A. Financial Statement Analysis

Instructions: Using the Industry ratios provided for the Boat Building Industry information, complete the Comparative and Common-size financial statements below.  Discuss your observations on the results.  Please refer to the Project Requirements for complete instructions.

B. Ratio Analysis

Instructions: Research the Boat Building Industry information, and then complete the ratio analysis below.  Discuss your observations on the results. Please refer to the Project Requirements for complete instructions.

C. Financial Cash Flow Analysis

Instructions: Complete the Financial Cash Flow analysis below using the data provided in the Case write-up.  Discuss your observations on the results. Please refer to the Project Requirements for complete instructions.

D. Financing Growth

"Instructions: Using the financial statements below:

1. Compute the Internal Growth rate and Sustainable Growth rate.

2. Discuss your results.

3. Enter the required information to compute the External Financing Needed (EFN) for the project expansion. Use the original estimated project cost. The projected growth rate and the tax rate are given in the case write-up.

4. Re-compute the affected financial ratios.  NOTE -Round EFN up to the nearest $100,000. Assume that all of the new financing will come from Debt. Additionally assume that the Debt will carry a 5.5% Interest payment and that the projected Interest Expense will increase proportionately.

5. Discuss your results.

Please refer to the Project Requirements for complete instructions."                                                    

E. Debt Financing

Instructions: Compute the total amount of Bond financing needed for the expansion project.  Bonds may only be issued in Face amounts of $1,000. The Coupon rate will be 5.5% and the Market rate is 4%. Round your solution to the nearest $100,000. Discuss your observations on the results.  Please refer to the Project Requirements for complete instructions.

a. How much total Bond financing is needed?

b. At what price will the bonds trade after the initial issue?

c. What are the company's total annual interest payments?

d. What is the total market value of the bonds?

e. Please discuss the implications of your calculations and why the market value and the actual proceeds from the bond issue are different.

F. Capital Structure

"Instructions:

1. Input the projected growth rate and actual project cost into the Input Parameters box.    Note the new level of EFN.

2. Using the new level of EFN, recompute the financial ratios assuming all of the EFN will come from Debt.  Round up to the nearest $100,000. 

Assume the Interest payments will be 5.5% of new debt. 

3. Discuss your results, and what other options for financing the company has. Please refer to the Project Requirements for additional data and complete instructions."                                                                        

G. Net Present Value                                                                    

"Instructions: 

1. Compute the Net Working Capital cash flow required by the new production line.

2. Compute the expected  Operating Cash Flow from the production line.

3. Using the above cash flow data, compute the NPV of the project cost using the final estimated cost.  You must decide if the company will finance the entire project through debt, or will issue the original amount of Bonds and offer equity financing for the remaiining financing needs.   Be sure to use the appropriate projected interest payments.

4. Discuss your decision and the results. 

Please refer to the Project Requirements for additional data and complete instructions."

Attachment:- Finance Project.rar