Longitudinal Analysis: When doing a longitudinal financial analysis on Costco, Costco’s profit margin has been slightly increasing between 1999 and 2008. It had a profit margin of 12.79% in 1999 to 13.29% in 2008. This gives the company an average profit margin of 13.16% compared to the industry average of 20.40%. This shows that even though Costco has been gradually increasing its profit margin, it is still below the industry average. The company needs to improve their financial performance by controlling cost to increase their profit margin.
In FBN’s case, their long-term debt ratios alone are 55.7% and 81.5% in years 12 and 13, respectively (and they’ve incurred interest rate increases); and ROCE in the same two years is 15.6% and 6.4%. Just observing these ratios, managers should have been able to see that the increase in borrowing (faster than sales profits) would greatly decrease the shareholders’ earnings. The Risk Analysis also shows that FBN’s current and quick ratios declined, meaning that they do not have enough resources to pay their debts over the next 12 months.
This means that the company has loss over three/fourths of the money that they made I 2007. This is a major amount of money that the company needs to look in to, to see why their product is not selling. Operating income is the second biggest loss. It is down -69.1%. The operating expenses are down, but they are not bringing in as much income as they did in 2007.
Should Mr. Jones convert Smithon to an S corporation and change the fiscal year end to a calendar year end? A: Converting Smithon to an S corporation has merit if the goal is for Smithon to remain controlled by a small number of shareholders. However, the equipment deductions for the corporation may be more valuable than it would be to Johnson personally. Either way, Smithon's value to Johnson will be the same, if he purchases Smithon outright. Changing to a calendar year end has little useful effect, and it requires that Smithon produce a short-year tax return from Dec to Jan, which is a relatively unnecessary administrative expense.
However, it takes a long time for changes in interest rates to feed through to consumption and investment and by then the economy may have gotten worse. Nevertheless, this policy is better than other policies such as a fiscal policy as they are only changed once a year and therefore they will not be able to respond quickly to problems in the
Custom Snowboards Inc. Managing Capital & Financial Assets 04/19/2014 WGU JET2 Financial Analysis Task 5, Part I - PASSED To: Vice President for Chief Financial Officer (CFO) The following is a summary report is an analysis of the current financial statements of Custom Snowboards Inc. The company wishes to be considered for an extended long term loan for a European expansion. We have arrived at a selection of key financial statement line items, conducted a risk assessment, and ratios and if the loan is granted, analysis on how to track the progress of the company’s ability to repay the loan. Financial Statement Analysis Income statements and balance sheets were reviewed to summarize the following key points that could impact the loan decision.
A number of areas could be the reason for the decrease in sales in year 8 including the economy which could have led to outside sponsorships being decreased. However CBI is continuing to plan for growth in a 3.2 % increase that is greater than could be a reality and a concern for such percentage. There is no historical data to show that a plan is in place to achieve this additional sales increase and coming off a hard economic year, it is concerning that this achievable. The Selling, General and Administrative Budget is another area to review for concerns in the budget planning area. Advertising is budgeted at a flat percentage of 2% of gross profit or $28,412 for year 9 and this has remained consistent for each of the previous 3 years.
Why it is important to increase economic growth 4. Your rationale for the use of Reserve Requirements At the end of the game, you will be provided with this information to give to your instructor. Answer: I chose to lower the reserve requirement. Lowering the reserve requirements permits the banks to free up more funds for lending. This action also reduces the amount of money that the banks are required to save in their reserves.
The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs, including the Veteran's Administration's programs and the Department of Agriculture's programs. Most people have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money.
Solutions 1.0 Tax policy By reducing tax may encourage consumers to spend and employers to expand their business and add jobs. The risk is higher national debt, which can slow the economy in the long-run. The American Taxpayer Relief Act of 2012 significantly reduced taxes relative to the full expiration of the Bush tax cuts. Lowering the costs of workers also encourages employers to hire more. This can be done via reducing existing Social Security or Medicare payroll taxes or by specific tax incentives for hiring additional