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FINANCIAL ANALYSIS ASSIGNMENT

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Financial Analysis Assignment

Question 1 Please review the above Balance Sheet for General Motors Company and complete the table below by locating the 2015 and 2014 Total Assets, Liabilities, and Equity for the General Motors Company? Then, look at the change in accounts from 2014 to 2105 and select the option that reflects if you think the trend is upward or downward. 2015 Total Assets Total Liabilities Total Equity Question 2 2014 $ $ Trending which way? Please review the above Balance Sheet for Ford Motor Company and complete the table below by locating the 2015 and 2014 Total Assets, Liabilities, and Equity for the Ford Motor Company? Then, look at the change in accounts from 2014 to 2105 and select the option that reflects if you think the trend in each account is upward or downward. 2015 Total Assets Total Liabilities Total Equity Question 3 2014 $ $ Trending which way? Which company appears to be larger based on the 12/31/2015 total assets (things they own)? How many more assets do they own (compare the total assets of the 2 companies and take the difference)? $ Which company has the most debt 12/31/2015 (ie…total liabilities or things they owe)? How many more liabilities do they owe (compare the total liabilities of the 2 companies and take the difference)? $ Which company has the largest amount of total equity on 12/31/2015 (difference between what they own and owe)? How much more equity do they own (compare the total assets of the 2 companies and take the difference)? $ Question 4 Please review the above GM 2015 Income Statement and complete the table below by locating the 2015, 2014, and 2013 Total Revenues, Costs and Expenses, and Net Income for the General Motors Company? Then, look at the change in accounts from 2013 to 2105 and select the option that reflects if you think the trend is upward or downward. GM Total Net Sales & Revenues Total Costs & Expenses Net Income 2015 2014 2013 Trending Question 5 Please review the above Ford 2015 Income Statement and complete the table below by locating the 2015, 2014 and 2013 Total Revenues, Costs and Expenses, and Net Income for Ford Motor Company? Then, look at the change in accounts from 2013 to 2105 and select the option that reflects if you think the trend is upward or downward. Ford 2015 2014 2013 Trending Total Revenues Total Costs & Expenses Net Income Question 6 Please review the above Balance Sheets for General Motors Company and Ford complete the table below by calculating the following ratios for each company using the 12/31/15 numbers? Then, you are asked to determine which company has the better current ratio, debt ratio, and return on total assets ratio. Please round your answers to 2 decimal places. Remember, the debt ratio and return on assets ratios are percentages. So, if your answer is .0654, then it needs to be entered as 6.54, which is 6.54%. Ford Current Ratio Debt Ratio Return on Assets General Motors Which is better? :1 2.12 : 1 % % % % Current Ratio You’ll need to calculate this by taking the 2015 Total Current Assets and dividing it by the Total Current Liabilities. Please round your answer to 2 decimal places. Calculation of the Current Ratio of Ford is a bit more complicated since the financial statement doesn’t break down current and long-term assets and liabilities. We could figure it, but I will save you the trouble and tell you that Ford’s Current Ratio at the end of 2013 was 2.12. This tells you that they have $2.12 in current assets to every $1 in current liabilities. We usually prefer a ratio or 1.5 or better to 1. This is a measure of the company’s ability to pay their short-term debt as they come due. Debt Ratio You’ll need to calculate this by taking the 2015 Total Liabilities and dividing it by their 2015 Total Assets. You will then have to move the decimal place to the right 2 places to get a percentage. Please round your answer to 2 decimal places. Which company has the higher Debt Ratio? This tells us how much of a company’s assets are financed by debt. This indicates risk. The higher the debt ratio, the higher the risk. Return on Assets You’ll need to calculate this by taking the 2015 Net Income and dividing it by their Average Total Assets. Average Total Assets will be calculated by taking the 2014 Ending Total Asset Balance and adding it to the 2015 Ending Total Asset Balance and divide the resulting number by 2. You will then have to move the decimal place to the right 2 places to get a percentage. Please round your answer to 2 decimal places. This tells us how a good a company is at using the assets they have invested in the company to generate net income. A higher number indicates the company is doing a better job using they assets they have to generate net income. Question 7 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Financials”, then click on the statement that you would like to view. Finally, click on the "$" button to view the financials as normally presented in dollars. Then, you can use the data provided to answer the following questions. For a video explanation, please see https://www.youtube.com/watch?v=lHgayWHzYQM [+]. Then, answer the following questions related to Home Depot using trend analysis. There is also a button just above the "Performance" tab in Morningstar that you can use to print the page if you prefer or you may choose to print this assignment to have available while you are online locating the required information. Let’s begin by viewing the Income Statement of the Home Depot. Please complete the following chart (when answering the problems, please enter the numbers as shown on the financial statement). Home Depot Revenue Cost of Revenue Gross Profit Total Operating Expenses Net Earnings 2016 2015 2014 Trending Question 8 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Financials”, then click on the statement that you would like to view. Finally, click on the "%" button to view the financials using vertical analysis Then, you can use the data provided to answer the following questions. For a video explanation, please view https://www.youtube.com/watch? v=qFDPmMLHOMo [+]. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for Lowe’s Companiesas well. There is also a button just above the Performance tab that you can use to print the page if you prefer. Another option is to print off this assignment and complete it on paper before returning to enter your answers. Let’s begin by viewing the Balance Sheet of the Home Depot. Remember, under vertical analysis, Total Assets will be set equal to 100% and then every component of the Balance Sheet will be shown as a percentage of Total Assets. Then, locate the same information for Lowe’s. Please complete the following chart (when answering the problems, please omit the % sign and enter 2 decimal places). We will focus our attention on the Vertical Analysis of the Balance Sheet for the year ended January 2016. Balance Sheet Vertical Analysis Home Depot Lowes Total Cash Total Inventories Total Current Assets Property, Plant & Equipment Total Current Liabilities Total Non-current Liabilties Total Stockholder’s Equity __________________________________________________________________________________________________ Question 9 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Financials”, then click on the statement that you would like to view. Finally, click on the "%" button to view the financials using vertical analysis Then, you can use the data provided to answer the following questions. For a video explanation, please view https://www.youtube.com/watch? v=qFDPmMLHOMo [+]. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for Lowe’s Companiesas well. There is also a button just above the Performance tab that you can use to print the page if you prefer. Another option is to print off this assignment and complete it on paper before returning to enter your answers. Let’s begin by viewing the Income Statement of the Home Depot. Remember, under vertical analysis, Revenues will be set equal to 100% and then every component of the Income Statement will be shown as a percentage of Revenues. Please complete the following chart (when answering the problems, please omit the % sign and enter 2 decimal places). We will focus our attention on the Vertical Analysis of the Income Statement for the year ended January 2016. Income Statement Vertical Analysis Home Depot Lowes Cost of Revenue (Cost of Goods Sold) Gross Profit Total Operating Expenses Net Income Question 10 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Key Ratios”, then click on it. Then, you can use the data provided to answer the following questions. Click on this link for a video explanation, https://www.youtube.com/watch?v=7ocuXYXiqqU [+]. Please keep in mind that there are 5 tabs under the Key Ratios tab toward the bottom that contain different information you’ll need. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for "Lowe’s Companies" as well. Then, answer the remaining question comparing the two companies. A brief hint would be to print off this assignment and complete it on paper before returning to enter your answers. You also have the option to print the Morningstar pages using the button just above the "Performance" tab. We will focus our attention for the Key Ratios for the year ended January 2016. Liquidity Ratios – review Home each companies ability to Depot pay current liabilities Lowes Which is better? Current Ratio Quick (Acid-test) Ratio Working Capital Question 11 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Key Ratios”, then click on it. Then, you can use the data provided to answer the following questions. Click on this link for a video explanation, https://www.youtube.com/watch?v=7ocuXYXiqqU [+]. Please keep in mind that there are 5 tabs under the Key Ratios tab toward the bottom that contain different information you’ll need. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for "Lowe’s Companies" as well. Then, answer the remaining question comparing the two companies. A brief hint would be to print off this assignment and complete it on paper before returning to enter your answers. You also have the option to print the Morningstar pages using the button just above the "Performance" tab. We will focus our attention for the Key Ratios for the year ended January 2016. Efficiency Ratios look at each company’s ability to Home buy and sell merchandise Depot and collect on their receivables. Lowes Which is better? Days Inventory Ratio Receivables Turnover Ratio Inventory Turnover Ratio Question 12 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Key Ratios”, then click on it. Then, you can use the data provided to answer the following questions. Click on this link for a video explanation, https://www.youtube.com/watch?v=7ocuXYXiqqU [+]. Please keep in mind that there are 5 tabs under the Key Ratios tab toward the bottom that contain different information you’ll need. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for "Lowe’s Companies" as well. Then, answer the remaining question comparing the two companies. A brief hint would be to print off this assignment and complete it on paper before returning to enter your answers. You also have the option to print the Morningstar pages using the button just above the "Performance" tab. We will focus our attention for the Key Ratios for the year ended January 2016. Solvency Ratios reflect a Home companies ability to pay Depot long-term debt Lowes Which is better? Debt / Equity Ratio Interest Coverage Ratio Question 13 Go to Morningstar.com . At the top of the page, in the middle, start to enter "Home Depot" in the box just before "Quote". As you start to type the company name a list of potential selections will pop up. Keep typing until you see "Home Depot" and then select it and hit the "Quote" button. Once you enter the company name or symbol, scroll down until you locate a tab called, “Key Ratios”, then click on it. Then, you can use the data provided to answer the following questions. Click on this link for a video explanation, https://www.youtube.com/watch?v=7ocuXYXiqqU [+]. Please keep in mind that there are 5 tabs under the Key Ratios tab toward the bottom that contain different information you’ll need. Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for "Lowe’s Companies" as well. Then, answer the remaining question comparing the two companies. A brief hint would be to print off this assignment and complete it on paper before returning to enter your answers. You also have the option to print the Morningstar pages using the button just above the "Performance" tab. We will focus our attention for the Key Ratios for the year ended January 2016. Profitability Ratios Home Depot Lowes Which is better? Net Margin % Return on Assets % Return on Equity % Earnings per share Question 14 Then, answer the following questions related to Home Depot. Once you have entered the information for the Home Depot, you’ll have to repeat the above steps to answer the questions for "Lowe’s Companies" as well. Then, answer the remaining question comparing the two companies. A brief hint would be to print off this assignment and complete it on paper before returning to enter your answers. You also have the option to print the Morningstar pages using the button just above the "Performance" tab. We will focus our attention for the Key Ratios for the year ended January 2016. Market Analysis Ratios Home Depot Lowes Dividends (per share) Dividend Payout Ratio Which is better? Select an answer Now, for the most important question: Taking into account your review of the Liquidity, Efficiency, Sovency, Profitability, and Market Analysis Ratios for Home Depot and Lowes, which company do you think would be a better investment?

#FINANCIAL ANALYSIS ASSIGNMENT

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monicaevansposts-blog · 8 years ago

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FINANCIAL ANALYSIS ASSIGNMENT

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Financial Analysis Assignment

#FINANCIAL ANALYSIS ASSIGNMENT

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monicaevansposts-blog · 8 years ago

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FINAL PROJECT

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For the Final Project, select the following topic and conduct scholarly and professional research while integrating the course’s learning outcomes to address a selected topic:

Research specific leadership and management traits and theories necessary for managing a multidisciplinary and multicultural health care organization to promote organizational effectiveness.

Research Requirements

Academic research and papers must meet certain standards of quality that are recognized by the academic community. What constitutes quality academic research?

The use of primary (original), credible sources written by experts in the field of study.

Ensuring secondary sources are supported by research in primary sources.

In graduate work, the use of peer-reviewed journal articles (journal articles reviewed by recognized experts in the relevant field of study) is required.

All research must reflect professional academic protocol and must be documented according to APA standards

Creating the Final Project

You may choose to present your research is the form of an eight- to ten-page research paper (excluding title and reference pages)

Introduction

Describe the issue. Include why it was selected, the perspective of your approach to the issue, and the scope of the paper or presentation. In essence, describe in this area what is being covered. Be specific and to the point. This is an important part of the project as it engages the reader and sets the scope of the research.

Statement of the Issue to be Investigated

Describe why the topic is a relevant problem or issue. It is important to provide literature sources in support of the importance of the need/issue/topic. For example, if you are interested in researching the issue of nutrition in early childhood brain development among American children – cite literature identifying the scope of the problem (for example: the number of malnourished children, the implications of malnourishment on learning and brain development; and long term implications). Overall, this section should detail what makes this topic or issue so important that you are spending time and energy researching it. What is the impact of the problem if nothing is done to correct the situation?

Research Sources

This section documents the relevant research reflecting the topic of the Final Project. In this section, paraphrased narratives of the actual research studies are reported and should represent the current research related to the topic area. In general, your research should:

Identify your chosen topic and what has happened in the specific research of the topic (describe the study, sample, findings, important points from the discussion in the research article, and any variables that may influence the findings of the research).

Discuss any key elements of the topic that may be instructional, legal, ethical, social, etc. (what is projected if nothing is done? what has been tried?). Support this section with relevant resource citations.

Provide an analysis of the research articles used, including: explaining what was done in the study, what the target population was, information about who did the research (the author), what was found with the study, and any implications of the findings to your topic or issue.

Conclusion

In this section, provide a general, but thorough summary reviewing: why the topic was selected; the problem or issue briefly stated; the approach that was used; findings; and solutions. In this section, the reader or audience should have a good idea of what the researcher did and what was found.

References

The references should be listed on a new page or slide and must be formatted according to APA requirements as outlined in the Ashford Writing Center. You must use a minimum of six to eight scholarly sources.

#FINAL PROJECT

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monicaevansposts-blog · 8 years ago

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FINAL PROJECT

To Download tutorial Copy and Paste below Link into your Browser

https://www.essayblue.com/downloads/1191/

for any inquiry email us at ( [email protected] )

For the Final Project, select the following topic and conduct scholarly and professional research while integrating the course’s learning outcomes to address a selected topic:

Research specific leadership and management traits and theories necessary for managing a multidisciplinary and multicultural health care organization to promote organizational effectiveness.

Research Requirements

Academic research and papers must meet certain standards of quality that are recognized by the academic community. What constitutes quality academic research?

The use of primary (original), credible sources written by experts in the field of study.

Ensuring secondary sources are supported by research in primary sources.

In graduate work, the use of peer-reviewed journal articles (journal articles reviewed by recognized experts in the relevant field of study) is required.

All research must reflect professional academic protocol and must be documented according to APA standards

Creating the Final Project

You may choose to present your research is the form of an eight- to ten-page research paper (excluding title and reference pages)

Introduction

Statement of the Issue to be Investigated

Research Sources

Conclusion

References

#FINAL PROJECT

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monicaevansposts-blog · 8 years ago

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FIN370 CLASS BOARDS

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Following is a discussion on the FIN370 class boards. Please answer question and answer needs to be substantive and needs an example. Thanks

So far we discussed evaluating project, however, it is often difficult to find them In competitive markets, generating ideas for profitable project is extremely difficult. The competition is tough for new profitable projects. for this reason, a firm must have a systematic strategy for generating capital-budgeting projects. Then the techniques we described in this thread would be applied. What are some companies that developed new project? Did these project, ideas, or products result in financial success for the company

#FIN370 CLASS BOARDS

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monicaevansposts-blog · 8 years ago

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FIN370 CLASS BOARDS

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Following is a discussion on the FIN370 class boards. Please answer question and answer needs to be substantive and needs an example. Thanks

#FIN370 CLASS BOARDS

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monicaevansposts-blog · 8 years ago

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FIN 665: FINAL PROJECT GUIDELINES AND GRADING GUIDE

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FIN 665: Final Project Guidelines and Grading Guide

The final project for this course is the creation of an Individual Case Analysis. The primary objective of this project is for students to understand how to analyze the capital structure of a company. Students will also improve their understanding of some basic forms of debt financing and learn to formulate strategies in structuring debt financing. The case will also expose students to the process of debt rating and its importance. Because of its international setting, the case provides an excellent opportunity for students to obtain an understanding of international capital markets and offshore offerings. Students will apply the case method described in this document. They will define the problem, build an analysis separating the important facts from the peripheral data, develop alternative courses of action citing advantages and disadvantages, and make final recommendations on policies that will maximize value for the business.

Main Elements

Case Method

The case method is an important tool in educating managers by allowing students to bring to life conceptual material that is often difficult to understand without application, and aiding in integrating tools and theories students have learned by applying them to relevant management decisions.

The cases used in this course are a record of issues and problems actually faced by business executives, with supporting facts, opinions, and financial data that decisions were based on. These real-life situations are summarized by case writers who provide you with all of the relevant information that was available to the decision makers involved. If the information presented seems incomplete, remember that this only mirrors the business world reality of decision making with limited information. Obtaining more information costs time and money, resources that are scarce in most situations.

Each case, like each management situation, is unique. Since there is no one best procedure for solving problems or making decisions, there are no right or wrong answers in case analysis. Each class member will approach the case in a different manner. However, the following procedure can serve as a rough guide to your analysis which can be fine-tuned to personal preferences.

Procedure

1. Read the Case. The first step is to get acquainted with the situation. Read through the case quickly, getting a general feel for what is going on. Who are the main players? What types of information are available to you? Go back and reread the case carefully, paying particular attention to case facts, figures, and diagrams. Be careful to separate symptoms and problems. Case writers will often flag important issues by italics, headings, or questions at the end of the case.

2. Define the Problem. Put yourself in the place of the decision makers in the case (managers, investors, debt holders, banks, employees, etc.). What are the critical issues? Does one problem stand out as primary, with other problems secondary or contingent upon it? Establish a time dimension to the problems; which problems demand immediate action, and which are long-term or strategic in nature? What critical assumptions are being made by the decision makers in the case, and how do these assumptions influence their chosen strategies? Try to state the problems so as to identify (a) who must take action, (b) why action must be taken, and (c) when should action be taken.

3. Build your Analysis. Gather the important facts and concepts in the case, and discard unimportant or fringe issues and data. Build a theme for your analysis, and establish the importance of the problems you have identified. Incorporate your knowledge of cultural impact on the situation, financial analysis, accounting techniques, marketing methods, economics, and human behavior into your analysis. Put theory to work in your paper, by using concepts from the readings and module overviews to analyze the problems and issues and explain why they require responses by management.

4. Develop Alternatives. Examine the alternative courses of action that are available to the firm. Make a list of the advantages and disadvantages of each. Don’t use “straw-man” alternatives (those that are patently unfeasible or undesirable). Develop a few well-reasoned responses that could solve the problems, and critically evaluate them.

5. Make a Recommendation. Based on your analysis of alternative courses of action, choose the best and recommend course of action. Be specific in your statements. How will your recommendation be implemented? Circle back through the case to identify possible points of inconsistency between your recommendation and case facts. What potential problems might crop up? How will internal constituencies (e.g., management, employees) and external constituencies (e.g., competitors, stockholders) react, and how will you handle their responses? What assumptions have you made in developing your recommendation?

Please review Writing and Revising/ Editing the Case Analysis for additional information on structuring a case analysis.

Deliverable: Case Write-Up

The write-up must include the following items:

Title page containing case name and date

Brief summary of the business situation in the case

Identification of problems or issues

Analysis of the problems or issues including the nature of the problems, causes of the problems, constraints, and related theories (framework for your analysis)

List of alternatives for solving problems, including pros and cons of each alternative

Your recommended alternative and clear reasoning for you decision

Supporting spreadsheets or charts

References

Read this Example of Case Analysis Writing for an example of a case analysis report from Ashford University.

Since most cases used in the class require a composite of careful thinking, conceptualization, quantitative analysis, and some form of decision making, your comments will be evaluated based on breadth and depth of your thought process demonstrated in your discussion. While you should put the problem in a context, you should not merely repeat case facts. You will get credit for only meaningful and high quality analysis.

Hutchison Whampoa Limited: The Capital Structure Decision

Obtain the Hutchison Whampoa Case from Harvard Business Publishing Coursepack. After reading the case, you are expected to submit a preliminary case analysis report (progress report) at the end of Module Five and a final case analysis report at the end of Module Ten. You are highly encouraged to utilize the Individual Case Analysis Questions forum to help you with this task. To help you with the analysis of this case, below are suggested questions for you to discuss on when analyzing it. Note that while these questions are helpful, your reports should not be written to answer these questions but to provide a full analysis of the case.

Suggested Questions

1. What kind of capital structure would you propose to Hutchison Whampoa in light of its future needs and why?

2. What bond rating do you think Hutchison Whampoa will be able to obtain from Standard and Poor’s?

3. What are the debt financing options? Why you are for/against the Yankee bond option?

4. Assume Hutchison Whampoa will require $1 million USD of financing in 1996. Assume that new equity can be raised at $48.8 a share and that a long-term debt issue will carry an interest cost of HIBOR plus 70 basis points (bps). How would an equity or debt issue impact Hutchison’s financial position and performance?

Format

In 8-4 Final Project: Milestone Two: you will submit a rough draft. The draft should contain the work from the progress report, reflecting the incorporation of the previous feedback. In addition, the identification and the evaluation of alternatives for solving problems as well as the recommended courses of action should be included in this rough draft. Be sure to provide convincing arguments, supporting information, and spreadsheet analysis to support your views and recommendations. The draft should be 8–10 pages, not including tables, charts, and references.

Final Project Rubric

Requirements of submission: Written components of projects must follow these formatting guidelines when applicable: double spacing, 12-point Times New Roman font, one-inch margins, and APA-style citations. Your case write-ups should be approximately 8-10 pages long including charts and figures.

Instructor Feedback: Students can find their feedback in the grade book as an attachment.

Critical Elements

Exemplary

Proficient

Needs Improvement

Not Evident

Value

Identification ofthe Main Issues/ Problems

Demonstrates a clear and deep understanding of main issues/problems in the case study

(18-20)

Demonstrates deep understanding of main issues/problems in the case study

(16-17)

Demonstrates limited understanding of main issues/problems in the case study

(14-15)

Demonstrates superficial understanding of main issues/problems in the case study

(0-13)

Analysis of the Issues/Problems

Makes appropriate, insightful, and powerful connections between the issues/problems and the theory. Relevant financial analysis is applied properly

(18-20)

Makes appropriate and insightful connections between the issues/problems and the theory. Relevant financial analysis is applied

(16-17)

Makes appropriate but somewhat vague connections between the issues/problems and the theory. Inadequate financial analysis is applied

(14-15)

Makes little or no connection between the issues/problems and the theory. No relevant financial analysis is applied

(0-13)

Identification and Evaluation of Alternatives

Identifies a comprehensive set of thoughtful alternatives. Pros and cons for alternatives are provided. Arguments are convincing, supported, and comprehensive

(18-20)

Identifies majority of alternatives. Pros and cons for alternatives are provided. Most of the arguments are convincing and supported.May be missing a few pros and/or cons

(16-17)

Identifies few alternatives. Pros and cons for alternatives are provided. Arguments, however, are insufficiently convincing and supported

(14-15)

Identifies few, if any, alternatives. Missingsignificant discussion of

alternative pros or cons

(0-13)

Recommendations

Makes realistic, appropriate, and insightful recommendations clearly supported by the information presented and the theory from the chapter

(18-20)

Makes realistic and appropriate recommendations clearly supported by the information presented and the theory from the chapter

(16-17)

Makes realistic or appropriate recommendations supported by the information presented and the theory from the chapter

(14-15)

Makes realistic or appropriate recommendations with limited support from the information presented and the theory from the chapter

(0-13)

Writing(Mechanics/Citations)

Writing demonstrates sophisticated clarity, conciseness, and correctness; includes thorough details and relevant data and information; extremely well-organized. Uses APA guidelines accurately and consistently to cite sources

(18-20)

Writing is accomplished in terms of clarity and conciseness and contains only a few errors; includes sufficient details and relevant data and information; well-organized. Uses APA guidelines with minor violations to cite sources

(16-17)

Writing lacks clarity or conciseness and contains numerous errors; gives insufficient detail and relevant data and information; lacks organization. Reflects incomplete knowledge of APA guidelines

(14-15)

Writing is unfocused, rambling, or contains serious errors; lacks detail and relevant data and information; poorly organized. Does not use APA guidelines

(0-13)

Total:Comments:

100%

#FIN 665: FINAL PROJECT GUIDELINES AND GRADING GUIDE

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monicaevansposts-blog · 8 years ago

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FIN 620 FINAL EXAMINATION

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FIN 620 Final Examination

1. Problem 19-4 Stock Splits and Stock Dividends

Roll Corporation (RC) currently has 330,000 shares of stock outstanding that sell for $64 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:

RC has a five-for-three stock split? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

New share price

RC has a 15 percent stock dividend? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

New share price

RC has a 42.5 percent stock dividend? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

New share price

RC has a four-for-seven reverse stock split? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

New share price

Determine the new number of shares outstanding in parts (a) through (d). (Do not round intermediate calculations and round your answers to the nearest whole number. (e.g., 32))

a. New shares outstanding

b. New shares outstanding

c. New shares outstanding

d. New shares outstanding

2. Problem 19-16 Dividend Smoothing

The Sharpe Co. just paid a dividend of $1.80 per share of stock. Its target payout ratio is 40 percent. The company expects to have an earnings per share of $4.95 one year from now.

If the adjustment rate is .3 as defined in the Lintner model, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Dividend

If the adjustment rate is .6 instead, what is the dividend one year from now? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Dividend

Which adjustment rate is more conservative?

3. Problem 29-16 Mergers and Shareholder Value

Bentley Corp. and Rolls Manufacturing are considering a merger. The possible states of the economy and each company’s value in that state are shown here:

State

Probability

Bentley

Rolls

Boom

.70

290,000

260,000

Recession

.30

110,000

80,000

Bentley currently has a bond issue outstanding with a face value of $125,000. Rolls is an all-equity company.

What is the value of each company before the merger? (Do not round intermediate calculations.)

Value of Bentley

Value of Rolls

What are the values of each company’s debt and equity before the merger? (Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations.)

Equity of Rolls

Debt of Rolls

Equity of Bentley

Debt of Bentley

If the companies continue to operate separately, what are the total value of the companies, the total value of the equity, and the total value of the debt? (Do not round intermediate calculations.)

Value of companies

Value of equity

Value of debt

d.1

What would be the value of the merged company? (Do not round intermediate calculations.)

Merged company value

d.2

What would be the value of the merged company’s debt and equity? (Do not round intermediate calculations.)

Value of the company

Value of debt

Value of equity

e-1.

How much would shareholders gain or lose in the merger? (Do not round intermediate calculations. Enter a gain as a positive number and a loss as a negative number.)

Shareholders’ gain or loss

e-2.

How much would bondholders gain or lose in the merger? (Do not round intermediate calculations. Enter a gain as a positive number and a loss as a negative number.)

Bondholders’ gain or loss

4. Problem 29-8 EPS, PE, and Mergers

The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here:

Flannery

Stultz

Price–earnings ratio

6.35

12.70

Shares outstanding

73,000

146,000

Earnings

230,000

690,000

Flannery’s shareholders will receive one share of Stultz stock for every three shares they hold in Flannery.

a-1

What will the EPS of Stultz be after the merger? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.16))

EPS

a-2

What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

What must Stultz feel is the value of the synergy between these two firms? (Do not round intermediate calculations.)

Synergy value

5. Problem 19-20 Dividends versus Reinvestment

After completing its capital spending for the year, Carlson Manufacturing has $1,000 extra cash. Carlson’s managers must choose between investing the cash in Treasury bonds that yield 8 percent or paying the cash out to investors who would invest in the bonds themselves.

If the corporate tax rate is 35 percent, what personal tax rate would make the investors equally willing to receive the dividend or to let Carlson invest the money? (Do not round intermediate calculations.)

Personal tax rate

Is the answer to (a) reasonable?

Yes

Suppose the only investment choice is a preferred stock that yields 12 percent. The corporate dividend exclusion of 70 percent applies. What personal tax rate will make the stockholders indifferent to the outcome of Carlson’s dividend decision? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Personal tax rate

Is this a compelling argument for a low dividend payout ratio?

Yes

Edie’s Health and Beauty Supply has 125,000 shares of stock outstanding with a par value of $1 per share and a market value of $5 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. What will the par value per share be after the split?

$0.20

$1.00

$2.50

$5.00

$10.00

On March 1, you contract to take delivery of 1 ounce of gold for $495. The agreement is good for any day up to April 1. Throughout March, the price of gold hit a low of $425 and hit a high of $535. The price settled on March 31 at $505, and on April 1st you settle your futures agreement at that price. Your net cash flow is:

$-30.

$-20.

$-15.

$10.

$20.

You purchased 200 shares of ABC stock on July 15th. On July 20th, you purchased another 100 shares and then on July 22st you purchased your final 200 shares of ABC stock. The company declared a dividend of $1.10 a share on July 5th to holders of record on Friday, July 23rd. The dividend is payable on July 31st. How much dividend income will you receive on July 31st from ABC?

$220

$330

$440

$550

The common stock of Winsson, Inc. is currently priced at $52.50 a share. One year from now, the stock price is expected to be either $54 or $60 a share. The risk-free rate of return is 4%. What is the value of one call option on Winsson stock with an exercise price of $55?

$0.39

$0.41

$0.45

$0.48

$0.51

A manager should attempt to maximize the value of the firm by:

changing the capital structure if and only if the value of the firm increases.

changing the capital structure if and only if the value of the firm increases to the benefit of inside management.

changing the capital structure if and only if the value of the firm increases only to the benefits of the debtholders.

changing the capital structure if and only if the value of the firm increases although it decreases the stockholders’ value.

changing the capital structure if and only if the value of the firm increases and stockholder wealth is constant.

Nelson Company had equity accounts in 2008 as follows:

Projected income is $150,000 and 40% of this amount will be paid out immediately as dividends. What will the ending retained earnings account be?

$122,000

$90,000

$242,000

$210,000

$92,000

The Tip-Top Paving Co. has an equity cost of capital of 16.97%. The debt to value ratio is .6, the tax rate is 34%, and the cost of debt is 11%. What is the cost of equity if Tip-Top was unlevered?

0.08%

3.06%

14.0%

16.97%

None of these.

Which one of the following stocks is correctly priced if the risk-free rate of return is 3.6% and the market rate of return is 10.5%?

An IPO of a firm formerly financed by venture capital is carried out for what primary purposes?

Insiders can sell their shares or cash out

Generate cash to pay down bank indebtedness

To establish a market value for the equity and provide funds for operations

All of the above.

None of the above.

Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $7,650 to buy and would be straight-line depreciated to a zero salvage value over 9 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 8%. The corporate tax rate is 30%.

What is the NPV of the lease relative to the purchase?

-$1,039.78

$339.78

$360.22

$6,610.22

None of these

A financial institution has equity equal to one-tenth of its assets. If its asset duration is currently equal to its liability duration, then to immunize, the firm needs to:

decrease the duration of its assets.

increase the duration of its assets.

decrease the duration of its liabilities.

do nothing, i.e., keep the duration of its liabilities equal to the duration of its assets.

Given the following information, leverage will add how much value to the unlevered firm per dollar of debt? Corporate tax rate: 34% Personal tax rate on income from bonds: 20% Personal tax rate on income from stocks: 50%

$-0.050

$-0.188

$0.367

$0.588

None of these

The market portfolio of common stocks earned 14.7% in one year. Treasury bills earned 5.7%. What was the real risk premium on equities?

12.2%

18.7%

9.0%

6.5%

5.0%

You own one call option with an exercise price of $30 on Nadia Interiors stock. This stock is currently selling for $27.80 a share but is expected to increase to either $28 or $34 a share over the next year. The risk-free rate of return is 5% and the inflation rate is 3%. What is the current value of your option if it expires in one year?

$0.76

$0.79

$0.89

$0.92

$0.95

The six components that make up the total costs of new issues are:

the spread; other direct expenses such as filing fees; indirect expenses such as management time; economies of scale; abnormal returns and the Green Shoe option.

the discount; other direct expenses such as filing fees; indirect expenses such as management time; due diligence costs; abnormal returns and the Green Shoe option.

the spread; other direct expenses such as filing fees; indirect expenses such as management time; abnormal returns; underpricing and the Green Shoe option.

the spread; other direct expenses such as filing fees; economies of scale; due diligence costs; abnormal returns and underpricing.

None of the above.

The Telescoping Tube Company is planning to raise $2,500,000 in perpetual debt at 11% to finance part of their expansion. They have just received an offer from the Albanic County Board of Commissioners to raise the financing for them at 8% if they build in Albanic County. What is the total added value of debt financing to Telescoping Tube if their tax rate is 34% and Albanic raises it for them?

$850,000

$1,200,000

$1,300,000

$1,650,000

There is no value to the scheme; Albanic is just conning Telescoping Tube into moving.

Alto and Solo are all-equity firms. Alto has 2,400 shares outstanding at a market price of $24 a share. Solo has 4,000 shares outstanding at a price of $17 a share. Solo is acquiring Alto for $63,000 in cash. The incremental value of the acquisition is $5,500. What is the net present value of acquiring Alto to Solo?

$100

$400

$1,200

$2,400

$5,500

Top of Form

On June 9th, you purchased 3,000 shares of SP stock. On July 5th, you sold 400 shares of this stock for $21 a share. You sold an additional 400 shares on July 18th at a price of $22.50 a share. The company declared a $.30 per share dividend on June 20th to holders of record as of July 10th. This dividend is payable on July 31st. How much dividend income will you receive on July 31st as a result of your ownership of SP stock?

$120

$780

$810

$1,000

It is impossible to calculate with the information given

Bottom of Form

Firm A is planning on merging with Firm B. Firm A will pay Firm B’s stockholders the current value of their stock in shares of Firm A. Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share. Firm B has 1,800 shares outstanding at a price of $15 a share. What is the value per share of the merged firm?

$19.00

$19.18

$19.44

$20.00

$20.33

If rates in the market fall between now and one month from now, the mortgage banker:

loses as the mortgages are sold at a discount.

gains as the mortgages are sold at a discount.

loses as the mortgages are sold at a premium.

gains as the mortgages are sold at a premium.

neither gains nor loses.

#FIN 620 FINAL EXAMINATION

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