Discount rate = 11%. The Net Present Value (NPV) of an investment proposal is equal to the present value of its annual free cash flows less the investment’s initial outlay (Keown, A. J., Martin, J. D., & Petty, J. W. (2014). The rule here is that our company will accept projects with a net present value greater than zero, and decline the ones with a net present value that is less than zero. The greater the net present value, the more appropriate the investment is. Based on that, Corporation B is desirable to Corporation A as it has a greater net present value.
The higher the ratio the more assurance exists that the retirement of current liabilities can be made. The current ratio measures the margin of safety available to cover any possible shrinkage in the value of current assets. Normally a ratio of 2 to 1 (2.0) or better is considered good. Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business.
Tootsie Roll Industries Inc. Loan Package In the current corporate arena, the steady decline of business has been evident with company closures, loss of jobs, and foreclosures on properties. For a business to survive in such a harsh environment, a sound business plan is necessary along with knowledge of the marketplace and the needs of consumers (The U.S. Small Business Administration, 2012). A company also needs to review operations to ensure its processes are efficient and cost effective. As a business expands and ages, it requires updating equipment that integrates advanced technology. The proposed plan for financing new equipment and technology will reduce costs, increase product gross margins, and maximize opportunities for dividends.
This action will help the company down the road as fewer liabilities will result in less cash outflow, and place the company in a position to manage through the construction downturn. Another upside in the balance sheet was that The Home Depot has reported a $63 million dollar increase in stock holder´s equity. This information will be used by potential lenders or investors to determine if this company is worth the investment. In this case, it appears that The Home Depot would be a good credit risk, based on the latest
The profit percentage of assets varies by industry, but in general, the higher the ROA the better. We can see a good trend over years in the company. Comments: Return on equity (ROE) is a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity. The formula for ROE is: ROE is more than a measure of profit; it's a measure of efficiency. A rising ROE suggests that a company is increasing its ability to generate profit without needing as much capital.
Lower risks and higher chances for maximized earnings proved to be a major concern in this decision (University of Phoenix, 2004). Castor Standard has lower deductibles that fall into the suitable range for what ConstructIt’s employees can afford (University of Phoenix, 2004). Castor Standard carries a lower risk factor when provided to a company with ConstructIt’s statistics and demographics. Castor Standard does not cover pre-existing conditions and is suitable for ConstrucIt but this does not provide much revenue for CCHP (University of Phoenix, 2004). The total cost of premiums charged to ConstructIt are $3,428, the earnings from this are $3.43 million (University of Phoenix, 2004).
Kroger has greater ROA performance at 6.4% in comparison to 6.0%. However they do have a weaker profit margin at 2.0% vs. 2.4%. Kroger overpowers this profit margin weakness by displaying quicker asset turnover at 3.171 (Kroger) vs. 2.509 (Safeway). 3. Which company was the more profitable in 2004?
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
In the meantime, Lowe’s is catching up with Home Depot and may exceed Home Depot in sales in the next few years. The sales per transaction at Lowe’s have been superior in comparison to those of Home Depot since 1998. Both Home Depot and Lowe’s have the potential to hinder each other’s future growth. The low interest rates can stimulate the growth of the housing market, and then the housing market will improve the market of home improvement industry. If the economic circumstances change in the future, the high interest rate cannot drive the growth of the housing market.
The second reason for a decline in illegal immigration is an improving Mexican economy. As more job opportunities and increase in wages has resulted in those who would be willing to immigrate illegally to stay home. As most who immigrate illegally would rather stay at home and work than to take a risky journey into the U.S and be away for long periods of time. The third reason for a decline in illegal immigration is a declining American economy. With lower job opportunities in the U.S illegal immigration has declined because most of those who would immigrate illegally don’t want to risk a dangerous and expensive journey and not find even find a job in the U.S.