures aircraft, its operations are different from commercial aircraft companies. S&S Air builds aircraft to order. By using prefabricated parts, the company is able to complete the manufacture of an airplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete. In contrast, a commercial airplane may take one and one-half to two years to manufacture once the order is placed. Mark and Todd have provided the following financial statements. Chris has gathered the industry ratios for the light airplane manufacturing industry. QUESTIONS 1. Calculate the ratios for S&S Air that are shown for the industry. Ratios for S&S Air Current ratio = Quick ratio = Cash ratio = Total asset turnover = Inventory turnover = Receivables turnover = Total debt ratio = Debt-equity ratio = Equity multiplier = Times interest earned = Cash coverage = Profit margin = Return on assets = Return on equity = 3. Compare the performance of S&S Air to the industry. For each ratio, comment on why it might be viewed as positive or negative relative to the industry. Suppose you create an inventory ratio calculated by inventory divided by current liabilities. How do you think S&S Air's ratio would compare to the industry average? please just answer the third question, thanks,Hi i want to ask this where did u answer this one: For each ratio, comment on why it might be viewed as positive or negative relative to the industry. thank you!,FOR SURE, i can extend 1 -2 more hrs
Question 3
Choose a publicly-traded company by the end of Week Three and submit for approval. ? Examine the chosen company?s annual report and calculate the ratios listed on page 2 below. ? Complete the following: o Financial statement analyses: horizontal analysis and vertical analysis o Preparation of common-sized financial statements o Comparison of company?s financial information with a competitor or industry report Please note: Ratios will be calculated for the two most recent years from available annual reports. Please note: Written proof of how the ratios were calculated must be attached to the report. You must calculate the ratios yourself (show all numbers in the calculations?not just the end result). Additionally, provide a copy of the following items: o Management?s discussion and analysis of results o Management?s statement of responsibility for the financial statements o Auditor?s report o Financial statements: balance sheet, income statement, statement of stockholders? equity, and statement of cash flows o Footnotes to the financial statements Please note: Be sure to clearly identify each item by writing the title of the item at the top. ? Write a 1,000?1,750 word report summarizing your findings. This paper must be in APA format and have a title and reference page (see The Little, Brown Compact Handbook). The title page, reference page, and calculation of the financial ratios do not count toward the required report length. Your paper should include: o An introduction (250?500 words) - Synopsis of the company?s business - Current business situation - Industry analysis o Analysis and interpretation (500?750 words) - The analysis of the financial ratios should include insights into the meanings behind the ratios. The ratios should tell a story about how the company is doing and its prospects for the future. You need to tell that story. - In order to make the ratios more meaningful, an industry average for each ratio should also be included, along with a brief discussion regarding the analysis of your company?s ratios versus its industry. Do not copy directly from the annual report. o Conclusion (250?500 words) - Investment decision: Imagine you had $25,000 to invest in the stock of this company. Provide a statement of your decision to invest or not invest in this company?s stock based on: ? Your interpretation of the company?s long-term prospects (i.e., long-term viability and growth) ? Your research: You are expected to integrate your conclusions from the ratio analysis above; however, this is not to be your only source of information for the investment decision. You may use articles about your company found in publications or financial analyst reports to support your decision. The Internet and Online Library must be used to search for information on your company and/or industry. Provide a list for any sources used on your reference page. Be sure to provide a conclusion on your decision to invest or not invest in this company?s stock. Required Ratios Liquidity and Efficiency Ratios 1. Current ratio 2. Quick ratio Solvency and Leverage Ratios 1. Times interest earned 2. Debt-to-equity ratio Profitability Ratios 1. Profit margin ratio 2. Gross margin ratio,I will need to know which company you choose by the end of the week,You did an amazing job, but you did two companies, and it called for 1 company. I dont know if you can easily delete out one of the companies but if you can, that would be perfect. Thank you
Question 4
Assume that the U.S. one-year interest rate is 3% and the one-year interest rate on Australian dollars is 6%. The U.S. expected annual inflation is 5%, while the Australian inflation is expected to be 7%. You have $100,000 to invest for one year and you believe that PPP holds. The spot exchange rate of an Australian dollar is $0.689. What will be the yield on your investment if you invest in the Australian market? Answer 6% 3% 4% 2% . 1 points Question 2 If interest rate parity holds, then the one-year forward rate of a currency will be ____ the predicted spot rate of the currency in one year according to the international Fisher effect. Answer greater than less than equal to answer is dependent on whether the forward rate has a discount or premium . 1 points Question 3 The interest rate in the U.K. is 7%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is $1.50. According to the international Fisher effect (IFE), the British pound should adjust to a new level of: Answer $1.47. $1.53. $1.43. $1.57. . 1 points Question 4 The Fisher effect is used to determine the: Answer real inflation rate. real interest rate. real spot rate. real forward rate. . 1 points Question 5 Which of the following theories suggests that the percentage change in spot exchange rate of a currency should be equal to the inflation differential between two countries? Answer purchasing power parity (PPP). triangular arbitrage. international Fisher effect (IFE). interest rate parity (IRP). . 1 points Question 6 Given a home country and a foreign country, purchasing power parity (PPP) suggests that: Answer a home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate. a home currency will appreciate if the current home interest rate exceeds the current foreign interest rate. a home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate. a home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate. . 1 points Question 7 According to the international Fisher effect, if Venezuela has a much higher nominal rate than other countries, its inflation rate will likely be ____ than other countries, and its currency will ____. Answer lower; strengthen lower; weaken higher; weaken higher; strengthen . 1 points Question 8 Which of the following is indicated by research regarding purchasing power parity (PPP)? Answer PPP clearly holds in the short run. Deviations from PPP are reduced in the long run. PPP clearly holds in the long run. There is no relationship between inflation differentials and exchange rate movements in the short run or long run. . 1 points Question 9 According to the IFE, if British interest rates exceed U.S. interest rates: Answer the British pound's value will remain constant. the British pound will depreciate against the dollar. the British inflation rate will decrease. the forward rate of the British pound will contain a premium. today's forward rate of the British pound will equal today's spot rate. . 1 points Question 10 Which of the following theories suggests the percentage change in spot exchange rate of a currency should be equal to the interest rate differential between two countries? Answer absolute form of PPP. relative form of PPP. international Fisher effect (IFE). interest rate parity (IRP). . 1 points Question 11 Assume that the inflation rate in Singapore is 3%, while the inflation rate in the U.S. is 8%. According to PPP, the Singapore dollar should ____ by ____%. Answer appreciate; 4.85 depreciate; 3,11 appreciate; 3.11 depreciate; 4.85 . 1 points Question 12 Assume that the international Fisher effect (IFE) holds between the U.S. and the U.K. The U.S. inflation is expected to be 5%, while British inflation is expected to be 3%. The interest rates offered on pounds are 7% and U.S. interest rates are 7%. What does this say about real interest rates expected by British investors? Answer real interest rates expected by British investors are equal to the interest rates expected by U.S. investors. real interest rates expected by British investors are 2 percentage points lower than the real interest rates expected by U.S. investors. real interest rates expected by British investors are 2 percentage points above the real interest rates expected by U.S. investors. IFE doesn't hold in this case because the U.S. inflation is higher than the British inflation, but the interest rates offered in both countries are equal. . 1 points Question 13 Which of the following theories suggests that the percentage difference between the forward rate and the spot rate depends on the interest rate differential between two countries? Answer purchasing power parity (PPP). triangular arbitrage. international Fisher effect (IFE). interest rate parity (IRP). . 1 points Question 14 Assume U.S. and Swiss investors require a real rate of return of 3%. Assume the nominal U.S. interest rate is 6% and the nominal Swiss rate is 4%. According to the international Fisher effect, the franc will ____ by about ____. Answer appreciate; 3% appreciate; 1% depreciate; 3% depreciate; 2% appreciate; 2% . 1 points Question 15 Assume that the one-year interest rate in the U.S. is 7% and in the U.K. is 5%. According to the international Fisher effect, British pound's spot exchange rate should ____ by about ____ over the year. Answer depreciate; 1.9% appreciate; 1.9% depreciate; 3.94% appreciate; 3.94% . 1 points Question 16 A fundamental forecast that uses multiple values of the influential factors is an example of: Answer sensitivity analysis. discriminant analysis. technical analysis. factor analysis. . 1 points Question 17 The following is not a limitation of technical forecasting: Answer It's not suitable for long-term forecasts of exchange rates. It doesn't provide point estimates or a range of possible future values. It cannot be applied to currencies that exhibit random movements. It cannot be applied to currencies that exhibit a continuous trend for short-term forecast. . 1 points Question 18 Assume that interest rate parity holds. The U.S. five-year interest rate is 5% annualized, and the Mexican five-year interest rate is 8% annualized. Today's spot rate of the Mexican peso is $.20. What is the approximate five-year forecast of the peso's spot rate if the five-year forward rate is used as a forecast? Answer $.131. $.226. $.262. $.140. $.174. . 1 points Question 19 Which of the following is not a method of forecasting exchange rate volatility? Answer using the absolute forecast error as a percentage of the realized value. using the volatility of historical exchange rate movements as a forecast for the future. using a time series of volatility patterns in previous periods. deriving the exchange rate's implied standard deviation from the currency option pricing model. . 1 points Question 20 Which of the following is not a limitation of fundamental forecasting? Answer uncertain timing of impact. forecasts are needed for factors that have a lagged impact. omission of other relevant factors from the model. possible change in sensitivity of the forecasted variable to each factor over time. . 1 points Question 21 Assume that the U.S. interest rate is 11 percent, while Australia's one-year interest rate is 12 percent. Assume interest rate parity holds. If the one-year forward rate of the Australian dollar was used to forecast the future spot rate, the forecast would reflect an expectation of: Answer depreciation in the Australian dollar's value over the next year. appreciation in the Australian dollar's value over the next year. no change in the Australian dollar's value over the next year. information on future interest rates is needed to answer this question. . 1 points Question 22 Assume that the forward rate is used to forecast the spot rate. The forward rate of the Canadian dollar contains a 6% discount. Today's spot rate of the Canadian dollar is $.80. The spot rate forecasted for one year ahead is: Answer $.860. $.848. $.740. $.752. . 1 points Question 23 If speculators expect the spot rate of the Canadian dollar in 30 days to be ____ than the 30-day forward rate on Canadian dollars, they will ____ Canadian dollars forward and put ____ pressure on the Canadian dollar forward rate. Answer lower; sell; upward lower; sell; downward higher; sell; upward higher; sell; downward . 1 points Question 24 Which of the following is not one of the major reasons for MNCs to forecast exchange rates? Answer to decide in which foreign market to invest the excess cash. to decide where to borrow at the lowest cost. to determine whether to require the subsidiary to remit the funds or invest them locally. to speculate on the exchange rate movements. . 1 points Question 25 Which of the following forecasting techniques would best represent the sole use of the pattern of historical currency values of the euro to predict the euro's future currency value? Answer fundamental forecasting. market-based forecasting. technical forecasting. mixed forecasting. . 1 points Question 26 The one-year forward rate of the British pound is $1.55, while the current spot rate is $1.60. Based on the forward rate, what is the expected percentage change in the British pound over the next year? Answer +5.0% ?3.1% +3.1% +3.2% . 1 points Question 27 If speculators expect the spot rate of the yen in 60 days to be ____ than the 60-day forward rate on the yen, they will ____ the yen forward and put ____ pressure on the yen's forward rate. Answer higher; buy; upward higher; sell; downward higher; sell; upward lower; buy; upward . 1 points Question 28 Assume that U.S. interest rate for the next three years is 5%, 6%, and 7% respectively. Also assume that Canadian interest rates for the next three years are 3%, 6%, 9%. The current Canadian spot rate is $.840. What is the approximate three-year forecast of Canadian dollar spot rate if the three-year forward rate is used as a forecast? Answer $.840 $.890 $.856 $.854 . 1 points Question 29 If the forward rate was expected to be an unbiased estimate of the future spot rate, and interest rate parity holds, then: Answer covered interest arbitrage is feasible. the international Fisher effect (IFE) is supported. the international Fisher effect (IFE) is refuted. the average absolute error from forecasting would equal zero. . 1 points Question 30 Small Corporation would like to forecast the value of the Cyprus pound (CYP) five years from now using forward rates. Unfortunately, Small is unable to obtain quotes for five-year forward contracts. However, Small observes that the five-year interest rate in the U.S. is 11%, while the Cyprus five-year interest rate is 15%. Based on this information, the Cyprus pound should ____ by ____% over the next five years. Answer appreciate; 16.22 depreciate; 16.22 appreciate; 6.66 depreciate; 6.66,Will you be able to get the answers by 12:30?
Question 5
P 15-1 Operating lease; scheduled rent increases LO4 On January 1, 2011, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual rent payments on December 31 of each year. The payments are $10,000 the first year and increase by $500 per year. Benefits expected from using the office space are expected to remain constant over the lease term. Required: Record Sweetwater's rent payment at December 31, 2015 (the fifth rent payment) and December 31, 2025 (the 15th rent payment). P 15-4 Capital lease LO5 At the beginning of 2011, VHF Industries acquired a machine with a fair value of $6,074,700 by signing a four-year lease. The lease is payable in four annual payments of $2 million at the end of each year. Required: 1. What is the effective rate of interest implicit in the agreement? 2. Prepare the lessee's journal entry at the inception of the lease. 3. Prepare the journal entry to record the first lease payment at December 31, 2011. 4. Prepare the journal entry to record the second lease payment at December 31, 2012. 5. Suppose the fair value of the machine and the lessor's implicit rate were unknown at the time of the lease, but that the lessee's incremental borrowing rate of interest for notes of similar risk was 11%. Prepare the lessee's entry at the inception of the lease. (Note: You may wish to compare your solution to Problem 15-4 with that of Problem 14-12, which deals with a parallel situation in which the machine was acquired with an installment note.) P 15-18 Initial direct costs; direct financing lease LO3 LO5 LO9 Bidwell Leasing purchased a single-engine plane for its fair value of $645,526 and leased it to Red Baron Flying Club on January 1, 2011. Terms of the lease agreement and related facts were: a. Eight annual payments of $110,000 beginning January 1, 2011, the inception of the lease, and at each December 31 through 2017. Bidwell Leasing's implicit interest rate was 10%. The estimated useful life of the plane is eight years. Payments were calculated as follows: b. Red Baron's incremental borrowing rate is 11%. c. Costs of negotiating and consummating the completed lease transaction incurred by Bidwell Leasing were $18,099. d. Collectibility of the lease payments by Bidwell Leasing is reasonably predictable and there are no costs to the lessor that are yet to be incurred. Required: 1. How should this lease be classified (a) by Bidwell Leasing (the lessor) and (b) by Red Baron (the lessee)? 2. Prepare the appropriate entries for both Red Baron Flying Club and Bidwell Leasing on January 1, 2011. 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. 4. Determine the effective rate of interest for Bidwell Leasing for the purpose of recognizing interest revenue over the lease term. 5. Prepare an amortization schedule that describes the pattern of interest revenue over the lease term for Bidwell Leasing. 6. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2011 (the second lease payment). Both companies use straight-line depreciation. 7. Prepare the appropriate entries for both Red Baron and Bidwell Leasing on December 31, 2017 (the final lease payment).
