They expect that the extra tables will add between $2,000 and $5,000 to the restaurant’s monthly revenue. The bank is willing to let the business have an intermediate-term loan of $50,000 for five years, at an interest rate of 6.5 percent. Calculate the monthly payment, and explain whether taking this loan is a smart business decision.
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.
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%.
Coupons. Financial performance: By taking an average of 3 years, the operating profit of 3 clubs shows that – Sam’s is on the top with 3.36%, followed by Costco with 2.68%; and BJ’s is in the 3rd place with 2.15% . Liquidity ratios show the best performance for BJ’s in year of 2011, Costco stayed about the same. But at BJ’s cash flow is down while Sales and expenses have increased (long-term debt has been eliminated). Costco’s Expansion outside US – a very positive tactic.
His business has increased significantly this year, as has his personal wealth, and his three children (and eight grandchildren) all are asking him for money. Alex is looking for your guidance. In a 3-4 page (12-pt, double spaced) memo to Alex Lee, explain the following in terms that he will understand: Explain the elements of the estate tax formula. Describe the interplay between gift and estate taxes. Describe strategies to minimize estate taxes.
Verizon Communications averages fairly close to the industry average in most areas of financial ratios. The biggest discrepancy is in its debt to equity ratio. Debt to equity ratio indicates the feasibility that a company will be able to pay off its’ debts in “the event of a liquidation” (investinganswers.com, 2014). According to investinganswers.com, “a high debt to equity ratio indicates that a company may not be able to generate enough cash to satisfy its debt obligations” (2014). With a debt to equity ratio as above average as Verizon Communications’, the probability that the company will be able to pay off its’ debts if a liquidation was to occur is unlikely.
Taking about $2,691,000 and dividing it by $40,000,000 dollars would result in a return of equity of some 6.73.00%. This would then be the lowest by far of the three investment types. It would require by far the least amount of debt that would have to be used and financed and would also use the most working capital of assets being used to finance and fund the investment. Conservative EBIT-$6,000,000 Minus Interest-1,515,000 EBT-$4,485,000 Minus Tax Rate of
Overall in this example, this is a risky investment. An investor would not be as eager to hand off more than half of their investment into this company’s debt. Current Ratios ideally should be at a minimum 1.7. This company having a current ratio of 0.97 is significantly less than the ideal displays that they have issues paying their bills on time. Moreover, the Quick
Is Nelson Jones’ estimate that a $350,000 line of credit sufficient for 2007 accurate? Jones currently has $203,000 of accounts payable. He also owes $24,000 per year to his old partner who he bought out. And based upon the projected growth, Jones will need $120,000 of new assets which $73,000 of that will need to be financed through external sources to contribute to the business in order to grow. He also has long-term debt on the balance sheet that he needs to continue to pay off.
| CASE 12: What are we really worth? | FIN 530: FINANCIAL MANAGEMENT | | Herzog, RichardSiepmann, KristinaRauls, PascalThiel, Philipp | | 13.11.2013 | SUMMARY After 20 years of success and growing, Matt, the owner of Citrus Glow, had to make a decision whether to gain capital by going public or not. He knew that the company would need more capital if the company should further grow and expand. To make the right decision he asked his children for advice since they are all MBA graduates. Lisa and Joe strongly supported their dad’s idea to issue shares whereas Dan thought outsourcing would be the better alternative.