19.5621 4.1822 2.0447 0.7339 3.5424 0.2947 0.1102 0.0538 0.1532 0.5171 73.2649 8.0492 4.2977 2.1276 0.6450 3.4198 0.2691 0.0754 0.0363 0.1091 0.2492 2001 2002 2003 2004 2005 EBIT/Sales EBT/EBIT 0.0514 0.1864 0.1280 0.6176 0.1102 0.7177 0.0754 0.7076 0.0465 0.6731 Analysis of ROE -5 Way NI/EBT Total Asset Turnover Debt Ratio 0.6794 1.3425 0.9300 0.6800 2.0658 0.8415 0.6800 2.0447 0.7339 0.6799 2.1276 0.6450 0.6801 2.1318 0.6454 2005 856.00 629.43 226.57 160.23 26.54 39.80 13.01 26
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MANAGEMENT CONSULTANCY - Solutions Manual CHAPTER 18 LONG-TERM FINANCING DECISIONS I. Questions 1. Both operating and financial leverage imply that the firm will employ a heavy component of fixed cost resources. This is inherently risky because the obligation to make payments remains regardless of the condition of the company or the economy. 2. Debt can only be used up to a point. Beyond that‚ financial leverage tends to increase the overall costs of financing to the firm as well as
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15 EBIT = $1‚800‚000‚000. = 0.05 NI = $600‚000‚000. Now use the income statement format to determine interest so you can calculate the firm’s TIE ratio. EBIT $1‚800‚000‚000 See above. INT 800‚000‚000 EBT $1‚000‚000‚000 EBT = $600‚000‚000/0.6 Taxes (40%) 400‚000‚000 NI $ 600‚000‚000 See above. TIE = EBIT/INT = $1‚800‚000‚000/$800‚000‚000 = 2.25. 3-6 We are given ROA = 3% and Sales/Total assets = 1.5. From Du Pont equation: ROA = Profit
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CHAPTER 4 FINANCIAL PLANNING FOCUS We begin by explaining the nature of business planning and placing financial forecasting within that broader context. Once we get into financial planning we focus on exactly how to construct plans from physical assumptions about a business and its environment. Finally we look at some of the problems created when plans function as both goal statements and projections of what is most likely to happen in the future. PEDAGOGY This chapter
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CHAPTER 8 MAKING CAPITAL INVESTMENT DECISIONS Answers to Concept Questions 1. In this context‚ an opportunity cost refers to the value of an asset or other input that will be used in a project. The relevant cost is what the asset or input is actually worth today‚ not‚ for example‚ what it cost to acquire. 2. a. Yes‚ the reduction in the sales of the company’s other products‚ referred to as erosion‚ should be treated as an incremental cash flow. These lost sales are included because
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II. M-commerce – M-commerce is also known as Mobile e-commerce. M-commerce was first launched at the Global Mobile Commerce Forum by Kevin Duffy in 1997. This service has the capability to deliver goods directly to the customers online‚ via wireless handheld devices. Payment System There are many ways of paying or translating money online. I. Cash on delivery –Cash on delivery is the selling of products according to the orders where payment is made after the delivery rather than in advance
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Chapter 3 Analysis of Financial Statements LEARNING OBJECTIVES After reading this chapter‚ students should be able to: • Explain why ratio analysis is usually the first step in the analysis of a company’s financial statements. • List the five groups of ratios‚ specify which ratios belong in each group‚ and explain what information each group gives us about the firm’s financial position. • State what trend analysis is‚ and why it is important. • Describe how
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Chapter 4 Analysis of Financial Statements Learning Objectives After reading this chapter‚ students should be able to: ◆ Explain what ratio analysis is. ◆ List the five groups of ratios and identify‚ calculate‚ and interpret the key ratios in each group. In addition‚ discuss each ratio’s relationship to the balance sheet and income statement. ◆ Discuss why ROE is the key ratio under management’s control‚ how the other ratios affect ROE‚ and explain how to use the DuPont
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Jones Distribution Case Finance Team -13 Executive Summary: The Company Jones Electrical Distribution was founded in 1997. The company distributes and wholesales electrical components. It is a sole proprietorship owned by Nelson Jones who is looking for a new banking relationship that will allow him to receive a larger loan to sustain his business. Even though the company has been turning in profits‚ the ineffective collection practice‚ not availing trade discounts on time and ineffective
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HW FIN 3331 Chapter 9 9.1. Warr Corporation just paid a dividend of $1.50 a share (that is‚ D0 = $1.50). The dividend is expected to grow 7% a year for 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years? D0 = $1.50; g1-3 = 7%; gn = 5%; D1 through D5 = ? D1 = D0(1 + g1) = $1.50(1.07) = $1.6050. D2 = D0(1 + g1)(1 + g2) = $1.50(1.07)2 = $1.7174. D3 = D0(1 + g1)(1 + g2)(1 + g3) = $1.50(1.07)3 = $1.8376. D4 = D0(1 + g1)(1 + g2)(1 + g3)(1 +
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