Ans): Laddering GIC(s) is a proven method of investing (also known as a laddering strategy) it can help you reduce the risk of interest rate fluctuations and increase your portfolio's overall return. Pros will be higher returns, every year 20% of your portfolio will mature and it decreases the cons of non-cashable GIC(s). Cons will be a bit more work and attention needed by the
A firm’s value depends on the positive net income generated in the past. True False A firm’s value depends on the firm’s ability to generate positive cash flows now and in the future True False When determining the value of a firm, which of the following statements is true? • Inversters are risk neutral. Other things equal they prefer to pay more stocks that are less risky and have uncertain cash flows • Investers love risk. Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows.
The Home Depot cash flow shows significant net earnings and the cash flow statement does not indicate a drastic drop from previous years. A potential investor would find this information important when evaluating the company. This information would allow investors an insight into how The Home Depot manages its cash in light of potential losses in the revenue
I would make an investment in the company’s 5% convertible bonds. Sepracor’s ROA and ROE is above the average and showing that it is profitable; however, the company’s debt to asset ratio is above 1, which means that most of its assets are financed through debt instead of equity. Sepracor would be in trouble if its creditors were to start demanding repayment. C.) To make valid comparisons between Sepracor and Bayer, you would have to compare the rules for fair value under the U.S GAAP and iGAAP. Under IFRS, convertible bonds are separately recorded as liabilities and stockholder’s equities.
Current Ratio 2011 = Current Assets / Current liabilities Gaps Current Ratio = 4,309 / 2,128 = 2.0249 This means that The Gap Inc. is capable of paying its short-term liabilities two times by selling its current assets. What was the current ratio for 2010? How did the current ratio change? Current Ratio 2010 = 3,926 / 2,095 = 1.8739 The current Ratio for The Gap Inc. Increase from 1.8739 to 2.0249 What is the implication of that change? The current ratio increased because there was a considerable increase in Cash and other current assets.
These are the main examples of capital outlay. When Caledonia Products are calculated accurately, it illustrates the financial wealth of the company. While reviewing the company’s cash flow, it appears that Caledonia is reaching their financial planning goals. The initial outlay is $3,956,000.00 in year 1; $7,432,000 in year 2; $10,300,000 in year 3; $8,056,000 in year 4; $5,680,000 in year 5. Therefore, through years one through five, Caledonia has an initial outlay of
In the event that the sales increase, the organization will create additional working capital, and can undoubtedly accomplish its yearly objectives. As stated by the organization's profit and loss statement, the organization must control its overhead costs and lessen its selling expenditures. After forecasting the five years sales there is an increase in sales from 15%, 10%, 25% and 50%. The gross profit will also increase every year from $697,428 to
Current ratios show relative amount of working capital, while quick ratios show the amount of quick assets by current liabilities. “Ratio analysis is an important and powerful technique or method, general, used for financial analysis. The purpose of financial analysis is to diagnose the information content in financial statements so as to judge the profitability, financial soundness of the firm, and chalk out the way to improve existing performance.” (Ramagopal, 2008) Duke Energy’s Current ratio is 3.54; this is calculated by current assets, 2,049 million, divided by current liabilities, 578 million. There is no current problem with the liquidity in this company. The quick ratio is .33 and this is calculated by cash and accounts receivable, 1,501,000+ 1,316,000 divided by current liabilities, 8,644,000.
The main focus of the company should be on the incremental cash flow because this holds a marginal benefit from the project. Depreciation is qualified as an expense: therefore, and the larger the depreciation the larger the expense. From the accounting profits point the profit would be much lower than on the free cash flow. 2. What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from accounting profits or earnings?
Is the use of a monthly average price a net advantage or disadvantage to J & L? Using NYMEX contracts will minimize the asset mismatch aspect of basic risk, along with a better liquidity. However, since diesel fuel is not a traded commodity, it cannot be directly hedged and J&L will suffer a certain amount of basis risk. J&L will also need to post a margin for their future contracts at NYMEX. Using product offered by Continental Bank would require a higher cost for J&L, and illiquid compared with NYMEX.