In addition, this report includes the recent history of the company and a recommendation on how to proceed with the expansion plans, which will be presented to the company’s CEO and the board of directors. A1. Key Points: There are several key points that could impact the bank officer’s decision in regards to extending a long-term loan to Custom Snowboards. The following summary will evaluate the company’s financial health, along with its ability to obtain resources and grow by utilizing several analytical techniques: horizontal analysis, vertical analysis, and trend analysis. Income Statement Horizontal Analysis: Revenue: Custom Snowboards was able to increase net sales between years 12 and 13 by 3.21% or $209,300.
Is ADM growing or shrinking its investment base in PPE? It is growing its base in PPE, as it continues to buy more PPE then the depreciation expense by a significant amount. 6. Estimate ADM’s free cash flow by taking CFO – CFI. Was their free cash flow positive or
Key Financial Data Points. One of the main components to show a firm’s strength and ability to repay debt is profitability, or how much income is left after all expenses are paid. This analysis will examine in some detail various financial results during years 12, 13 and 14 of Custom Snowboards operations
Due to the increase in units sold, various other expensive natural increased, such as sales commissions, distribution network support, and transportation expenses. There were also expected increases in General and Administrative Expenses, which include employment taxes, and payroll services, this is a result of the increases in employee compensation. The net earnings of Competition Bike Inc. during this period showed a substantial increase over the
Debt capital is the borrowed money, typically long-term, that is used to invest in the company to finance growth (Investopedia, 2014). Competition Bikes has determined it will need $600,000 to fund the Canadian expansion if the decision is made to move forward with the expansion. There are five alternative capital sources that have been identified and that are available to optimize the company’s capital structure after obtaining the funds necessary for expansion. These alternative capital sources use a combination of bonds, preferred stock, and common stock for years 9 through 13: * 100% of 12% bonds * 50% preferred and 50% common stock * 20% of 12%
This is because as price falls consumers can afford more goods as their real incomes increase and they feel richer. Real income is the bundle of goods and services that an individual can purchase. As we move from A1 to A2 utility increases from U1 to U2 because we move to a higher indifference curve so now the individual can now consume a better bundle of goods. This backs up the non satiation assumption of consumption which states more is better thus when we increase consumption total utility increase. The four axioms of consumption: Transitivity, Non-satiation, Marginal rate of substitution in consumption and Completeness must be met in order to be able to draw
In the short-run, a larger government deficit would cause an increase to “total planned expenditures and higher aggregate demand “(Miller, 2012, pg. 308). The real GDP equilibrium would rise above the full-employment level because of deficit spending. The price level would also increase. In the long-run, the economy “adjusted to changes in all factors” and the “equilibrium real GDP remains at its full-employment level” even though the increase in the budget deficit causes a rise in the aggregate demand.
The pro forma financial statements are based on the current business that my father owns, supply costs and other companies’ information, although most of this information on the pro forma statements will come from the expected growth of the industry within the following three years. According to IBISWorld.com, the landscaping industry is on its way up and within the next three years, revenue growth is expected to climb anywhere from 5.8% - 8.5%. As an up and coming industry, I believe that as a company we can increase our sales by at least 20% every year through effective marketing and advertisements. 341647.5 11.3 Pro Forma Income Statements Income Statement | | | | | Dec 14 | Dec 15 | Dec 16 | Net Sales | 194,700 | 295,500 | 324,000 | Cost of Sales | 145,494 | 228,480 | 268,800 | Gross Profit | 49,206 | 67,020 | 55,200 | Operating expenses | | | | General | 2,819 | 6,000 | 10,000 | Depreciation | 2,000 | 2,000 | 2,000 | Operating Income | 44,387 | 59,020 | 43,200 | Other Income | 0 | 0 | 0 | Interest Income | 0 | 0 | 0 | Interest Expense | 900 | 900 | 900 | Other Income expenses | 0 | 0 | 0 | Income before taxes | 43,487 | 58,120 | 42,300
The operating margin which indicates how much a company makes (before taxes and interest) on sales is a good indicator of the quality of the company. Home Depot showed an increase from 1997 to 1999 then a decrease and stabilization in 2000 and 2001. Lowes showed a steady increase indicating that Lowes was earning more dollars per sales across the 5 year period and was performing better than Home Depot. The NOPAT margin fluctuated for Home Depot showing changes in the firm operating efficiencies. Lowes showed a steady increase indicating operating efficiencies
270). Expansionary fiscal policy raises interest rates, whereas contractionary fiscal policy lowers the rates. The way that a person can track the policy that is recommended, is by looking at the output. If it has increased, the price level of such commodity is to rise as well. When there is a larger demand for more expensive commodities, the demand for money increases and the cost to borrow follows.