[pic] ADM 3350 M Winter 2010 CORPORATE FINANCE ANSWER KEY MIDTERM EXAMINATION – February 10th‚ 2010 Professor: Kaouthar LAJILI‚ PhD.‚ CGA Duration: 1 hour and 30 minutes | | | | |INSTRUCTIONS | | |
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Analysis for financial management (Robert C. Higgins) Summary of the used chapters in the lecture (WM0609LR) Chapter 1 Interpreting financial statements Accounting Information provided by 3 annual reports: Balance Sheet Cash-Flow statement Income statement Figure 1 Cash flowproduction cycle (Operating) working capital: movement of cash into inventory Investment: flow from cash into new fixed assets Depreciation: the loss in value of fixed assets ⇒ increase in value of merchandise made + needed for
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limit on their sustainable growth rate (g*=Profit Margin*Asset Turnover*Leverage*Retention Ratio). This behavior is not typical of a premier growth company. A growth company would tend to increase their g* substantially by piling on more debt. 4. Repurchase undervalued shares • There are 3 ways to increase shareholder’s wealth: Increase in market value of shares‚ dividends and last but not the least repurchasing stocks and reducing outstanding equity. Again‚ this behavior is not typical of a premier
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Financial Analysis Eli Lilly & Company 2013 Annual Report Group Group 22 Ibrahim Ibrahim Al-Oraifi Al-Oraifi Dheya Dheya Al-Shehabiyah Al-Shehabiyah Namir Namir Al-Bassam Al-Bassam Happy Happy New New Year‚ Year‚ 2015 2015 Company Confidential © 2013 Eli Lilly and Company INTRODUCTION Founded in1876 by Col. Eli Lilly Headquarters in Indianapolis‚ Indiana The first company to mass-produce penicillin The world’s largest manufacturer and distributor of psychiatric medications • Products marketed
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of the firm. You might find Chapters 3‚ 4‚ 7‚ 12 and 14-16 of our text useful. Possible concepts used: EFN‚ growth rates‚ financial ratios‚ financial leverage‚ MM propositions and tradeoff theory‚ pecking order theory‚ agency cost theory‚ share repurchase‚ special cash dividends‚ enterprise value‚ debt and equity value‚ WACC‚ cost of debt‚ cost of equity as well as the CAPM. Questions: 1. Is Blaine Kitchenware‚ Inc. financially sound? In particular‚ is the firm profitable? What is the firm’s sustainable
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Question 1 Which of the following statements is correct? Answer One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive. If a company has an established clientele of investors who prefer a high dividend payout‚ and if management wants to keep stockholders happy‚ it should not follow the strict residual dividend policy. If a firm follows a strict residual dividend policy‚ then‚ holding all else constant‚ its dividend payout ratio
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Financial Management Spring 2010 Project: Financial Analysis for Avon Products Inc Student: Ninoska Trejos April 17‚ 2010 1. Background 1.1 Company Description Avon Products Inc (AVP)‚ founded by David H. McConnell‚ is a leading global beauty company‚ with $10 billion in annual revenue; it commenced operations in 1886 and incorporated in the State of New York on January 27‚ 1916. The company’s stocks are traded in the New York Stock Exchange (NYSE). Its products fall into three
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FINA300 Fall 2011 Benedictine University 100 points Name: ___________________________________________________ 1) Which of the following statements is CORRECT? a. The New York Stock Exchange is an auction market‚ and it has a physical location. b. Home mortgage loans are traded in the money market. c. If an investor sells shares of stock through a broker‚ then it would be a primary market transaction. d. Capital markets deal only with common stocks
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1) shows that it faces future risk of losing market shares in all its business lines if it does not foresee competition and continues to focus on increasing stockholders’ value. AHP’s current financial performance is very good since it has high ROE (30.3)‚ high quick ratio (42.68)‚ low debt-to-equity ratio (0.09) and low debt-to-asset ratio (0.01). However‚ an analysis of different debt ratios shows that if AHP increases debt ratio‚ it will face a financial risk of increased debt-to-equity and
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Advantages Disadvantages Application process Credit check Term Options Other The Debt-to-Equity Ratio The Optimal Capital Structure a) Firm Value and Stock Value b) Capital Structure and the Cost of Capital How Financial Leverage Affects the EPS and ROE of a Firm How Interest Rates Affect the Demand for Debt and Equity Capital VI. VII. VIII. The Significance of Credit Ratings for Capital Structure a) Regulations on Bond Investment b) Information Content of Ratings c) Costs Directly Imposed on the
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