Question 1
Browse the Internet to acquire a copy of the most recent annual report for a publicly traded company. Analyze the information contained in the company?s balance sheet and income statement to answer the following questions: What are the company?s total assets at the end of its most recent annual reporting period? Why is this important? What are the total assets at the end of the previous annual reporting period? How much cash and cash equivalents did the company have at the end of its most recent annual reporting period? What amount of accounts payable did the company have at the end of its most recent annual reporting period? What amount of accounts payable did the company have at the end of the previous annual reporting period? What are the company?s net revenues for the last three annual reporting periods? What is the change in dollars in the company?s net income from its most recent annual reporting period to the previous annual reporting period? What are the company?s total current assets at the end of its most recent annual reporting period? What are the total current assets at the end of the previous annual reporting period? What in the information above would be important to a potential investor, employee, and so on? Summarize the analysis in a 700- to 1,050-word paper in a Microsoft? Word document. Include a copy of the company?s balance sheet and income statement. Format your paper consistent with APA guidelines. Click the Assignment Files tab to submit your assignment.
Question 2
Financial Management assignment. contemporary business. Using the WileyPlus resources, ?How News Lifts ? or Sinks ? World Stock? example. (attached file) Create a ten to fifteen (10-15) slide PowerPoint presentation (be creative). Be sure to use the speaker notes for the details. 1. Select two (2) tech stock companies that attempted to make profits from rising consumer demand after the crash. Analyze how they attempted to make a profit after the crash and discuss any unethical practices. 2. Evaluate the change in consumer demand trends after the crash for each of the tech stock companies you researched. Provide examples with your evaluation and use graphics such as charts, when applicable. 3. Discuss at least two (2) strategies that multinational corporations (MNCs) can undertake in order to make profit by leveraging the growing consumer demand. 4. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources. Your assignment must follow these formatting requirements: Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, the student?s name, the professor?s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. The specific course learning outcomes associated with this assignment are: Examine the components of the financial system including markets, financial institutions, the Federal Reserve, and laws and regulations. Use technology and information resources to research issues in contemporary business. Write clearly and concisely about contemporary business using proper writing mechanics.
Question 3
All else equal, the weighted average cost of capital for a firm will generally decrease when the: tax rate decreases. debt-equity ratio increases. cost of equity increases. market value of equity increases. Question 2 1 points Save Big Boy Equipment, Inc. is expected to pay an annual dividend in the amount of $1.45 a share next year. This dividend is expected to increase by 4 percent annually. The company?s stock is currently selling for $32.20 per share. What is the cost of equity? 4.50 percent 4.68 percent 8.50 percent 8.68 percent Question 3 1 points Save The Shoe Co. has a beta of .96. The risk-free rate of return is 4.6 percent and the expected return on the market is 13.5 percent. What is the cost of equity? 12.96 percent 13.14 percent 15.64 percent 17.56 percent Question 4 1 points Save Al?s Wooden Sheds has a cost of equity of 11 percent and a pre-tax cost of debt of 7 percent. The firm maintains a debt-equity ratio of .5 and has a tax rate of 35 percent. What is the firm?s weighted averagecost of capital? 7.13 percent 8.42 percent 8.85 percent 9.16 percent Question 5 1 points Save The Cola Co. is an all equity company that distributes soft drinks. The Cola Co. has 50,000 shares of stock outstanding at a market price of $22.56 per share and has a beta of 1.2. The Cola Co. is considering expanding into the potato chip and snack market. Potatoes and More is an all equity company that is currently involved with the snack foods market. Potatoes and More has 100,000 shares of stock outstanding at a market price of $38.10 per share. The beta of Potatoes and More is 1.3. The risk-free rate of return is 4 percent and the market risk premium is 8 percent. What discount rate should The Cola Co. use to evaluate its expansion project? 8.8 percent 9.2 percent 13.6 percent 14.4 percent Question 6 1 points Save The 8 percent preferred stock of Snowmobiles, Inc. is currently selling for $55.25 per share. If the par value is $100, what is the cost of preferred stock to the firm? 3.62 percent 8.00 percent 14.48 percent 16.00 percent Question 7 1 points Save The Textile Co. has a bond outstanding that matures in 10 years, carries a 6 percent coupon, and pays interest annually. The bond has a market value of $1,037.69. The company has a corporate tax rate of 34 percent. What is the aftertax cost of debt? 3.63 percent 3.96 percent 5.50 percent 6.00 percent Question 8 1 points Save The security market line approach: can only be used by firms which pay regular dividends. considers both the total risk associated with a stock and the risk-free rate of return. considers the systematic risk of a stock as compared to that of the overall market. values a security based on the risk-free rate and the amount of unsystematic risk inherent in a security. Question 9 1 points Save Woodcutters, Inc. has 20,000 shares of common stock outstanding at a market price of $16 a share. There are 7,000 shares of 8 percent preferred stock outstanding at a market price of $32 a share. The firm has 500 bonds outstanding with a face value of $1,000 and a market price of $980. The firm?s tax rate is 34 percent. What weight should be assigned to the cost of common stock when computing the weighted average cost of capital? 22 percent 31 percent 47 percent 53 percent Question 10 1 points Save The managers of Gotham Enterprises are evaluating a new project and decided to base the required rate of return for the project on Bristol Industries cost of capital. Bristol Industries is not owned or controlled by Gotham Enterprises. The managers are employing a strategy known as: the subjective approach. pure play. weighting the cost of capital the divisional cost of capital.
Question 4
Case study BYP3-6 BYP3-6 Bluestem Company is a pesticide manufacturer. Its sales declined greatly this year due to the passage of legislation outlawing the sale of several of Bluestem?s chemical pesticides. In the coming year, Bluestem will have environmentally safe and competitive chemicals to replace these discontinued products. Sales in the next year are expected to greatly exceed any prior year?s. The decline in sales and profi ts appears to be a one-year aberration. But even so, the company president fears a large dip in the current year?s profi ts. He believes that such a dip could cause a signifi cant drop in the market price of Bluestem?s stock and make the company a takeover target. To avoid this possibility, the company president calls in Cathi Bell, controller, to discuss this period?s year-end adjusting entries. He urges her to accrue every possible revenue and to defer as many expenses as possible. He says to Cathi, ?We need the revenues this year, and next year can easily absorb expenses deferred from this year. We can?t let our stock price be hammered down!? Cathi didn?t get around to recording the adjusting entries until January 17, but she dated the entries December 31 as if they were recorded then. Cathi also made every effort to comply with the president?s request. Instructions (a) Who are the stakeholders in this situation? (b) What are the ethical considerations of (1) the president?s request and (2) Cathi?s dating the adjusting entries December 31? (c) Can Cathi accrue revenues and defer expenses and still be ethical?
Question 5
7.18 Kingsman Incorporated had operating income before interest and taxes in 2011 of $220 million. The firm was expected to generate this level of operating income indefinitely. The firm had depreciation expense of $10 million that same year. Capital spending totaled $20 million during 2011. At the end of 2010 and 2011, working capital totaled $70 and $80 million, respectively. The firm?s combined marginal state, local, and federal tax rate was 40% and its debt outstanding had a market value of $1.2 billion. The 10-year Treasury bond rate is 5% and the borrowing rate for companies exhibiting levels of creditworthiness similar to Kingsman is 7%. The historical risk premium for stocks over the risk free rate of return is 5.5%. No Growth?s beta was estimated to be 1.0. The firm had 2,500,000 common shares outstanding at the end of 2011. Kingsman target debt to total capital ratio is 30%. a. Estimate free cash flow to the firm in 2011. b. Estimate the firm?s cost of capital. c. Estimate the value of the firm assuming the comparative market multiple of EBITDA is 6x d. Estimate the value of the equity of the firm at the end of 2011. e. Estimate the value per share at the end of 2011. FINANCIAL MODELING EXERCISE Prepare a financial five year income statement projection in Excel with the following assumptions: Year One: Unit Sales ? 4,000,000 Unit Price - $25 COGS - 50% Sales & Marketing Expense ? 15% of revenues General & Administrative Expense - $2,000,000 Tax Rate 40% Annual Depreciation - $100,000 (included in G&A Expense) Year Two through Year Five Unit Sales Increase ? 10% per year Price Increases ? 2% per year G&A increases ? 4% per year 1. Calculate Annual a. Gross Margin b. EBITDA Margin c. Net Profit Margin 2. If Company is valued at 6x EBITDA, what is the estimated current value after Year 1? Year 5? 3. Describe the operating leverage this company possesses?
