Based on Mr. Martin’s prediction for 1996 sales of $28,206,000, and for 1997 sales of $33,847,000 and relying on the other assumptions provided in the Tire City case, prepare complete pro forma forecasts of TCI’s 1996 and 1997 income statements and year-end balance sheets. As a preliminary assumption, assume any new financing required will be in the form of bank debt. Assume all debt (i.e., existing debt and any new bank debt) bears interest at the same rate of 10%. 3. Using your set of pro forma forecasts, assess future financial health of Tire City as of the end of 1997.
In deciding how to account for an unusual or unique transaction for financial reporting purposes, should one consider the tax treatment applied to the transaction? 3. Did Peat Marwick have a right to change its position on the proper accounting treatment for the stock redemptions? What factor or factors may have been responsible for Peat Marwick’s decision to change its position regarding these transactions? Facts In 1983, GEICO announced plans to purchase several million shares of its outstanding common stock for $60 per share.
2. The Wall Street Journal (WSJ) lists the current price of James River common stock at $27.00. a. Based on this information, the ValueLine 1995 expected dividend, and the annual rate of dividend change for the growth estimate, what is the company’s return on common stock using the constant growth model? What is the expected dividend yield and expected capital gains yield?
In order to give the advices on how the purchase of PacifiCorp affects the value of shares in Berkshire Hathaway, I will analyze some critical issues related to this case. Intrinsic Value The return on equity and the cost of equity must be determined to calculate the appropriate intrinsic value of PacifiCorp. Table 1 shows the appropriate intrinsic value of PacifiCorp. I assume the initial investment of $9.4 billion is discounted for the 10 year time horizon. During 10 years, the investors will reinvest all the cash flows into the company, so maintaining the growth of 7.45% each year.
Learning Team Ratio Analysis Paper Kudler Fine Foods Liquidity Ratio Upon reviewing the financial statements of Kudler Fine Foods, I came up with the following financial ratio for the company: The Kudler Fine Foods’ current total asset is $1,971,000 and the total current liabilities is $116,290. The company’s current ratio is 16.95. (1,971,000/116,290) = 16.949=16.5 Therefore, for every $1 that our company owes in short term, there is $16.95 in assets available that we can convert to cash in short term. Our company’s Debt Ratio is Total Debt is divided by our Total Assets. Our Total Current Liabilities are as follows: Accounts Payable 96,500 Sales Tax Payable 3,950 Payroll Tax Payable 15,840 and our Total Long Term Liabilities are the following: Long Term Notes Payable 630,000 Therefore, the Total Liabilities we have is $ $746,290 and our Total Assets is $2,675,250.
To make it matches with chosen Rf rate the appropriate measure of risk premium is Spread between S&P 500 Composite Returns and Long-term U.S . Government Bond Returns. The market risk premium is estimated as the difference between the arithmetic average of annual holding period returns on a market and the arithmetic average of annual holding returns on a portfolio of government securities. Thus, it will be 7.43%. β = Beta of the Asset: The case provides equity beta: 0.97.
The second note payable ($120,000) should be divided between current liabilities ($60,000) and long-term debt ($60,000). The current portion should read “current maturities of long-term debt” (Spiceland, et al., 2011, p. 120). Shareholders’ equity would be listed below long-term liabilities. The line item for allowance for uncollectible accounts should be grouped with accounts receivable. This figure should be deducted from the accounts receivable.
Common Stockholder's Equity) | | | | 8.46% | 2,430,872 ÷ (29,946,92 + 27,517,328 ÷ 2) 28,732,160 = 0.84604568 or 8.46 | Solvency Ratios A formulation used to measure a company's financial risk by determining how much of the company's assets have been financed by debt. The formula is calculated by adding short-term and long-term debt and
Instructions: Complete the following table: Case A Case B Case C a. Cash inflow on the issuance date b. Total cash outflow through maturity c. Total borrowing cost over the life of the bond issue d. Interest expense for the year ended December 31, 20X1 e. Amortization for the year ended December 31, 20X1 f. Unamortized premium as of December 31, 20X1 g. Unamortized discount as of December 31, 20X1 h. Bond carrying value as of December 31, 20X1 3. Definitions of manufacturing concepts Interstate Manufacturing produces brass fasteners and incurred the following costs for the