Homework Answers
(i) TRUE
(ii) FALSE - the equity holders return = Average net operating assets*Cost of capital
(iii) TRUE
(iv) TRUE
(v) TRUE
(vi) FALSE - IN PE multiple P means Share Price & E means Earnings of the firm
(vii) TRUE
(viii) FALSE - When using Book Value of the company as a summary performance measure, Growth in book value has to be considered.
(ix) TRUE
(x) TRUE
Add Answer to:
. QUESTION 4: (a) For each of the statements below, write T (True) or F (False)...
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating...
Following are forecasts of Target Corporation's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of January 30, 2016. Reported Horizon Period Terminal $ millions 2016 2017 2018 2019 2020 Period Sales $74,229 $75,714 $77,228 $78,773 $80,348 $81,151 NOPAT 3,340 3,407 3,475 3,545 3,616 3,652 NOA 22,269 22,714 23,168 23,632 24,104 24,345 Answer the following requirement assuming a terminal period growth rate of 1%, a discount rate (WACC) of 6%, common shares outstanding of 602 million,...
TRUE OR FALSE For company b, the receivables turnover ratio decreased in 2017 with respect to...
TRUE OR FALSE For company b, the receivables turnover ratio decreased in 2017 with respect to 2016. Therefore, its average collection period increased in that period. Net interest margin is defined as interest income minus cost of funding. The Price-to-earnings ratio (PE ratio) is useful as an indicator of debt, because it relates the earnings of a company to its stock price Because a firm that uses debt can be as profitable as a firm that does not, some financial...
[1] True or False? (1) Luxury goods companies have low asset turnover ratios and high operating...
[1] True or False? (1) Luxury goods companies have low asset turnover ratios and high operating profit margins. [7 marks] (2) In project valuation, one of the advantages of the Payback rule is that it provides a simple way to communicate an idea of project profitability. [7 marks] (3) Equity investors are satisfied with the performance of a company when the cost of equity is higher than ROE (return on equity)7 marks] (4) For Company A, the receivables turnover ratio...
QUESTION 5: (a) Innov Co. is a manufacturer of computer parts and sells parts in the...
QUESTION 5: (a) Innov Co. is a manufacturer of computer parts and sells parts in the local market, operating in the sub-sector of the information technology industry. Below is a summary of the financial information (dollars in millions) as at, and for the year ended 31 March 2018 for Innov Co. and five other companies the information technology industry, Ezy- Tech Ltd., Light Comm, Beta Parts, Decimal Inc., and T Zone Potential comparable companies Ezy-Tech Ltd Light Decima Innov Co....
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 In...
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 Inventories 40,140 35,250 64,920 57,460 Total Current Assets Plant Assets, Net 115,890 105,000 $180,810 $162,460 Total Assets $ 9,530 $ 7,990 Accounts Payable 7,760 7,160 Accrued Liabilities Total Current Liabilities 17,290 15,150 Long-term Debt 33,170 41,630 Total Stockholder's Equity 121,890 114,140 $180,810 $162,460 Total Liabilities and Equity GOLDSMITH INC. Income Statement for the year ended December 31, 2017 2016 2017 $95,640...
(1) Because a firm that uses debt can be as profitable as a firm that does...
(1) Because a firm that uses debt can be as profitable as a firm that does not, some financial ratios are calculated with NOPAT (Net Operating Profit After Tax) rather than with net income. (2) Free Cash Flow to the Firm measures the cash available to equity investors, after all debt payments (including interest and principal), have been made. (3) For Company T during 2017, the change in accounts receivable was positive, the change in inventories was positive, and there...
state whether each statement 1-8 if its true or false Consider the balance sheet of Wilkes...
state whether each statement 1-8 if its true or
false
Consider the balance sheet of Wilkes Industries as shown below. Because Wilkes has $800,000 of retained carnings, the company would be able to pay cash to buy an asset with a cost of $200.000 Cash Inventory Accounts receivable Total Current Assets Net fixed assets $ 50.000 Accounts payable 200.000 Accruals 250.000 Total Current Liabilities S500.000 Debt $ 900.000 Common stock Retained carnings 51.400.000 Total Liabilities & Equity $ 100.000 100.000...
(5) Because a firm that uses debt can be as profitable as a firm that does...
(5) Because a firm that uses debt can be as profitable as a firm that does not, some financial ratios are calculated t with NOPAT (Net Operating Profit After Tax) rather than with net income. [7 marks] [1] True or False? (42 points) (6) In ROC (return on capital) calculations, if the operating earnings corresponds to profits obtained during 2017, then the debt and equity values must be at end of 2017. [7 marks] (7) ROA (return on assets) ca...
You are instructed by your client to value the target company your client is considering acquiring...
You are instructed by your client to value the target company your client is considering acquiring using market-based valuation methods. Below is a summary of the financial information (dollars in millions) target company and three other companies, Company A, Company B, and Company C that you have identified as potentially comparable companies (a) as at, and for the year ended, 31 March 2018 for the Comparable companies Company Company Company C Target A Company value Equity value Net operating assets...
Lincoln Systems Co, is an all equity firm with 15 million shares of outstanding. A discount...
Lincoln Systems Co, is an all equity firm with 15 million shares of outstanding. A discount rate of 17 percent is appropriate a firm of risk. It is required to value stocks by using Free Cash Flows. The company’s revenues are forecasted to 500 million in one year are expected grow at 10 percent per year for the two years after that 7 percent per year for the next two years, and 6 percent per year after that. Expenses including...
[1] True or False? (1) Luxury goods companies have low asset turnover ratios and high operating profit margins. [7 marks] (2) In project valuation, one of the advantages of the Payback rule is that it provides a simple way to communicate an idea of project profitability. [7 marks] (3) Equity investors are satisfied with the performance of a company when the cost of equity is higher than ROE (return on equity)7 marks] (4) For Company A, the receivables turnover ratio...
QUESTION 5: (a) Innov Co. is a manufacturer of computer parts and sells parts in the local market, operating in the sub-sector of the information technology industry. Below is a summary of the financial information (dollars in millions) as at, and for the year ended 31 March 2018 for Innov Co. and five other companies the information technology industry, Ezy- Tech Ltd., Light Comm, Beta Parts, Decimal Inc., and T Zone Potential comparable companies Ezy-Tech Ltd Light Decima Innov Co....
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 Inventories 40,140 35,250 64,920 57,460 Total Current Assets Plant Assets, Net 115,890 105,000 $180,810 $162,460 Total Assets $ 9,530 $ 7,990 Accounts Payable 7,760 7,160 Accrued Liabilities Total Current Liabilities 17,290 15,150 Long-term Debt 33,170 41,630 Total Stockholder's Equity 121,890 114,140 $180,810 $162,460 Total Liabilities and Equity GOLDSMITH INC. Income Statement for the year ended December 31, 2017 2016 2017 $95,640...
state whether each statement 1-8 if its true or
false
Consider the balance sheet of Wilkes Industries as shown below. Because Wilkes has $800,000 of retained carnings, the company would be able to pay cash to buy an asset with a cost of $200.000 Cash Inventory Accounts receivable Total Current Assets Net fixed assets $ 50.000 Accounts payable 200.000 Accruals 250.000 Total Current Liabilities S500.000 Debt $ 900.000 Common stock Retained carnings 51.400.000 Total Liabilities & Equity $ 100.000 100.000...
You are instructed by your client to value the target company your client is considering acquiring using market-based valuation methods. Below is a summary of the financial information (dollars in millions) target company and three other companies, Company A, Company B, and Company C that you have identified as potentially comparable companies (a) as at, and for the year ended, 31 March 2018 for the Comparable companies Company Company Company C Target A Company value Equity value Net operating assets...
Most questions answered within 3 hours.
-
What is meant by a “term premium”?
What can explain such a premium? Is it a...
asked 15 minutes ago -
23. Which molecule has only covalent bonds? A. CO2 B. Al2O3 C.
Mg3N2
24. The octet...
asked 41 minutes ago -
the
total pressure for a mixture of N2O4 and NO2 is 2.20 atm. If Kp=
7.10...
asked 43 minutes ago -
Delaware Corp. prepared a master budget that included $22,385
for direct materials, $28,600 for direct labor,...
asked 40 minutes ago -
For pesticide HCB (hexachlorobenzene), its logarithmic partition
coefficient log Kow is 5.6. What would be the...
asked 43 minutes ago -
A chemist requires 0.422 mil Na2CO3 for a reaction. How many
grams does this correspond to?
asked 47 minutes ago -
If the vapor pressure of carvone is approximately 9.4 torr at 99
°C, approximately how much...
asked 1 hour ago -
A juice bottling company is carrying out a test at 10%
significance that the mean population...
asked 1 hour ago -
What is the reflectivity (in percent) needed to keep water at a
temperature near its freezing...
asked 1 hour ago -
Suppose that the average surface temperature of Earth is 300K.
Assume this is uniform over its...
asked 1 hour ago -
Draw the condensed structural formula for alkenes and alkynes or
the line-angle structural formula for cycloalkenes...
asked 1 hour ago -
M. Laing has suggested a new arrangement of the periodic table
(J.Chem.Ed.1989, 66,
746). Answer the following...
asked 1 hour ago