Executive Summary The recommendation for Teletech Corporation is to change from a constant hurdle rate to the use of two risk-adjusted hurdle rates, one for each segment. Teletech’s performance is evaluated upon economic profit calculations. Through this performance measure, the risk-adjusted hurdle rates return a higher amount of profit in comparison to a single corporate hurdle rate: Currently, the firm has been using the constant hurdle rate of 9.30%, and as a result the firm’s share prices are stagnant. In comparison, the market and industry indexes such as telecommunications and telecommunication equipment have outperformed Teletech. Their price-to-earnings ratio is also below investor’s expectation in comparison to the company’s risk.
Here are the findings for question 2: 1. The CLM (Combined Leverage Multiplier) for Kroger that year was 3.720 (= 4.477 financial structure leverage X 0.831 common earnings leverage). In contrast to a CLM of 2.745 for Safeway. 2. Kroger has greater ROA performance at 6.4% in comparison to 6.0%.
Stockholders may assume when reading the financial statements that they would be receiving a higher return each month or quarter when in reality that would not be the case especially if they are planning on switching to LIFO. It is unethical to make a huge financial decision based on only short term goals. The Sabarnes-Oxley act of two-thousand and twelve, contains 11 sections detailing rules and regulations for financial reporting. The SOX act section 404 requires that management of
President of Acer Corp, The purpose of this letter is to provide guidance to Acer Corp on the appropriate accounting for the Theta investment. Below is an overview of the transaction followed by our findings and authorities used for the basis of our conclusions under both US and International accounting standards. From our research, it is more beneficial for Acer to headquarter in the US where only partial gains from the transaction must be recognized. This transaction included the transfers of factory equipment to Theta Corp in exchange for $1 million cash and a 25% equity ownership stake in Theta. The book basis of the transferred equipment was $6 million, and the equipment was recently appraised for $6.5 million.
Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
This action will help the company down the road as fewer liabilities will result in less cash outflow, and place the company in a position to manage through the construction downturn. Another upside in the balance sheet was that The Home Depot has reported a $63 million dollar increase in stock holder´s equity. This information will be used by potential lenders or investors to determine if this company is worth the investment. In this case, it appears that The Home Depot would be a good credit risk, based on the latest
So each country has different currency, for example country A currency is 2 bills to our United States currency B which equals a dollar. So if we trade with country A we would get more for our dollar then country A would get less for their currency. The factor of inflation is a country that has consistently lower purchasing power like country A. This can cause higher interest rates for that country. Another influence is what they hold in a current account could be considered a deficit which means the country is spending more on foreign trade than it is receiving.
If IRR is larger than WACC, the project is considered to be profitable. Nevertheless, IRR is not the only indicator for investment evaluation; other factors are needed to be considered to come up with the final solution. 2. The Gopher Place (GP) vs. Whalen Court (WC) All the information for the analysis is derived from the Exhibit 1. on the next page. (In thousands except %) Gopher Place Whalen Court IRR 12.3% 9.8% NPV $16,755 $25,875 Initial Investment $23,016 $119,263 Hurdle Sales to Meet IRR 2.2% 31.2% Sensitivity of IRR with 10% (decline)increase in sales
Is the use of a monthly average price a net advantage or disadvantage to J & L? Using NYMEX contracts will minimize the asset mismatch aspect of basic risk, along with a better liquidity. However, since diesel fuel is not a traded commodity, it cannot be directly hedged and J&L will suffer a certain amount of basis risk. J&L will also need to post a margin for their future contracts at NYMEX. Using product offered by Continental Bank would require a higher cost for J&L, and illiquid compared with NYMEX.
Final Exam Michael Hofmeister Indiana Wesleyan University BBAO52 ADM447 Business Law March 2, 2012 Ryan Currie, Professor I have read and understand the plagiarism policy as outlined in the syllabus and the sections in the Student Bulletin relating to the IWU Honesty/Cheating Policy. By affixing this statement to the title page of my paper, I certify that I have not cheated or plagiarized in the process of completing this assignment. If it is found that cheating and/or plagiarism did take place in the writing of this paper, I understand the possible consequences of the act/s, which could include expulsion from Indiana Wesleyan University. Scenario 1 E-Z Rid can be held responsible for their actions under The Resource