the successful completion of this project. Group 1 Section C LBSIM Table of Contents Introduction to corporate history Performance highlights Risk‚ Return And Beta… Cost of Capital of ACC Dividend Policy Capital Structure Leverage Review of Cash Management And Working Capital Financial Analysis of ACC
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Excel Assignment #2 Preparing a Contribution Margin Income Statement and Operating Leverage Summer 2013 1. Assume that a company is budgeting to sell 2‚500 units of a product at a selling price per unit of $32. The variable cost per unit is $26 and total fixed costs are $5‚000. REQUIRED Prepare a contribution margin income statement and calculate operating leverage. 2. Suppose the company is unsure exactly how many units they will sell. As such‚ their marketing department has provided
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returns and HG Corp Bonds (recent history is implicitly more weighted)‚ s.d. of the S&P500 and s.d. of the HG Corp Bonds (Exhibit 4) Same 2 Risk-Free Rate Estimated to be equal to 10y US Gov Interest Rate as of April 1988 (Table B) Same 3 Current Leverage Using financial statements (Exhibit 1)‚ we estimated the market value of debt and divided by market value of assets. Market value of debt is estimated to be equal to its book value. Market value of assets is equal to market value of debt + market
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include bottleneck‚ routine‚ leverage and strategic items. The category within which an item falls on the matrix determines the approach towards suppliers. * Bottleneck items on the other hand provide a lot of problems and risks. Volume insurance‚ vendor control‚ security of inventories and backup plans are recommended here. * Non-critical items: require efficient processing‚ product standardization‚ order volume and inventory optimization * Leverage items: allow the buying company
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Ratio analysis Debt ratio Debt ratio (2006-2007) = Total liabilities / Total assets = 10‚170/12‚064 = 0.84 Debt ratio (2007-2008) = 9‚210/11‚769 = Debt ratio (2008-2009) = 10‚003/11‚229 = Debt ratio (2009-2010) = 11‚043/12‚537 = Current ratio Current ratio (2006-2007) = Current assets / Current liabilities = 3‚424/4‚790 = 0.71 Current ratio (2007-2008) = 2‚164/4‚498 = Current ratio (2008-2009) = 1‚326/5‚389 = Current ratio (2009-2010) = 2‚697/6‚085 = Return on sales (ROS) Return on Sales
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Financial Leverage Performance review Liquidity Asset Management Assessing a Company’s Future Financial Health Questions • What is your assessment of the performance of SciTronics in 2008 versus 2005? • We can identify 4 main areas of analysis to asses a performance of a company – Sales Growth – How does the company grow over time? – Profitability – How profitable is the company? – Asset Management – How well does the company employ its assets? – Liquidity and Financial Leverage
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PERCENT STATE-PLUS-FEDERAL CORPORATE TAX BRACKET‚ THE RISK FREE RATE IS 6 PERCENT AND THE MARKET RISK PREMIUM IS 4 PERCENT. A. NOW‚ TO DEVELOP AN EXAMPLE WHICH CAN BE PRESENTED TO PIZZAPALACE’S MANAGEMENT TO ILLUSTRATE THE EFFECTS OF FINANCIAL LEVERAGE‚ CONSIDER TWO HYPOTHETICAL FIRMS: FIRM U‚ WHICH USES NO DEBT FINANCING‚ AND FIRM L‚ WHICH USES $10‚000 OF 12 PERCENT DEBT. BOTH FIRMS HAVE $20‚000 IN ASSETS‚ A 40 PERCENT TAX RATE‚ AND AN EXPECTED EBIT OF $3‚000. 1. CONSTRUCT PARTIAL INCOME STATEMENTS
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a single product? Q3: How are CVP calculations performed for multiple products? Q4: What is the breakeven point? Q5: What assumptions and limitations should managers consider when using CVP analysis? Q6: How are the margin of safety and operating leverage used to assess operational risk? Chapter 3: Cost-Volume-Profit Analysis Eldenburg & Wolcott’s Cost Management‚ 1e Slide # 2 © John Wiley & Sons‚ 2005 Q1‚ Q4: CVP Analysis and the Breakeven Point • CVP analysis looks at the relationship between
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Textbook case: Managerial Accounting for Managers‚ 2nd edition Noreen‚ Brewer and Garrison (McGraw-Hill/Irwin‚ 2008). Case 4-33 Cost Structure; Target profit and Break-Even Analysis Contribution Income Statement for all three scenarios: 15% commission 20% commission Own sales force Sales $16‚000‚000 $16‚000‚000 $16‚000‚000 Variable manuf. cost $7‚200‚000 $7‚200‚000 $7‚200‚000 Commissions $2‚400‚000 $3‚200‚000 $1‚200‚000 -Tot. variable cost ($9‚600‚000)
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system ________________________________________________________________________________________ 6 4.1.2 Liquidity risk ______________________________________________________________________________________________________________ 6 4.1.3 Excess Leverage ___________________________________________________________________________________________________________ 6 4.2 Basel III Reform
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