10 July 2012 Managerial Finance FIN515 Professor David Felsberg DellaTorre Mini Case Corporate finance is important to all managers regardless of the industry they are in due to the fact that it deals with the strategic financial issues associated with achieving goals such as how the corporations should raise and manage its capital ‚ what investments the firm should make‚ what portion of profits should be returned to shareholders in the form of dividends‚ and whether it makes sense to make
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Ratio = 1 - 0.40 = 0.60% Solution: D/A 60% 3-3 Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities‚ $3 billion in long-term debt‚ and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston’s market/book ratio? Winston market = $75 x 800 million = $60 billion Book Value = Assets ($10b in total asset) – Liabilities ($1b current liabilities
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FIN515 Homework 5 Problem 10-8: NPVs‚ IRRs‚ and MIRRs for Independent Projects Edelman Engineering is considering including two pieces of equipment‚ a truck and an overhead pulley system‚ in this year’s capital budget. The projects are independent. The cash outlay for the truck is $17‚100 and that for the pulley system is $22‚430. The firm’s cost of capital is 14%. After-tax cash flows‚ including depreciation‚ are as follows: Year | Truck | Pulley | 1 | $5‚100 | $7‚500 | 2 | 5‚100 |
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Problem 16-1 (Cash Management) Williams & Sons last year reported sales of $10 million and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm’s inventory level and increase the firm’s inventory turnover ratio to 5 while maintaining the same level of sales‚ how much cash will be freed up? Inventory = Sales / Inventory Turnover Ratio Inventory = $10 million / 2 = $5 Million Inventory = Sales / Inventory Turnover
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Homework Assignment: Week 1 Mini-Case a. Why is corporate finance important to all managers? Corporate finance is important to all managers because you need to be aware of the tools needed to evaluate the firm’s value and be able to accurately make decisions to maximize wealth. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. A business may start as a sole proprietorship‚ or
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CLICK TO DOWNLOAD MAT 540 Week 6 Homework Complete the following problems from Chapter 2: 1. Problems 2‚ 6‚ 7‚ 12‚ 16‚ 20 2. Chapter 2 2. A company produces two products that are processed on two assembly lines. Assembly line 1 has 100 available hours‚ and assembly line 2 has 42 available hours. Each product requires 10 hours of processing time on line 1‚ while on line 2 product 1 requires 7 hours and product 2 requires 3 hours. The profit for product 1 is $6 per unit‚ and the profit
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Managerial Finance. FI515 Homework Week 6 Problems (p. 503) 12-1 AFN Equation Baxter Video Products’s sales are expected to increase by 20% from $5 million in 2010 to $6 million in 2011. Its assets totaled $3 million at the end of 2010. Baxter is already at full capacity‚ so its assets must grow at the same rate as projected sales. At the end of 2010‚ current liabilities were $1 million‚ consisting of $250‚000 of accounts payable‚ $500‚000 of notes payable‚ and $250‚000 of accruals. The
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29. In fiscal year 2011‚ Starbucks Corporation (SBUX) had revenue of $11.70 billion‚ gross profit of $6.75 billion‚ and net income of $1.25 billion. Peet’s Coffee and Tea (PEET) had revenue of $372 million‚ gross profit of $72.7 million‚ and net income of $17.8 million. a. Compare the gross margins for Starbucks and Peet’s. Gross Marin = Gross Profit/Sales (Page 35) Starbucks: ($6.75 gross profit / $11.70 sales) = 0.57692 x 100 = 58% GM Peet’s: ($72.7 gross profit / $ 372 sales) = 0.19543 x
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Week 6 Homework MBA527 1. Read "Case 9: National Collegiate Athletic Association Ethics and Compliance Program‚ pp 444-454. Answer the questions at the end of the case. How does the NCAA encourage collegiate football programs to develop a culture of ethics and compliance? Collegiate football is not only a very lucrative and rapidly growing “business” but it also has a “tremendous impact on our culture‚ influencing the values of millions of participants and spectators”. Because of this‚ it is
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(Points : 10) A Division B project with a 13% return. A Division B project with a 12% return. A Division A project with an 11% return. A Division A project with a 9% return. A Division B project with an 11% return. 6. (TCO D) Assume that you are a consultant to Broske Inc.‚ and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from retained earnings based on the DCF approach? (Points : 10)
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