2. I utilized an “Acid Test Ratio” which shows us whether the entity could pay all its current liabilities if they became due now or sooner than expected. In 2011, the acid test ratio was 0.64. By 2012, it decreased to 0.43. Even though the acid-test ratio is less than 1 which rates in the lower third quartile in the industry of 1.6, 0.9 to 0.6, it indicates a concern with repaying current liabilities.
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
The elimination of short-term debt shows that Home Depot, Incorporated is not using such debt to meet short-term cash requirements. The cause of the elimination of short term debt may be caused by the improved cash position and the economy. Home Depot, Incorporated’s financial position and ratios look good. In fiscal year 2008, the long-term debt-to-equity ratio was 54.4% compared to fiscal year 2007’s 64.3%. In fiscal year 2008, the return on invested capital of continuing operations was 9.5% compared to fiscal year 2007’s 13.9%.
57). To figure out the contribution ratio one must divide the largest revenue source by the total revenues (Martin, 2001, p. 57). Valley of the Sun United Way’s largest funding source is from grants totaling 30,903,947 and the total revenue in 2012 was 63,588,104 (Ernst & Young, 2012, p. 4). The ratio is calculated at .48 which is still on the safe side. An agency should not be .5 or higher because then they would be too dependent on one source (Martin, 2001, p.
Note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return. Thus, she should choose the corporate bond. When the state rate is 10%, Dana would achieve the following returns from the Treasury bond or the corporate bond: The Treasury bond would still yield $1,125 or $30,000 x [.05 x (1-.25)] after tax because state rates don’t affect after- tax returns from Treasury bonds. The corporate bond yields $1,215 or $30,000 x [.06 x (1 - .25 - .10(1-.25))] after tax. Again, note that the actual state rate is reduced by 25% to allow for the deductibility of state income taxes on the federal income tax return.
My evaluation of Nike’s share price is based on Joanna Cohen’s analysis. In the following paragraphs I am going to point out the mistakes that Joanna has made and also give my suggestions in the WACC calculation First of all, for as much as over 95% of Nike’s revenue comes from sports-related business, I do agree with Joanna’s assumption of single costs of capital. Although cost of capital of non-Nike branded product may different from its main sport business, it has a minor effect on the cost of capital of the company as a whole. However, I found that she has made a few mistakes in calculating debt and equity weights and cost of debt. Debt and Equity Weights The first mistake in Joanna’s calculation is that the weights of Nike’s debt and equity should be based on the market value rather than book value mixes of Nike’s debt and equity.
Jones income at 28% generates $14. The government prefers and requires taxpayers to round the tax rate to be rounded because it prevents them from losing income tax revenue and works out in their favor.000 would then be taxed at 27% and she would pay $13. By rounding the items up to the next whole dollar . Mrs. Jones the government would earn $13. if Ms. Jones would be saving $400 by having her income tax rate truncated to a whole number.
The restatement results from the lack of payments received by certain Chinese customers for shipments already accounted for (Savitz, 2011). Previously, AMSC recognized revenues once customers received shipments not once payment was received. In the case of Chinese customer Sinovel Wind Group, AMSC stated that they should have used the cash-based method of accounting for shipments after September 30, 2010 (Fredette, 2011). This improper recognition of revenue by AMSC will negatively affect previously reported earnings. The adjustments for 2010, 3rd quarter earnings will reduce to $98 million, down from $101.5 million, and 4th quarter will be reduced to $43 million from $114.2 million (Savitz, 2011).
NCU – CMU BBA Articulation Program Fall Semester Case study 2: Mintendo Game Girl (page 242 – 243) Submitted by Nguyen Vo Minh Thong (SID: 5000thong) To Prof. Geogre Agrimis November 26, 2011 1. Which option delivers the maximum profit for the supply chain: Sandra’s plan, Bill’s plan, or no promotion at all? • We have the formula: Σ(15*8*20)Wt +Σ22.5Qt +Σ1000Ht +Σ5000Lt +Σ4It +Σ10St +Σ12Pt+Σ18Ct • Applying the formuar, we have Bill’s plan $37,679,375 Sandra’s plan $36,584,000 No Promotion $36,010,000 • Based on results, we can see that Bill’s plan is the most profitable at a $5 discount. 2. How does the answer change if a discount of $10 must be given to reach the same level of impact that the $5 discount received?
Financiering 6012B0217 Financiering Case 2012/2013 Vraag 1 a) Excel regression (ongecorrigeerde beta) equity beta van ING: 1.972874 ASML: 1,002967 Ahold: 0,395736 b) We know that there is a linear relationship between the stock beta and its expected return. So, if there is fewer stock the security market line will be steeper so, the beta will be smaller. Vraag 2 ßu = ßa= (E/(D+E)) x ße Net debt: Interest Bearing Debt – Cash and Cash Equivalents ING: 47284/(1234038+47284) x 1,972874 = 0,07280 Debt: 1247110-13072=1234038 ASML: 2773908/(1456616+2773908) x 1,002967 = 0,65763 Debt: 3406450-1949834=1456616 Ahold: 5910/(6215+5910) x 0,395736 = 0,192891 Debt: 8815-2600=6215 Vraag 3 a) ASML has a higher asset beta because it participates in an market which develops faster, so it has a higher systematic risk. Ahold has a lot of more diversity on his business. Ahold can better spread his risk.