• having liability exposure similar to that of a sole proprietor. • being taxed like a corporation. • being taxed like a corporation with liability like a partnership. 4. Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?pay raises based on length of service • implementation of a stock option plan • threat of a proxy fight • management compensation tied to the market value of the firm’s stock • threat of a takeover of the firm by unsatisfied stockholders 5. a. Compute the future value of $2,000 compounded annually for 20 years at 4 percent.
2. What is IPO underpricing? If you decide to try to buy shares in every IPO, will you necessarily make money from the underpricing? Underpricing refers to the fact that, on average, underwriters pick the IPO issue price so that the average first-day return is positive. If you followed a strategy of placing an order for a fixed number of shares on every IPO, your order will be completely filled when the stock price goes down, but you will be rationed when it goes up.
Profitability ratios are one of the most frequently used in the financial ration analysis. We will use profitability ratios to determine Berry‟s Bug Blasters‟ bottom line, efficiency, and performance. This is done through analyzing asset turnovers, profit margin, Return on Assets, and Return on common stockholders‟ equity. Asset Ratio: determined by dividing sales revenue by total assets. In 2008, for every dollar of assets owned by Berry‟s Bug Blasters, they sold $1.68 worth of goods and services.
A tax advantage of business combination can occur when the existing owner of a company sells out and receives: a. cash to defer the taxable gain as a “tax-free reorganization” b. stock to defer the taxable gain as a “tax-free reorganization” c. cash to create a taxable gain d. stock to create a taxable gain 2. Publics Company acquired the net assets of Citizen Company during 20X9. The purchase price was $800,000. On the date of the transaction, Citizen had no long-term investments in marketable equity securities and $400,000 in liabilities. The fair value of Citizen assets on the acquisition date was as follows: |Current assets |$ 800,000 | |Noncurrent assets | 600,000 | | |$1,400,000 | How should Publics account for the $200,000 difference between the fair value of the net assets acquired, $1,000,000, and the cost, $800,000?
I think Costco has the best strategy due to the cost efficient distribution through the use of the cross dock distribution. Cross docking allows the club has the ability to minimize inventory, improve product quality and increase responsiveness to any changes in the market conditions. Does one rival have a somewhat weaker strategy than the other two? Yes; BJ’s because they’re not as popular and they’re concentrated in the Eastern United States, which allows the company to streamline distribution and marketing. They’re also not benefiting from the economies of scales, because the margins are very thin and making low costs/high volumes are essential to profitability.
And how had it financed the growth and how its capital structure evolved? Assumptions For the year 2001 a recession occurred. This occurrence is considered when reviewing the financial numbers and statistics during this year. Qualitative Analysis The first step in analyzing Costco Wholesale Corporation is analyzing the relative qualitative data. Based on the data provided within the case the points below summarize how Costco is performing: * Industry: Wholesale clubs grew 12-15% in the 1990s and Costco is currently the largest wholesale club in the industry.
We can compute the levered value of the plant using the WACC method. Goodyear’s WACC is ￼ Therefore, ￼ A divestiture would be profitable if Goodyear received more than $47.6 million after tax. Problem 18-5 Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent’s debt cost of capital is 6.1% and its marginal tax rate is 35%. a.What is Alcatel-Lucent’s WACC?
Adams provided information to support that World War II was in fact the best war ever, “The U.S gross national product increased 60 percent during the war. And while living costs rose 30 percent, total earnings went up 50 percent. By 1945, the United States owned two-thirds of the world’s gold reserves, half its shipping, and more than half its manufacturing capacity.” The recovery the United States economy went through is unbelievable, this was looked at as a “magic formula” that needed to be repeated if America was ever in a horrible place such as the Great Depression that left 8.9 million people unemployed. “Had the government spent as much during the Depression to pump the economy as it during the war, it would have achieved the same spectacular results.” During World War II the United States government spent a grand total of $323 billion dollars; but in order to achieve recovery financially there had to be just as much spending. According to a secondary source I found on an online database, the information provided supports the point Michael C.C Adam’s made in chapter 6.
However, the company must be careful because a too big of a ratio can eventually lead to bankruptcy (Investopedia). The inventory turnover ratio for Nestlé is lower than Hershey’s because Nestlé either has lower sales or excess inventory. The total asset turnover for Hershey’s is also higher; this means that it is more efficient in using its assets in generating sales. As a result of a higher total asset turnover, the gross profit margin is lower than Nestlé’s (Investopedia). The return on assets and return on equity ratios are also better for Hershey’s because the company is making more money on less investment then Nestlé.
But the fact that this affected Pelosi, and she took the actions she did, is hysterical. Wealthy people can deduct less, but they also now pay less overall tax—from 39.6 percent down to 37 percent—so there’s a break there. However, the Pelosis are so incredibly wealthy that they will still end up losing lots of money because there is still a deduction cap that they