Liquidity Ratio Calculations: Current Ratio = Current Assets / Current Liabilities $147,800 / $90,283 = $1.637:1 Acid-Test Ratio = (Cash + Short-Term Investments + Net Receivables) / Current Liabilities $89,664 + $0 + $51,869 / $90,283 = $1.567:1 Receivables Turnover = Net Credit Sales / Average Receivables ($1,109,295 - $89,664) / [($51,869 + $81,557) / 2] = 15.283 *Average Collection Period = 365 / 15.283 = 23.883 Days When evaluating Huffman Trucking’s ability to pay off short-term debt and maturing obligations, it’s imperative to analyze the company’s liquidity. Utilizing the current ratio to analyze liquidity, which compares all current assets to current liabilities,
What is the expected dividend yield and expected capital gains yield? Explain the difference in the required return estimates from the ValueLine (see question 1a) to the WSJ price data. The company’s return on common stock using the constant growth model is 7.72%. The expected dividend yield is [pic]. The expected capital gains yield is the difference of the total yield, 7.72%, and the dividend yield of 2.22%, which give us 5.5% for the
Table of Contents Executive Summary 1 Introduction 2 Alternatives Analysis 3 Alternative 1: Introduce a new product. 3 Alternative 2: Increase promotion. 3 Alternative 3: Raise prices and cut costs. 4 Recommendations 5 Appendices: Budgeted Income Statements & the Rate of Growth in Profits 6 Executive Summary Shepard Poles is a company that manufactures and sells specialized poles for the past ten years. Shepard has three different lines: hiking poles, downhill ski poles, and cross-country ski poles.
After thorough analysis, the need for short term fund requirements should not be used in capital expenses since the cash needed to repay the short term fund requirements comes from the sales of inventory which was the intention of the additional cash to stock up more inventory. Proper utilization of funds is a must for SureCut to be able to manage its payables to its business partners. Case Context SureCut Shears, Inc. manufactures a complete line of household scissors and industrial shears. Their products are distributed through wholesalers to specialty, hardware and department stores around the country. In June 1995, Mr. Fisher, treasurer of SureCut Shears arranged a line of credit of $3.5 million with the Hudson National Bank to cover requirements for the fall anticipating that the loan would be fully paid off by December of the same year.
Debt capital is the borrowed money, typically long-term, that is used to invest in the company to finance growth (Investopedia, 2014). Competition Bikes has determined it will need $600,000 to fund the Canadian expansion if the decision is made to move forward with the expansion. There are five alternative capital sources that have been identified and that are available to optimize the company’s capital structure after obtaining the funds necessary for expansion. These alternative capital sources use a combination of bonds, preferred stock, and common stock for years 9 through 13: * 100% of 12% bonds * 50% preferred and 50% common stock * 20% of 12%
The reserves in banks must correlate with the deposits made by customers. A decrease in ratio allows banks to extend and make new loans increasing money supplies. An increase in the ratio counteracts this process lowering availability. The discount rate charge also play a role in monetary policy. This policy is the cost the Feds ensue to depositing businesses when borrowing short-term loans.
Clarkson Lumber Company Case Study I Please read the case “Clarkson Lumber Company”, and finish the following questions: 1. Please finish the following common-size financial statements and financial ratios Common-size income statement (20%) 2009 2010 2011 Net sales 100.00% 100.00% 100.00% cost of goods sold 75.39% 75.75% 75.77% Gross profit 24.61% 24.25% 24.23% Operating expenses 21.29% 20.62% 20.80% Earnings before interest and taxes 3.32% 3.62% 3.43% Interest expense 0.79% 1.21% 1.24% Net income before income taxes 2.53% 2.42% 2.19% Provision for income taxes 0.48% 0.46% 0.49% Net income 2.05% 1.96% 1.70% Common-size balance sheet (30%) 2009 2010 2011 Cash 4.7% 4.5% 3.4% Accounts receivable, net 33.3% 35.5% 37.0% Inventory 36.7% 37.3% 35.9% Current assets 74.6% 77.4% 76.3% Property, net 25.4% 22.6% 23.7% Total assets 100% 100% 100% Notes payable, bank 5.2% 23.8% Note payable to Holtz, current portion 8.6% 6.1% Notes payable, trade 7.8% Accounts payable 23.2% 29.4% 23.0% Other current liabilities 4.6% 3.9% 4.6% Term loan, current portion 2.2% 1.7% 1.2% Current liabilities 29.9% 48.8% 66.5% Term loan 15.2% 10.4% 6.1% Note payable, Mr. Holtz 8.6% 0.0% Total Liabilities 45.2% 67.8% 72.6% Net worth 54.8% 32.2% 27.4% Total liabilities and Net Worth 100% 100% 100% Financial ratios (Please use the year-end amount.) (20%) 2009 2010 2011 Asset management Days sales in receivables 38 43 48 Days sales in inventory 55 59 62 Days payables Fixed asset turnover 12.5 13.2 11.6 Total asset turnover 3.2 3.0 2.8 Liquidity Current ratio 2.5 1.6 1.1 Quick ratio 1.3 0.8 0.6 Profitability Profit margin 0.021 0.020 0.017 ROA 0.065 0.059 0.047 ROE 0.12 0.18 0.17 Financial leverage Total debt
Since Smithton’s basis or tax schedule would not be change. Mr. Jones can’t change the financial period to end on December 31. If Mr. Jones issues debt in Johnson Services it would increase the debt to equity ratio substantially and become unattractive to future investors because it would appear to be heavily financed by debt. It would also increase the fact that it is already operating at substantial
Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ? Find the real return, nominal after-tax return, and real after-tax return on the following: Stock Nominal Return Inflation Tax Rate X 13.5% 5.0% 15% Y 8.7% 4.7% 25% Z 5.2% 2.5% 28% How are industry-operating differences reflected in a firm’s financial statements? week 6 Assignment
Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide. The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government's support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup. The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.