SciTronics had net fixed assets of $ 18,000 and sales of $ 244,000 in 2008. Its fixed asset turnover ratio in 2008 was 13.6 times, a deterioration from 16.3 times in 2005. Leverage Ratios: How soundly is the company financed? 1. SciTronics’
(Points : 5) sales under $1,000,000 no accountants on staff insignificant receivables and payables all sales and purchases on account 5. (TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5) LIFO will have the highest ending inventory FIFO will have the highest cost of goods sold FIFO will have the highest ending inventory LIFO will have the lowest cost of goods sold 6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours.
Option two is the choice because the $2,716 savings difference in total interest from option two outweighs the $1,043 in interest savings from option one. Here the simulator reveals that loan option one is the correct choice. Loan option one is the best choice to solve the working capital shortfall because even though it has a higher interest rate, there is no prepayment limitation and has a total interest payment of only $32,603 after three months. The Financial Dictionary explains that “prepayment is good for the borrower because it relieves him/her of the debt, but it deprives the lender of interest he/she would have received otherwise” (Financial Dictionary, p. 1,
Inventory $2,573 $3,220 ($ 647) Accounts Payable $1,556 $1,702 $ 146 Accruals $ 268 $ 408 $ 140 $ 798 AXTEL COMPANY Statement of Cash Flows For the period ended 12/31/X1 ($000) OPERATING ACTIVITIES: Net Income $3,116 Depreciation $1,166 Change in WC $ 798 Cash from Operating Activities $5,080 INVESTING ACTIVITIES: Increase in Fixed Assets ($1,882) Cash from Investing Activities ($1,882) FINANCING ACTIVITIES: Decrease in Debt ($1,110) Dividends Paid ($1,727) Stock Retired ($1,000) Cash from Financing Activities ($3,837) NET CASH FLOW ($ 639) Reconciliation Beginning Cash $3,514 Net Cash Flow ($ 639) Ending Cash
This is a good assumption when debt represents a fairly small fraction of the firm’s value. Questions: 1. How can the Capital Asset Pricing Model be used to estimate the cost of capital for a project (as opposed to a financial asset)? In particular, how can we apply the CAPM to estimate the cost of capital when we do not even know how the investment in the project will be financed (debt vs. equity)? (Here you think in terms of the risk of the project, or project beta, or asset beta).
This moderate policy approach for investing uses more than about one-half of the short-term debt that is left but also uses more working capital when having to finance the policy. The moderate policy approach also only uses about half the debt and only about half the assets when it comes to funding the investment. It makes somewhat of a moderate risk of not having to risk to much or for that matter to little since not that much can be lost as opposed to an aggressive policy type approach. Moderate EBIT-$6,000,000 Minus Interest-1,460,000 EBT-$4,540,000 Minus Tax Rate of 40%-1,816,000 EAT-$2,724,000 Return on Equity-6.81.00% Conservative investment policy type uses a majority of working capital and also uses little if any short-term debt. 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%.
The company is also operating more effectively than its competitors based on management procedures, including a continuously improving quality and internal controls system. Whole Foods is also educating consumers about healthy eating and the benefits of natural and organic products. This strategy is accompanied by the company’s goals of reducing prices and costs while growing its own brand. The company’s effective strategies resulted in 2012 being the best year in the company’s 32 year history and a very positive market view on the company. Based on the complete financial statement analysis of the company, it is a reasonable prediction that Whole Foods Market, Inc. is going to remain in the position of a market leader
Executive Summary: On the 24th May 2005, MidAmerican, a division of Berkshire Hathaway, announced a deal with Scottish Power to acquire Pacificorp, an energy provider to the northwest of America, for $5.1bn in cash and a further $4bn in options. Warren Buffet, the CEO of Berkshire Hathaway, called it the ‘right fit’ and it represented the second biggest deal in his career to date (the largest being General Re). This report evaluates the deal, looking at stock market reaction, valuation of Pacificorp and the effect of intrinsic values. Following this the paper assesses Berkshire Hathaway’s performance since 1965, the result of the acquisition of MidAmerican and the impact on ‘Buffet’s Big Four’, Berkshire’s holdings in American Express, Coca Cola, Gillette and Wells Fargo. The report concludes with a critical assessment of Buffet’s investment philosophies, looking at the impact it has on Berkshire Hathaway and why it is difficult for other investors to replicate Buffet’s strategy and be as successful.
In 2014 the debt ratio of Walmart was 0.60. The debt ratio shows the solvency of the company. A debt ratio is good if is the below the 1.0 threshold, thus Walmart is not too highly leverage and has an acceptable level of overall
The luxury auto industry’s health varies depending on factors including: a country’s economic stability, the percentage of high-income citizens of a country, and the specific company being examined. Honing in on one company’s success in one country will provide a basic understanding of the workings of a successful multi-billion dollar corporation. For the purposes of this paper, the BMW Group is researched relative to the company’s success in the United States. There are many reasons why it has maintained its successfulness throughout the years, and has become the leader in United States luxury cars. The superb management of the corporation, as well as the customer loyalty the BMW Group possesses is due to the competitive advantages the large company exercises.