Question 1
"Attached are the financial statements for Boston Beer Company that you are to use for the cash flow assignment. Note I have included all of the statements as you may want to look at statements other than the cash flow statement as you answer the questions in the assignment. 1) Over the most recent three years what has been the company?s experience with the production of net income? 2) Over the most recent three years what has been the company?s experience with the production of cash flow from operations? 3) Discuss why net income and cash from operation are different. Be specific and also discuss in your answer the major items that create these differences in the most recent year. 4) What are the major ongoing needs for cash outside of operations? 5) How has the company been able to pay for the cash needs outlined in question (4)? Comment on all three years. 6) In general, how does the company finance its business? Use data from the financial statements to support your answer. 7) Discuss whether you believe that the company will continue to provide sufficient cash from operations to support its cash needs. 8) Suppose that you were a banker who was evaluating the company for a potential loan. What would you see as the pros and cons with lending money to the company? ",Hi, I have one question - for number 2 the question asks "Over the most recent three years what has been the company's experience with the production of cash flow from operations?" You answered with figures from the Cash Flow Statement under "Cash flows provided by (used in) financing activities - Cash and cash equivalents at end year. ($63,147 in 06, $79,289 in 07, and $8,837 in 09. The table does not show the year 2009 and the $8,837 number is from the "income taxes paid" line. I was thinking the answer would have gotten figures from "Net cash provided from operating activities" - 2008-$39,842, 2007-$53,794, and 2006-$28,977.,I'm just looking at number 5 and I am not understanding the answer you got. The question asks, how has the company been able to pay for the cash needs outlined in question 4. Comment on all three years. In number 4 it talks about investing and financing but in number 5 you answered it with operating activity. I'm thinking the answer has to do with how did the company pay for the cash in financing and investing activity?
Question 2
Hi Rachel, First Of all, please ignore the previous question. The following attachment is the Correct Question It is an Assignment which is more like an essay. I can provide a copy of an earlier assignment. The 2 Memorandas are worth 30 points each. And the essay is 20 points. It is Based on Federal Tax. As we learned in Week 4, the Code allows taxpayers to take a deduction for the cost of meals when taxpayers have been deemed to be "away from home" for tax purposes. This determination can be difficult. Two separate clients came to you with questions as to whether they are entitled to take a deduction for the cost of meals incurred during a particular trip. The facts pertaining to each are: 1. Tracey is a sales representative for a national pharmaceutical company. She has a rather large sales territory, and she makes her rounds to her customers using a company-owned car over a 16- to 19-hour period of time. During these one-day business trips, Tracey will pull over in a suitable location (such as a park or a rest stop) and take a short nap in the backseat of her automobile. 2. Mark captains a ferryboat. This ferryboat carries tourists on roundtrips from Seattle to Victoria and back, each trip of which lasts from 15 to 17 hours and provides for a 6- to 7-hour layover in Victoria. During the layover, Mark typically takes a four-hour nap on a cot that he has stored in the pilothouse of the ferryboat. Under each of these circumstances, if the taxpayer entitled to deduct the cost of meals purchased during the trip at issue? COMPOSE A TAX FILE MEMORANDUM CONCERNING THIS ISSUE FOR BOTH TAXPAYERS USING THESE FACTS AND THE RESEARCH MATERIALS PROVIDED TO YOU IN THE NEXT FEW PAGES (30 POINTS).
Question 3
Valuation of Groupon Inc. This question requires you, among other things, to calculate the stock price for Groupon Inc, and provide the needed analysis as asked in what follows. You will need to use ?Sources of Financial Data? from the list below to obtain the necessary financial info/statements for Groupon Inc., identify its peer companies and obtain pricing and financial information for them. A. Develop a DCF model using Excel to estimate the fair value of the firm?s common shares at the end of 2011 ? for historical numbers use the data from SEC filings including S-1 form with all amendments and Prospectus, and other sources of financial data. Don?t forget to include the terminal value (value after the forecast period) in your estimate. B. For each of the value drivers (i.e., revenues growth and profit margin over the forecast period, tax rate, WACC etc.), identify your sources and assumptions, and show all you calculations. This is especially important for the WACC that you will use to calculate the NPV, due to the sensitivity of your results to this critical parameter. C. Perform a sensitivity analysis for WACC, growth rate and profit margin. D. Using comparable ratios of peer companies, estimate the company?s stock price at the end of 2011. List the major assumptions and sources of information that you used in your calculations. Were your assumptions reasonable enough? Explain. E. Groupon Inc. went public on November 4, 2011. How do your DCF and relative valuations compare with the company?s IPO price? Its first-day closing? Average price for trading period in 2011? If your valuations differ from observed prices, can you briefly forward any possible explanations? F. A year earlier, in November 2010, it was rumored that Google might acquire Groupon at $6 billion, but the acquisition never realized. What is your estimate of a fair value of Groupon to Google at that time? Please don't forget a possible synergy. G. In November 2009, Accel Growth Fund invested $20 million in the company by buying 2,932,553 shares of Series E convertible preferred stock. What was the realized IRR of this investment, if "Each share of Series E preferred stock was converted into 12 shares of Class A common stock on October 31, 2011" (Amendment No. 8 to form S-1, filed with SEC on November 2, 2011, page II-3)? Make sure to justify your responses by using the available data/info and carrying out any needed and relevant calculations. Here is the list: ? Yahoo Finance; ? Google Finance; ? Reuters; ? Edgar (SEC source of 10-K, S-1 form, Prospectus and other required financial reports); ? Hoovers (general company information); ? Bloomberg (a good source of interest rate data); ? Wall Street Journal (free site of the famous newspaper); ? NYSE Euronext (New York Stock Exchange website);
Question 4
Master Budget Exercises Complete the following three exercises and submit to your instructor. Be sure to show your work for calculations to earn full credit. Sales and Production Budgets (8-12): The marketing department of Jessi Corporation has submitted the following sales forecast for the upcoming fiscal year (all sales are on account): 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 11,000 12,000 14,000 13,000 The selling price of the company's product is $18.00 per unit. Management expects to collect 65% of sales in the quarter in which the sales are made, 30% in the following quarter, and 5% of sales are expected to be "'uncollectible. The beginning balance of accounts receivable, all of which is expected to be collected in the first quarter, is $70,200. The company expects to start the first quarter with 1,650 units in finished goods inventory. Management desires an ending finished goods inventory in each quarter equal to 15% of the next quarter's budgeted sales. The desired ending finished goods inventory for the fourth quarter is 1,850 units. Prepare the company's sales budget and schedule of expected cash collections. Prepare the company's production budget for the upcoming fiscal year. Direct Materials and Direct Labor Budgets (8-13): The production department of Hareston Company has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 7,000 8,000 6,000 5,000 In addition, the beginning raw materials inventory for the first quarter is budgeted to be 1,400 pounds and the beginning accounts payable for the first quarter is budgeted to be $2,940. Each unit requires 2 pounds of raw material that costs $1.40 per pound. Management desires to end each quarter with an inventory of raw materials equal to 10% of the following quarter's production needs. The desired ending inventory for the fourth quarter is 1,500 pounds. Management plans to pay for 80% of raw material purchases in the quarter acquired and 20% in the following quarter. Each unit requires 0.60 direct labor-hours and direct labor-hour workers are paid $14.00 per hour. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the upcoming fiscal year. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. Direct Labor and Manufacturing Overhead Budgets (8-14): The production department of Raredon Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced 12,000 14,000 13,000 11,000 Each unit requires 0.70 direct labor-hours, and direct labor-hour workers are paid $10.50 per hour. In addition, the variable manufacturing overhead rate is $1.50 per direct labor-hour. The fixed manufacturing overhead is $80,000 per quarter. The only noncash element of manufacturing overhead is depreciation, which is $22,000 per quarter. Prepare the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. Prepare the company's manufacturing overhead budget.
Question 5
For years The Glass Slipper restaurant has operated in a resort?community near a popular ski area of New Mexico. The restaurant?is busiest during the first 3 months of the year, when the?ski slopes are crowded and tourists flock to the area.? When James and Deena Weltee built The Glass Slipper,?they had a vision of the ultimate dining experience. As the view?of surrounding mountains was breathtaking, a high priority was?placed on having large windows and providing a spectacular?view from anywhere inside the restaurant. Special attention was?also given to the lighting, colors, and overall ambiance, resulting?in a truly magnificent experience for all who came to enjoy?gourmet dining. Since its opening, The Glass Slipper has developed?and maintained a reputation as one of the ?must visit??places in that region of New Mexico.?While James loves to ski and truly appreciates the mountains?and all that they have to offer, he also shares Deena?s?dream of retiring to a tropical paradise and enjoying a more?relaxed lifestyle on the beach. After some careful analysis of?their financial condition, they knew that retirement was many?years away. Nevertheless, they were hatching a plan to bring?them closer to their dream. They decided to sell The Glass?Slipper and open a bed and breakfast on a beautiful beach in?Mexico. While this would mean that work was still in their?future, they could wake up in the morning to the sight of the?palm trees blowing in the wind and the waves lapping at the?shore. They also knew that hiring the right manager would allow?James and Deena the time to begin a semi-retirement in a?corner of paradise.?To make this happen, James and Deena would have to sell?The Glass Slipper for the right price. The price of the business?would be based on the value of the property and equipment, as?well as projections of future income. A forecast of sales for the?next year is needed to help in the determination of the value of?the restaurant. Monthly sales for each of the past 3 years are?provided in Table 5.14. Questions 1. Prepare a graph of the data. On this same graph, plot a?12-month moving average forecast. Discuss any apparent?trend and seasonal patterns.?2. Use regression to develop a trend line that could be used?to forecast monthly sales for the next year. Is the slope of?this line consistent with what you observed in question 1??If not, discuss a possible explanation.?3. Use the multiplicative decomposition model on these?data. Use this model to forecast sales for each month of?the next year. Discuss why the slope of the trend equation?with this model is so different from that of the trend equation?in question 2. Month 2008 2009 2010? January 438 444 450? February 420 425 438? March 414 423 434? April 318 331 338? May 306 318 331? June 240 245 254? July 240 255 264? August 216 223 231? September 198 210 224? October 225 233 243? November 270 278 289? December 315 322 335
