a. Define “incremental cash flow.” Incremental cash flows are the difference between the cash flows the firm will have if it implements the projects minus the cash flows it will have if it rejects the project. (426) Incremental cash flows = Company’s cash flows - Company’s cash flows with the project without the project (1.) Should you subtract interest expense or dividends when calculating project cash flow? No‚ you should not subtract interest expenses when
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Chapter 04 - Fundamentals of Cost Analysis for Decision Making 4-61. (continued) Incremental Cash Flow – Alternative A Make Containers and Perform Maintenance Year of Operation 2 3 0 Buy GHL Tax savings on purchase Cash flow on purchase Other materials Labor: Supervisor Labor: Workers Rent: Warehouse Maintenance Other expenses Manager’s salary Total costs Tax savings Cash flow due to costs Tax effects of depreciation Tax effect of GHL costs Total cash flow Discount rate factor (10%) Present
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Overview History/Growth This case concerns the John M. Case Company‚ which at one time was the leading producer of business calendars in the United States. The company was founded by the grandfather of John M. Case in 1920 and was inherited in 1951. The company had experienced profitable operations every year since 1932‚ and held approximately a 60-65% market share by 1984. Sales had been increasing annually at about a 7% compound rate‚ and the return on average invested capital was about
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advance from customers Rs. 3‚00‚000 31.1.2011 Paid interest on loan Rs. 5‚000 31.1.2011 Paid instalment of loan Rs. 25‚000 31.1.2011 Interest allowed by bank Rs. 8‚000 Classification of accounting equation approach with meaning and examples Analysis of transaction –with accounts involved-nature of accountaffects and debit/credit 2 4 10 6 The following trial balance was extracted from the books of Chetan‚ a small businessman. Do you think it is correct? If not‚ rewrite it in the
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Solution to Case 03 Cash Flow Analysis The Lazy Mower: Is it really worth it? Questions: 1. Prepare a Pro Forma Statement showing the annual cash flows resulting from the Lazy Mower project. (See table on next page) 2. Use a scenario analysis to show how the cash flows would change if the sales forecasts were 15% worse (Pessimistic) and 15% better (Optimistic) than the stated forecast (base). 3. Realizing that the CIC will demand
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twenty years‚ rounded to the nearest dollar? (A) (B) $19‚292 (C) $144‚105 (D) 3. $14‚938 $40‚000 A firm’s profit before tax is $150 000 and depreciation expense is $30‚000. Assuming a company tax rate of 30%‚ the firm’s cash flow from operations is: (A) $840‚000 (B) $180‚000 (C) $135‚000 (D) $75‚000 4. Given an effective annual interest rate of 14 per cent‚ the present value of a perpetuity consisting of yearly payments of $25‚000 starting immediately
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Chapter 5 Risk Analysis CHAPTER 5 RISK ANALYSIS Solutions to Questions‚ Exercises and Problems‚ and Teaching Notes to Cases 5 . 1 Relation between Current Ratio and Operating Cash Flow to Current Liabilities Ratio. Both ratios use current liabilities in the denominator‚ although the current ratio using current liabilities at the end of a period and the cash flow ratio uses average current liabilities for the period. Thus‚ the explanation most likely relates to the numerator. The firm is probably
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reasonable prices.” Mission statement is “We are the highest-quality sandwich shop in Dawkins because of our legendary sandwich-making processes and our commitment to using the highest-quality ingredients.” Situational Analysis The following are facts important to LS analysis. Paul and Sam aims for 1.1 Million Net Income in 2015. LS maximum 6 employees. LS must maintain $20‚000 at the bank. Must pass city quarterly health audit. Paul purpose franchising alternative and highlighted eggplant
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Running head: MINI CASE - CHAPTER 3 Mini Case - Chapter 3 Computron Industries – Jamison Analysis Mini Case - Chapter 3 Computron Industries‚ a manufacturer of electronic calculators‚ has been going through some growth over the course of the 2007 and 2008 years. Some components of this growth include new sales offices‚ additional plant capacity and a costly advertising campaign. However‚ execution of this growth is subpar‚ and has led to suppliers and lenders being paid late‚ bank complaints
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Individual Comparative Analysis Memo Accounting – Annual Report Project Fall 2009 Annual Report Project | SJM | Medtronic | | 2008 | 2008 | Profitability Ratios | | | Return on Equity | 12.5% | 17.8% | Return on Assets | 13.13% | 7.9% | Earnings per Share | $1.12 | $1.94 | Return on Sales | 8.81% | 14.86% | Gross Margin Percentage | 73.17% | 80.60% | Solvency Ratios | | | Current Ratio | 2.02 | 2.37 | Working Capital | 1‚051‚539* | 4‚313** | Quick Ratio | 1.20
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