Once the predicted demand is frozen, L.L. Bean uses its historical demand and forecast data to analyze the forecasting errors. The forecast errors are calculated for each individual item and a frequency distribution of these is made, which is further used as a probability distribution for future errors. Thus, if 50% of the errors were within 0.7 and 1.6, the forecast for this year would be adjusted accordingly. Next, each item commitment quantity was calculated using its contribution margin and its total contribution in dollar to the revenue of the company.
Roughly 25 percent of the firm’s customers take the discount, 65 percent pay within thirty days, and 10 percent pay late (about sixty days after the invoice date). The firm presently has a cash balance of $300,000 and wants to maintain a minimum cash balance of $300,000. Additional borrowing necessary to maintain that minimum balance is estimated in the final section of Table 1 (attached worksheet). The Cash surplus or Loan requirement line on Alpine Wear's cash budget shows that loans are required from January to April, and surpluses are expected during May and June. Specific amounts are showed as the table below.
most common form of organization reduced legal liability for investors lower taxes harder to transfer ownership 4. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year?
Case study: Another example “Explain how a two-year bill facility that uses 90-day bills poses interest rate risk for the borrower. Describe FRAs, BAB futures and interest rate swaps and explain how they can be used to hedge the interest rate risk involved in a planned issue of BABs. Demonstrate how each hedge instrument establishes the company’s cost of funds.” Businesses often require funds for a longer term than the usual 90-day term of a bill and so will be provided with a bill facility. This is an agreement to rollover bills on their maturity date by issuing a replacement set of bills, however there is potential that borrowers will be exposed to interest rate risk. Interest rate risk is basically the threat posed by unexpected changes in interest rates, in other words, it can be defined as the uncertainty surrounding expected returns on security, brought about by changes in interest rates.
P0= D1/ Dividend yield= $26.67 P7= P0 *(1+11%)^7= $ 55.36 15. Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock’s current market value?
Using the criteria above, we have chosen the best method of production for each requirement in order to help us make our final decision. Income - Level Production Based on income, level production is the best choice. Level production will eliminate overtime costs of $225K and direct labor costs of $265K, reducing the percentage of COGS from 70% to 65.1% of sales. A portion of these savings would be offset by higher storage costs of $115K, which will increase operating costs each month. However, even with these additional costs, net profit under level production is projected to be $520K, which is a 48% increase over the seasonal production estimate of $351K.
1. Introduction The Walt Disney Company (Disney), like many other international firms that have gone global, faces tremendous currency risks when their income is generated in a foreign currency but income and balance sheet items are denominated in the local currency. Tokyo Disneyland, opened for just over two years in July 1985, provides Yen denominated royalty receipts. These receipts are expected to grow 10% to 20% per year over the next few years. Disney is considering hedging tools to reduce its yen exposure especially given the recent depreciation of the yen against the dollar by 8% in a year.
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? Explain the difference in the required return estimates from the ValueLine (see question 1a) to the WSJ price data. Expected Return= 7.72% Expected Dividend Yield = D1/P0 = .60/27=2.22% Capital Gains Yield = g = 5.5% The dividend remained constant at .$60 and the stock price went up causing the return to go down. b.
Installment loan. Feedback That’s incorrect. A manufacturer with seasonal sales would be most likely to obtain an unsecured short-term term loan from a commercial bank to finance the need for a fixed amount of additional capital during the busy season. Question 3 of 100 (2A2-CQ09) Maydale Inc.’s financial statements show the following information. Flag for Review http://imalc.mycrowdwisdom.com/diweb/?wicket:bookmarkablePage=:com.digitalignite.mo... 4/9/2013 Digital Ignite :: Test Engine Page 2 of 54 Maydale’s accounts receivable turnover ratio is
Kwik Lube Case Study Compute the loss for Kwik Lube stations during the last two years using trend analysis. How accurate can results claim to be? With a -.01 bias and a negligible tracking symbol, the forecast analysis substantiates Dick Johnson’s assertion that the presence of competition cut directly into Kwik Lube’s profit. A trend analysis was conducted and projects sales in the amount of $1,419,445 and $1,530,445 for 2006 and 2007, respectively. Comparing the gross sales forecast to actual sales, this results in a loss of $309,445 in 2006 and $420,445 in 2007.