Distribution expenses rose significantly in 2010 by 10.12% from 1.18% in 2009.This was as a result of Hurricane Tomas in 2010 as the distribution network was significantly impacted when several power lies were damaged. Appendix 4 showed the comparative balance sheet statements. Cash rose significantly from 22% in 2008 to 105% in 2009 and fell off again in 2010 at 50%. During that period, it was noted that the collection of accounts receivable contributed
Capital expenditure of $155,000 was incurred during last 2 years. Increase in invested capital reduced both IGR and SGR. As sales growth rate was higher than IGR and SGR, firm had to rely on trade credits and trade notes, besides internal accruals and bank notes to finance its cash outflows. Projections for 1996 are based on information provided and other assumptions described in excel sheets viz. all trade notes will be fully paid and trade credit of 10 days is for additional purchases made from April 1, 1996.
We created the following examples to show how WACC could potentially influence Marriott’s financial decisions: Suppose Marriott is taking on a project that requires a $100,000 initial investment, which produces cash inflows of $20,000 per year for 10 years. If we use Marriott’s current WACC of 9.29% the project would produce an NPV of $26,730. If we use the Target WACC, 10.24% for Marriott the NPV would be $21,634. Deciding based on the assumption of an NPV of $26K but it will actually achieve a NPV of $21K. Management will have to explain to shareholders why they were unsuccessful in achieving increased shareholder value.
1. Explain the hedging strategy of Metallgesellschaft After the Gulf War in 1991 oil prices fell significantly; as a result demand for forward oil contracts increased dramatically. Forward contracts are agreements between a buyer and a seller who are both obliged to perform against a certain price at a certain agreed upon date in the future. The goal of forward contracts is to lock in a certain price for a commodity, in this case oil, to avoid large price fluctuations in the future. MG Corp, MG AG's US subsidiary, was a major seller of these contracts, which in 1993 resulted in obligations to supply nearly 160 million barrels of oil over the next ten years.
Capital Budgeting Case QBR/501 Capital Budgeting Case Given two separate companies to compare I had to first crunch the numbers using the information on both companies that were proposed. The spending limit was $250,000 and I could not go over that amount. Corporation “A” had revenues equaling $100,000 in year one but increasing by 10% each year. It also had expenses of $20,000 and increasing by 15% each year. The depreciating expense is $5000 each year with a tax rate of 25% and discount rate of 10%.
Savings in purchasing cost: Annual demand: 800, 11.89*800 = $9512 per year. Holding cost will be higher, Extra storage, FOB, LT= 4weeks vs. 2 weeks. Sourcing and Procurement Slide 3 © Hu Lot Sizing Analysis D=800 H=20% C=$108.2 S= $75 ? Q0 2* D * S 2*(Annual Demand)*(Ordering cost) H (Annual Unit Holding Cost) QO = {2 * 800 * 75/ (108.2*0.2)} = 74.46, round up to 80, Then You order 10 times a year, you have 360/10=36 days inventory Do all of the EOQ assumptions hold here? Sourcing and Procurement Slide 4 © Hu 2
The Growth Market quadrant is defined as a period in the development of a market when growth rates are significantly in excess of 10 percent. Strategically, a time when gains in market share create more shareholder value than maximizing profits. I believe FedEx falls in this quadrant because they are still are trying to gain market share or take it away from their biggest competitor Emery. Additionally, they understood that the competitive climate had increased and was preforming well. 2.
1. Assume it is April 1st 2006. Based on the case, build a compelling case for buying or selling JPYUSD Analysis of the Current situation During the first half of the decade of the 2000’s, the USD had appreciated. In 2005, the USD went against all predictions of the prognosticators and rose. Despite a terrible current account deficit (USD800), the USD is heading towards a 140 JPY/USD level.
Leveraged Buyout (“LBO”): Assuming an IRR (usually 20 percent to 30 percent), what would a financial buyer be willing to pay? Usually provides a floor valuation. 3. Of the valuation methodologies, which ones are likely to result in higher/lower value? Precedents usually yield higher valuations than trading comps because a buyer must pay shareholders more than the current trading price to acquire a company.
Longer Lead Time: It took around 14 days for the receipt of goods at the distributers end from the date the order was placed and the average lead time being 10 days. This long lead time adds to variability and reduced service levels. 3. Improper Promotions: Sales promotions were not done in a correct manner and lot of promotion campaigns like volume discounts were offered and this ultimately led to an inflated demand and caused a lot of forecasting errors during operation. 4.