multi –brand strategy and service offering (i.e. Operating both‚ the budget brand Jetstar and premium brand Qantas). 5. Price of Aviation Turbine Fuel (ATF) 6. Stable domestic economy. 7. Global strategic tie-up for its International service offerings. 8. Aircrafts with lowest average age. Financial Analysis (Consolidated – Per Statutory Books) For the year ended Unit 30 June 2012 30 June 2011 Total Revenue $ M 15‚724 14‚894 Operating Profit (excluding Fuel Cost) $ M 5‚431 5‚312
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C) What do you think is the real cause for the cash flow problem at cyclone? What actions can be taken to improve the situation? Comment on Rangi’s management of the factory. The real causes for the cash flow problem at cyclone are: • No perfect planning to distribute goods /provisions • Failure to establish human resource strategies. • Misusage of wealth during the cyclone • Negligence & irresponsibility of top level management. • Unsatisfactory workplace. Remedies to be done for improvement of
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Errors Cash flows. Is the movement of money into or out of a business‚ project‚ or financial product. It is usually measured during a specified‚ limited period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company’s value and situation. Cash flow notion is based loosely on cash flow statement accounting standards. It’s flexible as it can refer to time intervals spanning over past-future. It can refer to the total of all flows involved
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871.01 248‚212‚514.56 260‚623‚140.28 273‚654‚297.30 287‚337‚012.16 301‚703‚862.77 316‚789‚055.91 Less operating exp 132‚140‚000.00 138‚754‚000.00 144‚469‚740.00 155‚822‚627.00 162‚881‚016.15 171‚030‚884.57 178‚851‚101.06 187‚801‚097.03 196‚461‚659.76 206‚294‚288.39 215‚881‚896.83 226‚688‚271.74 237‚298‚685.96 249‚179‚459.37 260‚918‚483.62 Operating cash flow before tax 17‚860‚000.00 18‚746‚000.00 20‚905‚260.00 29‚397‚373.00 31‚599‚983.85 33‚174‚165.43 35‚564‚201.44 37‚334‚970.60
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000 $16‚250 $23‚400 Expenses (4‚250) (8‚000) (8‚100) Tax cost (2‚730) (3‚075) (4‚590) Net cash flow $6‚020 $5‚175 $10‚710 Discount factor (6%) .943 .890 Present value $6‚020 $4‚880 $9‚532 NPV $20‚432 11. a. Year 0 Year 1 Year 2 Year 3 Year 4 Before-tax cash flow $(500‚000) $52‚500 $47‚500 $35‚500 $530‚500 Tax cost (7‚875) (7‚125) (5‚325) (4‚575) After-tax cash flow 44‚625 40‚375 30‚175 525‚925 Discount factor (7%) .935 .873 .816 .763 Present value $(500
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This case captures the problems concerning cash flow and working-capital management typical of small‚ growing businesses. At the end of 2005‚ Bob and Maggie Brown have completed their third year of operating Horniman Horticulture‚ a $1-million-revenue woody-shrub nursery in central Virginia. While experiencing booming demand and improving margins‚ the Browns are puzzled by their plummeting cash balance. The case highlights the difference between cash flow and accounting profits‚ as well as the common
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E[Daily Charter Rate] f) Adjustment Factor g) E[Daily Hire Rate] h) Daily Operating Cost i) Days Hired (per year) j) Revenue ($M) k) Operating Costs ($M) l) Depreciation m) Taxable Income n) Tax Paid o) After-Tax Income p) Operating Cash Flow q) Capital Expenditures (CAPEX) r) Change in Net Working Capital ( NWC) s) Asset Sales (after tax) t) Free Cash Flow (FCF) u) PV Factor: 1/(1+r)t v) PV of Cash Flow (PV[CF]) w) Net Working Capital x) Book Value ($M) y) Scrap Value ($M) Suppose
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CHAPTER 10 Cash Flows and Other Topics in Capital Budgeting ANSWERS TO END-OF-CHAPTER QUESTIONS 10-1. We focus on cash flows rather than accounting profits because these are the flows that the firm receives and can reinvest. Only by examining cash flows are we able to correctly analyze the timing of the benefit or cost. Also‚ we are only interested in these cash flows on an after tax basis as only those flows are available to the shareholder. In addition‚ it is only the incremental
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Tasty Foods Case Summary (Roxana): Tasty Foods Corporation was founded in 1995 by Henry Abercrombie. The corporation is a food conglomerate that has major product lines including cereals‚ frozen dinners‚ canned sodas and fruit juices. Abercrombie founded the company with a small inheritance and with the idea of producing instant hot cereal. The firm’s hot cereal proved to be a success and was well accepted by the consumers. Over the years it grew by its acquisitions and product innovation ideas
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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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