Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Management Expert

Part A-Budgeting & Financial Analysis

Assume the following data for Spring Break Corp:

Statement of Income:                                               Balance Sheet:

2017                                                                            2017                2016

 

Sales                           $750                                        Current Assets        $1,050                 $840   

Costs                             300                                        PP&E                            650                  400

Op Income                    450                                        Goodwill                       150                  100

Interest                            40                                        Total Assets                1,850               1,340

Pre-tax Income             410   

Taxes                            160                                        Current Liabilities          250                  200

Net income                 $250                                        Notes Payable                 150                  120

                                                                                    Revolving Credit Line   150                  110

                                                                                    Deferred taxes            20                    10

                                                                                    Total Liabilities              570                  440

                                                                                    Shareholders' Equity     1,280                   900

                                                                                                                     $1,850             $1,340

1. Calculate the net profit margin and explain what it means.

2. Calculate the ROE (return on equity) and explain what it means.

3. Calculate the current Debt/Total Capital ratio and explain what it means.

4. Calculate the asset turnover ratio and explain what it means.

5. Based on the following assumptions, what is the expected growth (bps) in operating margin in 2018.

a. Sales projected to grow 12.0% each year

b. Costs expected to leverage 50 bps (basis points) as a percentage of sales

c. Interest expense projected to stay fixed at $40

d. Taxes expected to be 20% as a result of the new tax plan in 2018

Part B - Financial Analysis Short Answer

You are required to show all your work to receive full credit.

If using a financial calculator, please list your inputs and the function used.

If using excel, please download "Midterm Backup" file under Assignments on Blackboard and submit exam through Blackboard.

If using paper, please detail all calculations.

 

Year 1

Year 2

Year 3

Project A

$400

$400

$400

Project B

$180

$420

$600

Project C

$600

$420

$180

1. At an interest rate of 12%, which of the following sequences of cash flows should you prefer and why?

2. Assume Go Fish, Inc. has about 6.0 million shares outstanding and the stock price is $24.50. Also, assume the P/E ratio is about16.4x. Calculate the approximate market capitalization for Go Fish, Inc.

3. A government bond has a face value of 100 euros, a coupon rate of 5.5 percent and matures in six years. The bond pays annual interest payments. Calculate the yield to maturity of the bond (in euros) if the price of the bond is 105 euros.

4. Tapped Out is a no-growth firm and has 1.3 million shares outstanding. It expects to earn a constant $11.5 million per year on its assets. If it has no debt, all earnings are paid out as dividends, and the cost of capital is 12.3%, calculate the current price per share of the stock.

5. ABC Co. has $7,500,000 of revenue today. It is estimated to grow 15% next year, 13% the following year and 11% in each of the next 2 years. What is the CAGR?

6. Joe Condo has taken a 30-year $425,000 mortgage, payable monthly, on his condo at an interest rate of 6.20% per year. What is the remaining balance (or value) of the mortgage after 6 years?

PART C - Short Answer

1. Please give one example of the following decisions a company may face:

- Investment decision

- Financing decision

2. What is the relationship between the yield to maturity and coupon rate on a premium bond?

3. During which stage of company's lifecycle would you expect it to have higher payout ratios and why?

4. Why did Prof. Kaplowitz highlight the Doritos/Mountain Dew Super Bowl commercial as a good use of marketing budget?

5. Rank these securities from most to least risky.

a. SeniorSecured Bond

b. Common Stock

c. Subordinateddebt

d. Preferred Stock

6. What is the NPV rule?

7. Does Harvard Athletic Department break even from a budget standpoint in 2018? Why or why not?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M93137401
  • Price:- $30

Priced at Now at $30, Verified Solution

Have any Question? 


Related Questions in Financial Management

Question spirituality is a fundamental and universal

Question : Spirituality is a fundamental and universal aspect of human existence and is a critical component in working with clients, groups, communities, etc. There is a vast diversity in spiritual beliefs and religious ...

We have seen that there are 3 phases discussion making and

We have seen that there are 3 phases (Discussion; Making and accepting proposals; and closing the deal), in the process. Please respond in about 300 words. Do we need to follow them in sequence, or can we be flexible bet ...

Please respond to the following discussion not an essay

Please respond to the following: {Discussion, NOT an Essay. Under 350 WORDS} a) Suggest one key factor that a financial manager should evaluate when determining whether to invest in stocks or bonds. Provide support for y ...

Response 1 nancymergers or acquisitions m amp a - this

Response #1 (Nancy) Mergers or Acquisitions (M & A) - this publication: Mergers and acquisitions covers all aspects of mergers and acquisitions. Beginning with the pre-combination phase (the period between the deal's ann ...

Your assignment consists of three parts1go to the internet

Your assignment consists of three parts: 1. Go to the internet and find a news article published within the last one year that discusses capital expenditures of the company, summarize key points and post in the Discussio ...

Question 1youre asked to assess whether your corporation

Question 1. You're asked to assess whether your corporation should invest in a long-term capital project. You calculate the payback period and NPV. Give an example of a specific recommendation you could make based on the ...

Discussion board unit the balance sheet - liabilitiesin

Discussion Board Unit: The Balance Sheet - Liabilities In 300-400 words, define and discuss the following: Estimated and contingent liabilities The difference between gross and net take home pay The difference between em ...

Assignmentdirections answer the following questions on a

Assignment Directions: Answer the following questions on a separate document. Explain how you reached the answer, or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assig ...

Assignmentplease conduct preliminary research on the 2008

Assignment Please conduct preliminary research on the 2008 Lehman Brothers Bankruptcy and its various effects on world financial markets, business management, the credit crisis and individual wealth. Your research and re ...

Group projectinstructionyou and your team members should

Group Project Instruction: You and your team members should choose a problem statement and apply statistical techniques to solve it. The following step by step instruction will guide you to complete this activity: Step 1 ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As