Using these benchmarks, an investor would want to go with the better average and invest in Home Depot. Home Depot also showed a higher 5 year average gross margin of 30.52% compared to Lowes of 27.59%. The gross margin represents the percent of total sales revenue that the companies retain after incurring direct costs with producing the goods and services sold. The averages here show that Home Depot retains more on each dollar of sales to other cost obligations which performs stronger than Lowes. The operating margin which indicates how much a company makes (before taxes and interest) on sales is a good indicator of the quality of the company.
Berry‟s Bug Blasters had a 25.52% Return on assets. This means they were able to receive $25.52 profit on every $100 in assets. Return on Common Stockholders‟ Equity: Determines corporate profitability. Investors can measure how Berry‟s is using the money they invested. To calculate ROE divide Net Profit after Taxes by Stockholder‟s Equity.
FedEx 1 Mandel Adams BUS 630: Managerial Accounting FedEx Instructor: Oscar Lewis July 9, 2012 FedEx 2 * What is FedEx’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operations excellence, or product leadership customer value proposition? What evidence supports your conclusion? I believe the company is relying on customer intimacy, operations excellence and product leader ship customer value proposition. FedEx states, “Through our holding company and FedEx Corporate Services, Inc. (“FedEx Services”), we provide strategic direction to, and coordination of, the FedEx portfolio of companies.
Warren E. Buffett, 2005 Financial Case Analysis On May 24, 2005, it was announced that MidAmerican Energy Holding Company would acquire PacifiCorp from its parent company, Scottish Power plc. The deal would be for $5.1 billion in cash and $4.3 billion in liabilities and preferred stock. MidAmerican Energy’s parent company is Berkshire Hathaway Inc. Upon the announcement of the deal both Scottish Power and Berkshire Hathaway’s shares increased by 6.28% and 2.4% respectively. This translated into a market value gain for Berkshire Hathaway of $2.55 billion.
Our current valuation shows Cooper Industries can continue to be competitive in its acquisition of Nicholson File while maintaining a satisfactory return on investment. FORECASTED INCOMES To establish a forecast for Nicholson File, assumptions were made in regards to costs, growth, and revenue. Financial statements for the past 5 years were analyzed to produce average percentage growth of sales revenue. To identify a high and low maximum share value, two sets of assumptions were made. A conservative model representing current company growth, based on a current calculated growth rate of 3.39%, used a forecasted Cost of Goods Sold (CGS) and Selling, General, Administrative (SGA) of 65.58% and 22.01% of sales respectively (See Exhibit 1a).
Its prospective goals indicate a $50,000.00 first year net revenue, a 5% net revenue increase over the first few years, and a turnover rate of approximately 10%. In order to achieve the realistic goals set and for the business strategy to be met, you must consider what it would take to reach them. Understanding that employee loyalty will be an asset to the business is a good start. This means developing a flexible framework that expresses the company's culture and shows managements' commitment to developing a strong team of employees. Providing the right training opportunities is essential for meeting business objectives.
FIN515 Week 4 Homework 9-1 Future Value of a Company Assume Evco, Inc., has a current price of $50 and will pay a $2 dividend in one year, and its equity cost of capital is 15%. What price must you expect it to sell for right after paying the dividend in one year in order to justify its current price? Answer: Find price of stock in 1 year. Current Price = $50, Dividend = $2, Cost of Equity Capital = 15% X = Price the stock will sell right after paying the dividend: 50 = (2+ X) /(1+0.15) X = 55.50 Therefore, price the stock will sell right after paying the one year dividend is $55.5 9-4 Dividend Yield and Cost of Equity Capital Krell Industries has a share price of $22 today. If Krell is expected to pay a dividend of $0.88 this year, and its stock price is expected to grow to $23.54 at the end of the year, what is Krell’s dividend yield and equity cost of capital?
Within the last year JC Penny Corporation reached a 52 week high of 54.74 per share, while Kohl’s Corporation stock reached as high as 56.00. Many forecasters and investors believe that you can analyze the price earnings ratio. It serves as an indicator of a company’s future performance. By determining the relation of a company’s share price and its actual profit, you are able to see a company’s true performance indicator. When the prices get higher and profits get higher, the ratio stays the same.
• He can see if his investments in new machinery are paying dividends. • And he can also assess the amount of stock that he is carrying in the business. Question 1 (B) The identified Issues within Michael's Chairs profit and loss account lie in a few areas. Purchases are up +35% on last year due to a £170000 spend on high-precision sawing equipment which has increased overall expense. Stock is up by +115% on last year, but a 20% rise in sales due to new machinery speeding up production is expected and planned for.
$2 billion being invested in the upcoming years, the discount rate is significantly important in order to make investment decision on profitable projects, that will increase shareholder’s value. 2. Estimate the segment WACCs for Teletech: | |Corporate |TS |P&S |Explanation | |MV asset weights |100% |75% |25.00% | | |Bond rating |A-/BBB+ |A |BB | | |Pretax cost of debt (Kd) |5.88% |5.74% |7.47% | | |Tax rate (t) |40% |40% |40% | | |After-tax cost of debt |3.53% |3.44% |4.48% | | |Kd(1-t)