Current ratio = Current assets/current liabilities = $1,085 million / $450 million = 2.41 2. Total Debt to equity = Total liabilities / Stockholder’s equity Total liabilities for 2009 = $1003 million Stockholder’s equity for 2009 = $1,845 million Ratio of total debt to stockholders’ equity for 2009 = $1,003/$1,845 = 54.36% 3. Gross profit rate = Gross profit / Sales Gross profit for 2009 = $2,362 million Gross margin percentage for 2009 = $2,362 / $3,540 = 66.72% 4. Return on sales = Net income / Sales Net income for 2009 = $272 million Sales for 2009 = $3,540 million Return on sales for 2009 = $272 / $3540 = 7.68% 5. Return on stockholders’ equity = Net income / Average stockholders’ equity Net income for 2009 = $272 million Average stockholders’ equity for 2009 = $1,732 million Return on stockholders’ equity for 2009 = $272 / $1,732 = 15.70% 6.
Corporations have three methods available for raising new capital in the free enterprise system. retained earnings- putting money from the company’s profits back into the business after taxes and dividends, if any, have been paid borrowing- taking out loans or issuing bonds which are sold to investors equity financing- issuing new shares of stocks Although we frequently hear the words “stocks and bonds” use together, these two types of securities differ significantly. A person who buys a bond essentially is lending money to the issuer of a bond (usually a company or a branch of government). The issuer of a bond promises to repay the amount of a loan at a specific time (called the date of the bond’s maturity). Between the time the loan is made and the date of maturity, the issuer also promises to pay the bondholder a specified amount of interest at specified
Balance Sheet vertical Analysis: Costco’s long-term debt was 5.1% of their original asset in 2012; it is increased to 14.5% of their total assets in 2015. During the past four years, Costco Wholesale Corporation had a 9% increase in their long-term debt as shown on the vertical analysis of the balance sheet. There are few main causes to this change. Firstly, In December 2012, Costco issued $3,500 million of Senior Notes to fund the business, these notes are payable in 2015 2017, and 2019. Secondly, the Japanese Costco Subsidiary issued approximately $102 million of promissory notes with 1.05% interest that is due in May 2023, then the same subsidiary got an approximately $102 three-year term loan in July of 2013, which bears an interest
Memorandum to the File Date: February 1, 2017 From: Mayra Ramirez Caicedo Re: The proper accounting treatment for investments debt and equity securities Facts Orange Corporation, our client, acquired four security investments during the year 2016. First, on January 1, 2016, Orange purchased a 35% interest in Canary, Inc. for $800,000 and it paid Orange a dividend of $60,000. The fair value of the interest was $1,000,000 at the end of the year. Second, on July 1, 2016, Orange acquired 5%, 10 year bonds of ABC, Inc. for $200,000 and received semiannually payments at the end of the year. The fair value of the bonds on December 31 was $204,000.
Bankruptcy is a time of turmoil and uncertainty in any company, in addition to employees leaving and a loss of confidence from vendors and customers, management is restricted in their ability to make decisions and navigate the company. Because of the heightened uncertainty, many investors abandon the company, greatly reducing the value of the company, making the process even more difficult. However, savvy investors can generate large returns by entering the company at the right time as it begins to rebuild, so long as they can determine which companies will fail, and which will recover. H Partners is currently engaged in this process with Six Flags, having already gathered substantial returns on Six Flags’ senior debt, H Partners is determining
Describe and calculate Project A’s expected net present value (ENPV) and standard deviation (SD), assuming the discount rate (or risk-free interest rate) to be 8%. What is the decision rule in terms of ENPV? What will be San Diego LLC’s decision regarding this project? Describe your answer. Probability Cash flow Probability X Cash flow Variance = Probability 0.3 $70,000,000 $21,000,000 43,200,000,000,000 0.4 $60,000,000 $24,000,000 1,440,000,000,000,000 0.1 $50,000,000 $5,000,000 250,000,000,000,000 0.2 $40,000,000 $8,000,000 320,000,000,000,000 Total cash flow Yr 3 $58,000,000 2,053,200,000,000,000 This was done by standard deviation: √ Variance Year 1 = √ 919,200,000,000,000 = 30,318,311.30 Year 2 = √ 1,380,000,000,000,000 = 37,148,351.25 Year 3 = √ 2,053,200,000,000,000 =
E) 1- By using a financial calculator I input : n = 10, rd = I/YR = 13, PMT = 100, and FV = 1000 To get PV=837.21., the value of this bond is $837.21, Discount. 2- By using a financial calculator I input : n = 10, rd = I/YR = 7, PMT = 100, and FV = 1000 To get PV=1,210.71, the value of this bond is $1,210.71, Premium. 3- A premium bond value will decrease at maturity. A discount bond value will increase at maturity. Because all bond reach par value at maturity.
In his news conference, John F. Kennedy utilizes juxtaposition and parallelism to support his idea that with the decline of huge companies, the price of things is going to start to increase significantly for Americans. The first rhetorical strategy Kennedy uses in his news conference is juxtaposition to show that with the decline in workers and the decline in profit will create an increase in prices around the country. This is shown when he says "when we are devoting our energies to economic recovery and stability, when we are asking Reservists to leave their homes and families for months on end, and servicemen to risk their lives- and four were killed in the last two days in Viet Nam- and asking union members to hold down their wage requests,
Supporters believe that raising the minimum wage will positively affect the economy. The individuals that are not supporters of the minimum wage increase feel that an increase, (while it is helping low-income individuals) will make it more difficult for companies and businesses to succeed. Anti- supporters believe that due to the fact that company owners would have to raise wages or prices of their products in order to make profits, this could eventually lead to the business closing. This could then lead to a “trickle-down” effect for the rest of the economy. Anti- supporters believe an increase in the minimum wage will negatively affect the economy.
As Anthony Seldon and Daniel Collings stated in their publication, Britain Under Thatcher, The policy of privatisation called "a crucial ingredient of Thatcherism" (Seldon, Collings, 1). Thatcher accelerated her wish to privatise many state owned companies after her success in retaining power from the 1983 general election. The government sold twenty nine billion pounds worth of state owned business to private companies. This impacted British society as it fuelled the huge economic growth that the United Kingdom experienced during this time. However, privatisation also often results in these services becoming more expensive to the general public as private businesses run their companies to make a profit, whereas the government’s main focus for these services is to make them available to its citizens, then to try and make a profit.
The maximum depreciation rate for the property is 10%. It is subsequently retired by the taxpayer as obsolete on December 31 of the third year. The deductible portion resulting from obsolescence is $350,000 ($500,000 - ($50,000 × 3)), and this amount is adjusted for inflation in order to determine the deduction for obsolescence of the property. Note that this amount does not reflect the actual depreciation deductions taken with respect to the property, which, because of inflation, will have exceeded $150,000 ($50,000 per year) over the three-year period during which the property was
a. How much interest will the purchaser of this home pay over the life of the loan, being that the loan is a 30 year fixed mortgage that will require the purchaser to pay $1009 per month? ($745 of this payment represents principal and interest, the rest of the amounts used to calculate payments include insurance and tax) Solution: This problem requires the use of the Finance Charge formula: The Finance charge is equivalent to the total of all monthly
iv. A company has a $20 million portfolio with a beta of 1.2. It would like to use futures contracts on the S&P 500 to hedge its risk. The index futures are currently standing at 1080, and each contract is for delivery of $250 times the index. What is the hedge that minimizes risk?
Altering Financial Statements Major companies with extensive operations such as Chesapeake Energy have several areas in which their financial statements can be altered intentionally. This can be due to issues such as motivation of employees, opportunities that may arise, and rationalizations individuals make for such actions. One area in which individuals may alter such financial information relates to understating expenses to boost profits. There are several reasons to commit such fraud and report overstated profits. Staff members may be under pressure by higher level management by standards set in the beginning of the year, in addition, bonuses and compensation packages may solely depend on profits for the year.
In the event of a federal rate hike, in mid-December, there will be many pros and cons. Some of the pros include higher interest rates for savers and more interest income for retirees. A rate hike could also help people who are on-the-fence about buying a house get off the fence. It could also help to strengthen the dollar bill and might lead to a slight jump in bank loans. The con that people are most worried about is a higher interest rates on loans.