Question 1
You may use Microsoft Word and/or charts/formatting from Excel. Your submission must be typed. I will not accept hand-written submissions. Format and presentation count as part of your grade: you should make this as professional-looking as possible! You will need to refer to the consolidated financial statements (including the NOTES) of Foot Locker, Inc., that are presented in Appendix B at the end of your textbook, in order to complete each requirement of the project. The book only has the numbers for 2005- 2007. If you need numbers for other years, you can get them from the Foot Locker, Inc. Annual Reports, which are on the Foot Locker, Inc. website. You can find the information you need either by going to the Investor Relations web page www.footlocker-inc.com/investors.cfm?page=investor-relations or by going to www.sec.gov and downloading the company?s 10-k for the relevant year(s). Suppose you are an investor considering buying Foot Locker, Inc., common stock. The following questions are important. Show amounts in millions and round to the nearest $1 million. 1 Explain whether Foot Locker, Inc. had more sales revenue or collected more cash from customers during 2007. Why is accounts receivable missing from its balance sheet? 2 Investors are vitally interested in a company?s sales and profits, and its trends of sales and profits over time. Consider Foot Locker?s sales and net income (net loss) during the period from 2005 through 2007. Compute the percentage increase or decrease in net sales and also in net income (net loss) from 2005 to 2007. Which item grew faster during this two-year period, net sales or net income (net loss)? Can you offer a possible explanation for these changes? During 2007, Foot Locker, Inc. had numerous accruals and deferrals. As a new member of Foot Locker, Inc.?s accounting staff, it is your job to explain the effects of accruals and deferrals on net income for 2007. The accrual and deferral data follow, along with questions that Foot Locker, Inc.?s stockholders have raised (all amounts in millions): 3 Examine Footnote 8 to Foot Locker?s consolidated financial statements (Other Current Assets). Notice that included in this total is ?net receivables.? Ending net receivables for 2006 (beginning balance of 2007) were $59 million. Ending net receivables for 2007 were $50 million. Which of these amounts did Foot Locker, Inc. earn in 2006? Which amount is included in Foot Locker, Inc.?s 2007 net income? 4 Examine Footnote 9 (Property and Equipment, Net). Notice that accumulated depreciation stood at $870 million and the end of 2006 and at $903 million at year-end 2007. Assume that depreciation expense for 2007 was $100. Explain what must have happened to account for the remainder of the change in the accumulated depreciation account during 2007. 5 Focus on cash and cash equivalents. Why did cash change during 2007? The statement of cash flows holds the answer to this question. Analyze the seven largest individual items on the statement of cash flows (not the summary subtotals such as ?net cash provided by operating activities?). For each of the seven individual items, state how Foot Locker Inc.?s action affected cash. Show amounts in millions and round to the nearest $1 million. 6 What securities are included in Foot Locker?s Short-term investments? What type of securities are they? 7 Make a T-account for Short-term investments. Record $249 as the balance in the account as of the end of 2006. Using the information in the investments section of the Consolidated Statement of Cash Flows, record the cash purchases and sales of short-term investments during 2007. Why doesn?t the ending balance equal the amount shown on the balance sheet as of the end of 2007? 8 Three important pieces of information are (a) the cost of inventory on hand, (b) the cost of sales, and (c) the cost of inventory purchases. Identify or compute each of these items for Foot Locker, Inc. at the end of its fiscal year 2007. 9 Assume that all inventory purchases were made on account, and that only inventory purchased increased Accounts Payable. Compute Foot Locker, Inc.?s cash payments for inventory during fiscal 2007. 10 How does Foot Locker, Inc. value its inventories? Which costing method does Foot Locker Inc. use? 11 Did Foot Locker, Inc.?s gross profit percentage and rate of inventory turnover improve or deteriorate in fiscal 2007 (versus fiscal 2006)? Consider the overall effect of these two ratios. Did Foot Locker, Inc. improve during fiscal 2007? How did these factors affect the net income for fiscal 2007? Foot Locker, Inc.?s inventories totaled $1,254 million at the end of fiscal 2005. Round decimals to three places. 12 Which depreciation method does Foot Locker, Inc. use? Over what useful life does Foot Locker, Inc. depreciate various types of fixed assets? 13 Were Foot Locker, Inc.?s plant assets proportionately newer or older at the end of fiscal 2007 (versus 2006)? Explain your answer. 14 The current liability section of Foot Locker, Inc.?s Consolidated Balance Sheet as of February 2, 2008 (the end of fiscal 2007) lists accrued and other liabilities totaling $268 million. Find the details of this total in the Notes to Consolidated Financial Statements. What are the four principal items comprising this total? 15 How would you rate Foot Locker, Inc.?s overall debt position at the end of fiscal 2007 ? risky, safe or average? Compute the ratios that enable you to answer this question. 16 As of the end of fiscal 2007, how many classes of stock does Foot Locker, Inc. have authorized? Issues? Outstanding? 17 During 2007, Foot Locker, Inc. repurchased its treasury stock. How many shares did it purchase? How much did it pay for the stock? How much per share? Compare the price it paid for these shares with the market price of the company?s stock at the end of each quarter (see footnote 26). Does it look like the company was getting a ?good deal? on the purchase of its stock? Why? 18 Did Foot Locker, Inc. issue any new shares of common stock during fiscal 2007? Briefly explain the reasons. 19 Prepare a T-account to show the beginning and ending balances, plus all the activity in Retained Earnings for fiscal 2007. 20 What indicates that Foot Locker, Inc. owns foreign subsidiaries? Identify the item that proves your point and the financial statement on which the item appears. 21 At February 2, 2008, did Foot Locker, Inc. have a cumulative net gain or a cumulative net loss from translating its foreign subsidiaries? financial statements into dollars? How can you tell? 22 What is your evaluation of the quality of Foot Locker, Inc.?s earnings? State how you formed your opinion. 23 Perform a trend analysis of Foot Locker?s net sales, gross profit, operating income and net income. Use 2005 as the base year, and compute trend figures for 2006 and 2007.,Michael, I have a couple of questions for you before I match your price. Do you already have the answers to this assignment, and if so how soon can you send me the answers? Jimmy,Please find all the information you will need from the following links: For 2007: http://www.footlocker-inc.com/pdf/2007/AnnualReport2007.pdf For 2008: http://www.footlocker-inc.com/pdf/2008/AnnualReport2008.pdf,Michael, I was wondering how far you have gotten on the questions as the deadline is approaching for me. Could you please let me know now? Thank you. Also please supply me with the answer to questions no. 1.,That is fine, I did set the deadline to midnight on the 18th which is today. I was just concerned thats all. I should have done it ages ago.,Kindly answer all the questions that you have missed.
Question 2
The Case of Tracking the Terrorists A bill has just been introduced in the Legislature, with wide bi-partisan support, that would create a database for creating a "network" of information by which to track non-documented workers and potential terrorists. The information that would be accessed includes information from driver?s licenses, and requests for government services. In addition, the legislation would require all manufacturers of software to embed a code in their product which would allow tracking of internet use as well as sales on the computer. No notice would be given to the consumer other than the general notice that the measure has become law. Be Attentive If we consider each of the lenses a pane in a window which gives us a balanced view of the problem, the final process combines all four of the lenses as we balance among the four core values of our community. After working through each of the lenses individually, you can now see how to put the pieces together in a whole. The process requires that you diligently ask the core questions over and over as you analyze problems that come to you. All four lenses are needed. In the question about what comes first, rights and justice or results and virtue, the answer is - it doesn't matter. If you prefer to start with rights and justices, your horizons can be expanded as you dream of possibilities with those who focus on results and reputation. If you start with imagining what is possible, those dreams need to be disciplined by the constraints of rights and justice. As you go through all four lenses, you can calibrate your response and assure that you have considered all facets of the problem. For the final round, we will work through the lenses in the order in which they were presented: (1) Rights/Responsibility Lens; (2) Results Lens; (3) Relationship Lens; (4) Reputation Lens. We begin by setting the context. Please address the following questions: ? Who is the ethical actor? Who or what group will be taking the action in this particular problem? ? Who are the stakeholders? Who are those people and/or groups to which we owe a duty? What are the express and implied agreements that you have with each of the constituents? ? What is the context and assumptions? What are the facts that need to be considered? In framing the context, what assumptions as to competing rights and responsibilities are present?
Question 3
" 4/16/2010 Chapter 6. Ch 06 P14 Build a Model a. Use the data given to calculate annual returns for Bartman, Reynolds, and the Market Index, and then calculate average returns over the five-year period. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2005 because you do not have 2004 data.) Data as given in the problem are shown below: Bartman Industries Reynolds Incorporated Market Index Year Stock Price Dividend Stock Price Dividend Includes Divs. 2010 $17.250 $1.150 $48.750 $3.000 11,663.98 2009 14.750 1.060 52.300 2.900 8,785.70 2008 16.500 1.000 48.750 2.750 8,679.98 2007 10.750 0.950 57.250 2.500 6,434.03 2006 11.375 0.900 60.000 2.250 5,602.28 2005 7.625 0.850 55.750 2.000 4,705.97 We now calculate the rates of return for the two companies and the index: Bartman Reynolds Index 2010 2009 2008 2007 2006 Average Note: To get the average, you could get the column sum and divide by 5, but you could also use the function wizard, fx. Click fx, then statistical, then Average, and then use the mouse to select the proper range. Do this for Bartman and then copy the cell for the other items. b. Calculate the standard deviation of the returns for Bartman, Reynolds, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.) Use the function wizard to calculate the standard deviations. Bartman Reynolds Index Standard deviation of returns c. Now calculate the coefficients of variation Bartman, Reynolds, and the Market Index. Bartman Reynolds Index Coefficient of Variation d. Construct a scatter diagram graph that shows Bartman?s and Reynolds? returns on the vertical axis and the Market Index?s returns on the horizontal axis. It is easiest to make scatter diagrams with a data set that has the X-axis variable in the left column, so we reformat the returns data calculated above and show it just below. Year Index Bartman Reynolds 2010 0.0% 0.0% 0.0% 2009 0.0% 0.0% 0.0% 2008 0.0% 0.0% 0.0% 2007 0.0% 0.0% 0.0% 2006 0.0% 0.0% 0.0% To make the graph, we first selected the range with the returns and the column heads, then clicked the chart wizard, then choose the scatter diagram without connected lines. That gave us the data points. We then used the drawing toolbar to make free-hand ("by eye") regression lines, and changed the lines color and weights to match the dots. e. Estimate Bartman?s and Reynolds?s betas as the slopes of regression lines with stock returns on the vertical axis (y-axis) and market return on the horizontal axis (x-axis). (Hint: use Excel?s SLOPE function.) Are these betas consistent with your graph? Bartman's beta = Reynolds' beta = f. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns. Market risk premium (RPM) = 5.000% Risk-free rate = 6.040% Expected return on market = Risk-free rate + Market risk premium = 6.040% + 5.000% = 11.040% Required return = Bartman: Required return = = Reynolds: Required return = = g. If you formed a portfolio that consisted of 50% Bartman stock and 50% Reynolds stock, what would be its beta and its required return? The beta of a portfolio is simply a weighted average of the betas of the stocks in the portfolio, so this portfolio's beta would be: Portfolio beta = h. Suppose an investor wants to include Bartman Industries? stock in his or her portfolio. Stocks A, B, and C are currently in the portfolio, and their betas are 0.769, 0.985, and 1.423, respectively. Calculate the new portfolio?s required return if it consists of 25% of Bartman, 15% of Stock A, 40% of Stock B, and 20% of Stock C. Beta Portfolio Weight Bartman 25% Stock A 0.769 15% Stock B 0.985 40% Stock C 1.423 20% 100% Portfolio Beta = Required return on portfolio: = Risk-free rate + Market Risk Premium * * Beta = = ",dear tutor I am not able to retrieve this zip file Finance-7809928.zip please resend in excel format Thank you,Dear Tutor there is nothing in the zip folder Finance-7809928.zip your help is greatly appreciated Gus
Question 4
Part (A) is what I dont know how to get, but then after that there is some information that I just wrote in case you need it. (A) Work in Process Inventory 6/1 Balance 5,113 June Completed Work ? Direct materials ? Direct labor ? Overhead applied ? 6/30 Balance ? They give me this information: Enos Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2010, the general ledger for Enos Inc. contains the following data. Raw Materials Inventory $4,547 Manufacturing Overhead Applied $32,579 Work in Process Inventory $5,113 Manufacturing Overhead Incurred $32,005 Subsidiary data for Work in Process Inventory on June 1 are as follows. Job Cost Sheets Customer Job Cost Element Fowler Haines Krantz Direct materials $542 $784 $949 Direct labor 360 510 420 Manufacturing overhead 432 612 504 = 1334 =1906 =1873 During June, raw materials purchased on account were $4,334, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $710 and miscellaneous costs of $472 incurred on account. A summary of materials requisition slips and time tickets for June shows the following. Customer Job Materials Requisition Slips Time tickets Fowler 756 450 Elgin + 2499 +790 Haines + 447 + 360 Krantz + 1922 + 1600 Fowler + 324 + 400 = 5948 = 3600 General use + 1819 + 1700 = 7767 +5300 Overhead was charged to jobs at the same rate of $1.2 per dollar of direct labor cost. The patios for customers Fowler, Haines, and Krantz were completed during June and sold for a total of $18,417. Each customer paid in full. Journalize the June transactions: (i) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (ii) assignment of direct materials, labor, and overhead to production; and (iii) completion of jobs and sale of goods. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.) Account/Description Debit Credit Raw materials inventory 4334 Accounts payable 4334 (Purchase of raw materials.) Factory labor 5300 Cash 5300 (To record factory labor costs.) Manufacturing overhead 1182 Acc. Depreciation-Equipment 710 Accounts payable 472 (To record manufacturing overhead costs.) Work in process inventory 5948 Manufacturing overhead 1819 Raw materials inventory 7767 (To assign raw materials to production.) Work in process inventory 3600 Manufacturing overhead 1700 Factory labor 5300 (To assign factory labor to production.) Work in process inventory 4320 Manufacturing overhead 4320 (To assign manufacturing overhead to production.) Finished goods inventory 14744 Work in process inventory 14744 (To record completion of jobs.) Cash 18417 Sales 18417 (To record sale of jobs.) Cost of goods sold 14744 Finished goods inventory 14744 (To record cost of jobs.)
Question 5
"Scout Finch is the Chief Financial Officer [CFO] of SALEM Manufacturing, a U.S. based manufacturer of gas turbine equipment. She has just concluded negotiations for the sale of a turbine generator to Crown, a British firm for One million pounds. This single sale is quite large in relation to SALEM?s present business. SALEM has no other current foreign customers, so the currency risk of this sale is of particular concern. The sale is made in March with payment due three months later in June. Scout Finch has collected the following financial market information for the analysis of her currency exposure problem: ? Spot Exchange rate: $1.5640 per British pound. ? Three month forward rate: $1.5549 per pound ? SALEM?s cost of capital: 16% ? U.K. three month borrowing interest rate: 12.0% (or 3.0% per quarter) ? U.K. three month investment interest rate: 10.0% (or 2.5% per quarter) ? U.S. three month borrowing interest rate: 12.0% ( or 3.0% per quarter) ? U.S. three month investment interest rate: 8.0% (or 2.0% per quarter) ? June put option in the over-the-counter (bank) market for 1,000,000 British pounds; Strike price $1.55 (nearly at-the money) 1.5% premium ? June put option in the over-the counter (bank) market for 1,000,000 British pounds: Strike price $1.51 (out-of-the money) 1.0% premium ? SALEM?s foreign exchange advisory service forecasts that the spot rate in there months will be $1.56 per British pound. Like many manufacturing firms, SALEM operates on relatively narrow margins. Although Ms. Finch and SALEM would be very happy if the pound appreciated versus the dollars, concerns center on the possibility that the pound will fall. When Ms. Finch budgeted this specific contract, she determined that the minimum acceptable margin was at a sale price of $1,500,000. The budget rate, the lowest acceptable dollar per pound exchange rate, was therefore established at $1.5 per British pound. Any exchange rate below would result in Dayton actually losing money on the transaction. Four alternatives are available to Dayton to manage the exposure: 1. Remain un-hedged. 2. Hedge in the forward market. 3. Hedge in the money market. 4. Hedge in the options market. What should SALEM do?
