Muhammad Qureshi Jeff Nowakowski Phase II: Southwest Current Assets: Accounts Receivables a. Analyzing Receivables: There is limited information about the bad debt expense or the allowance for doubtful accounts on Southwest’s 10k. According to the 10k, accounts receivables are carried at cost and the allowance for doubtful accounts was immaterial so the company did not provide figures for the account. The largest source of accounts receivable for Southwest is credit cards companies. These receivables are associated with ticket sales for future travel and amounts from business partners involved in firm’s frequent flyer programs. The fact that Southwest was not required to disclose actual figures on their allowance for doubtful accounts and bad debt expense because of their immateriality indicates that the company does very well with collecting their receivables.
Also, based on Target’s income statements, Target doesn’t have any revenues or expenses non-recurring in nature. Due to no change in accounting policy and no nonrecurring income items, Target doesn’t have much restated financials except certain reclassified amounts in prior years, which, however, can be negligible and doesn’t affect our analysis for comparability purpose. Target operates in three business segments: U.S. Retail, U.S. Credit Card, and Canadian. Target discloses detailed qualitative and quantitative information regarding these three segments in its report. Majority of Target’s current revenues are from its retail business in U.S. For the past several years, the retail sales amount and EBIT in retail segment increase steadily, and maintain a stable EBIT margin rate of around 7% each year.
The total sales revenue is the price per ton under contract times 600,000 tons, plus the spot market sales times the spot market price. The sales per year will be: Year 1 $20,400,000 2,000,000 $22,400,000 Year 2 $20,400,000 5,000,000 $25,400,000 Year 3 $20,400,000 8,400,000 $28,800,000 Year 4 $20,400,000 5,600,000 $26,000,000 Contract Spot Total The current aftertax value of the land is an opportunity cost. The initial outlay for net working capital is the percentage required net working capital times Year 1 sales, or: Initial net working capital = .05($22,400,000) = $1,120,000 So, the cash flow today is: Equipment Land NWC Total –$30,000,000 –5,000,000 –1,120,000 –$36,120,000 Now we can calculate the OCF each year. The OCF is: Year 1 Year 2 Year 3 Year 4 $22,400,000 $25,400,000 $28,800,000 $26,000,000 8,450,000 9,425,000 10,530,000 9,620,000 2,500,000 2,500,000 2,500,000 2,500,000 4,290,000 7,350,000 5,250,000 3,750,000 $7,160,000 $6,125,000 $10,520,000 $10,130,000 2,720,800 2,327,500 3,997,600 3,849,400 $4,439,200 $3,797,500 $6,522,400 $6,280,600 4,290,000 7,350,000 5,250,000 3,750,000 $8,729,200 $11,147,500 $11,772,400 $10,030,600 Year 5 Year 6 Sales Var. costs Fixed costs Dep.
1. At what point, if ever, did the parties have a contract? “One generally accepted definition of a contract is a promise or a set of promises enforceable by law” (Melvin, 2011, p. 194). In this scenario, Big Time Toymaker entered into an option contract with Chou. “BTT was interested in distributing Strat and entered into an agreement with Chou whereby BTT paid him $25,000 in exchange for exclusive negotiation rights for a 90-day period” (Melvin, 2011, p. 155).
Initial value of Pacific ridge investment (December 1995) is: 666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7). If we now value the rest of the company’s stock before venture capitalist investment at $1.50, we have: $1.50 * (800,000 + 4,796,000) =
Vodafone-Mannesmann Case Questions 1. Vodafone proposes that each Mannesmann share would receive 53.7 Vodafone shares, so that in aggregate Mannesmann shareholders would own 47.2% of the equity of the newly combined firm, 1 and Vodafone shareholders 52.8%. Based on December 17, 1999 stock prices how much would Vodafone shareholders contribute to the newly combined firm? (hint: look at the current market caps of Vodafone’s and Mannesmann’s shares) Assume in what follows that the stock prices prevailing on October 21 reflect the stand-alone values of the firm, so that both firms would trade at October 21 prices if the bid failed and the merger did not go through. a. b.
The beta for Boston Beer Company cannot be calculated as it has not been listed before. The pure play method cannot be used because their competitors have only recently listed and there are no historical betas for them yet. The beta for Boston Beer has hence been arbitrarily calculated by taking Anheuser-Busch’s beta of 1 and incorporating greater risk. 4. The market risk premium was not given in the case study and has been taken as the spread between stock and bond annual returns over the period 1926 – 1997 to be 7.2% 5.
| The accident not happened on the 30th of September 2003 | The recognition has no effect to Biovail’s financial statement. (revenue has been recognized before the accident happened) | The recognition has no effect to Biovail’s financial statement. (revenue not recognized yet because the delivery still not occurred) | 3) The revenue recognition requirements in accordance with U.S GAAP. i) Persuasive evidence of an arrangement exists; It seems clear that there is an ongoing relationship between Biovail and the Distributor and that certainly there was a bill, purchase order and/or invoice in order to support this sale. ii) Delivery has occurred or services have been rendered; The delivery was never realized due to the truck accident happened on the 30th of September 2003. iii) The seller’s price to the buyer is fixed or determinable;
The project requires $267.9 million to fund six locomotives and seven train sets and have three options to acquire the equipment: 1) issue debt to finance the purchase, 2) lease the equipment using a leveraged-lease structure, or 3) use federal grant monies. A discounted cash flow analysis on the three options has been performed to determine the most cost-efficient option. We will assume two potential scenarios when analyzing the options: 0% tax rate (operating at a loss) and 38% tax rate (operating with a gain). Discussion: Amtrak could issue bonds with a 20-year term at 6.75% per annum to purchase the equipment. They would make semiannual payments of $12.303 million and can sell the equipment at the end of its 25-year useful life at $40.185 million.
The 30th April 2009 letter to the complainant though raising inference of a contract of service there was no performance by Kobe Moss for evaluation and assessment for remuneration for that period or for determination of renewal of the contract, positive evaluation thereof, being the basis for such renewal. No. The contract of service requires that annual leave be planned and taken within the year it is due otherwise it lapses and becomes forfeited and so does any benefits thereof. In this case annual leave lapsed upon expiry of contract on 31st December 2008 and so did any claims under it. STATEMENT OF FACTS Mr. Kobe Moss entered into service in