...An analysis of American International Group (AIG) indicates that it is a multinational insurance corporation that operates across the globe with around 88 million customers in its database. The company accounts for employing more than 64000 people across 90 countries. There are three major types of businesses that are currently operated by the company and these include AIG Property Casualty, AIG Life and Retirement and United Guarantee Corporation. These are the three important divisions that are noted in respect to AIG and they accounts for providing different insurance products and services to its customers. As for instance, AIG Property Casualty accounts for providing insurance products especially in respect to segments involving commercial, institutional and individual customers whereas AIG Life accounts for providing life insurance and retirement services to its customers. With regard to the UGC section, it focuses on providing mortgage guarantee insurance and mortgage insurance to its customers. Thus, the AIG Group as a whole accounts for providing insurance services of different categories to its larger customer database that is widely diversified, and its services are available throughout the globe. Following the financial crisis of 2008, the financial industry suffered backlash from the public following a historic and infamous series of events that threatened America’s economy. From media pundits to organized efforts such as the “Occupy: Wall Street” movement, there...
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...American General Corporation Evaluating the Risk of the American General Corporation we started from looking at company's market standing from potential investors point of view. First we take a look at the companies profile. American General Corporation is a diversified financial services organization, provides retirement services, life insurance, and consumer loans. The company offers retail financial programs through fifteen thousand merchants. American General Corp. operates in 41 states. Puerto Rico, and the United States Virgin Islands. Well, first we find out that American General Corporation is a blue chip, multibillion dollar company. This tells us right from the beginning that this financial giant is really worth looking at as a potential candidates to be added in our stock portfolio. Considering that this is a financial company dealing with investments, pension funds and life insurance we have to be very careful because these industries are most sensible to overall economy changes, and we know that at this point US economy is going through the period when recession is most expected. To get a better understanding of how this might affect companies risk we have to know how diversified companies investments are. For that we have to evaluate companies performance compare to market performance. ( for this purpose we use chart on returns for American General Corporation to S&P 500 ). As we can see from the chart behavior of the company is almost identical...
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...The American Honda Corporation began as a small motorcycle company in 1959. Today, Honda is a top manufacturer of motorcycles, power equipment, ATVs, generators, marine engines, and automobiles. From the first Honda vehicle, the S500, released in Japan to today’s top-selling Accord and Civic, Honda is one of the world’s leading manufacturers in the automobile industry. In 1967, auto production began in the Suzuka factory. In 1972, the Honda Civic debuts and by 1977, the Civic ranks first in United States fuel-economy tests for the fourth consecutive year. The Honda Prelude debuts in 1978, followed by the most profitable Honda Accord in 1982. In 1986, Honda introduces its luxury line, Acura. By 1990, the Honda Accord becomes the best-selling car model in the United States and wins the fifth consecutive 1st ranking in the J.D. Power and Associates Consumer Satisfaction Index. Honda Motor Corporation’s basic philosophy of making products acceptable in international markets has led the Company and its subsidiaries’ unique business development since its early days. As customer acceptance of Honda products in key markets increases, this philosophy has expanded to a basic business strategy of making products wherever they are being sold in quantity. Through this approach, Honda has been able to contribute to the economic welfare of a number of countries that produce Hondas. An example of Honda’s commitment to the people and countries in which its products are sold is Honda of America...
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...American Corporation Analysis ACC/561 Sep 10, 2015 American Corporation Analysis Comparative and ratio analyses are two ways that companies look at their own growth and that of their competitors. Comparative analysis is a way for businesses to look over several accounting periods and find emerging trends and see how the business is progressing in areas. Ratio analysis is a financial technique that allows companies to quickly see how they are doing at any given moment and also allows investors to see how that company is doing at that moment. Two areas that can be looked into is that of ratio analysis which focuses on liquidity and profitability ratios. Team D chose to take the American of CVS to examine and compare it to that of its competitor Walgreens to analyze its growth within its market. Comparative Profitability Comparative analysis can be completed in a number of different bases. Intercompany basis compares the financial relationship of CVS with Walgreens which is one of the competing companies (Kimmel, Weygandt, & Kieso, 2011). As shown in figure 3, 1, we analyze the data from the published financial statements from each of the individual companies. CONDENSED INCOME STATEMENTS (in millions) | | CVS | Walgreens | | Dollars | Percent | Dollars | Percent | Net sales | $139,367.00 | 100.00% | $76,362.00 | 100.00% | Cost of goods sold | $114,000.00 | 81.80% | $54,823.00 | 71.79% | Gross profit | $25,367.00 | 18.20% | $21,539.00 | 28.21% | Selling...
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...En junio de 1979, American Chemical Corporation anunció una oferta pública de todos y cada uno de los acciones de la Corporación de papel Universal. Estadounidense fue uno de los mayores química diversificada empresas en los Estados Unidos (Anexo 1). Universal era un papel de gran tamaño y de la empresa de celulosa (Anexo 2). Gestión de Universal se opuso a la toma de posesión y, entre otras cosas, demandó en una corte federal tienen la oferta de compra bloqueado por motivos de que la adquisición de American de Universal violaría la Ley Clayton de las leyes de competencia de EE.UU.. Las dos empresas dedicadas a la producción de clorato de sodio. Universal, alegó que su adquisición por parte estadounidense reduciría sustancialmente la competencia en el sodio clorato de negocio, especialmente en el sudeste de mercado de los EE.UU., donde las dos empresas se competidores. El gobierno de EE.UU. se unió a Universal en la búsqueda de un mandamiento judicial para poner Oferta estadounidense de licitación. A pesar de que negó las acusaciones, American impedido preliminar orden judicial al acordar la venta de su planta de clorato de sodio, situado cerca de Collinsville, Alabama, en el evento adquirió Universal. Estadounidense posteriormente fue un éxito en la adquisición de más del 91% de Acciones de Universal. En octubre de 1979, American comenzó a buscar un comprador para la planta de Collinsville. Una serie de los posibles compradores se acercó, incluyendo la Corporación...
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...Authors: Philip Larson American Chemical Corporation I prepared my answers by myself before discussing the case with anyone else. I only consulted other members of this class and this work is my own. In particular, I consulted Matt Thompson. 1) Do the circumstances surrounding the sale of the Collinsville plant play any role in your willingness to buy the assets? If so, how, if not, why not? On the one hand, the circumstances of the sale make me less willing to buy. In particular, both Universal and the federal government think that American’s acquisition creates antitrust issues. If this is the case, American could use its market power to change the nature of the market and make Dixon’s new plant unprofitable by setting lower prices for sodium chlorate in its other plants. On the other hand, the circumstances make me more willing to buy the assets because American has to divest the plant to comply with a court order. Therefore, they have less leverage during the sale because there are only a limited number of purchasers and American must sell. I would be more willing to purchase the plant given that demand for sodium chlorate is expected to continue increasing. On the other hand, power costs which account for the majority of manufacturing costs were rising making it more expensive to produce. 2) Which firms are relevant for obtaining an asset beta for the Collinsville...
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...Dixon Corporation, an American specialty chemicals producer, wants to buy Collinsville plant in October 1979 from American Chemical Corporation, another typical chemicals company. This plant initially costs $ 12 million, and additional optional $ 2.25 million needed to buy and install laminate technology to increase efficiency and profitability of the plant in order. A firm that is operating in the interests of its shareholders should accept all projects that increase the wealth of the shareholders. In the case of Collinsville, we have used the Net Present Value to make our recommendations. We could also have used another criterion: the Internal Rate of Return (IRR). All the details of the calculation of the NPV are in appendices attached (calculation of the WACC, which is 14,183%, and the NPV with and without laminate technology). Based on our calculations, without the laminate technology, the NPV of Collinsville turns out to be negative ($ 1 714.13 thousands). Thus, we do not recommend investing in this project since it is against shareholders’ interests. However, with the laminate technology that enables to cut power costs (which are the main charge) and eliminate graphite costs, the NPV of the project becomes positive ($ 2 409.23 thousands). In that case, we do recommend acquiring Collinsville plant, because it increases the wealth of the shareholders and it enables Dixon to complement its strategy of supplying chemicals products to the paper and pulp industry. Moreover...
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...American Corporation Analysis ACC 561 July 23, 2014 Prof. American Corporation Analysis PROFITABILITY RATIOS Note: All numbers are shown in millions except for ratios. 1. Earnings Per Share Ratio | Formula | Purpose | 2013 | 2012 | Earnings Per Share (EPS) | Net Income − Preferred Stock DividendsAverage Common Shares Outstanding | Measures the net income earned on each share of Deere’s common stock. | $9.093,537.3 – 0389.2 | $7.633,064.7 – 0401.5 | Earnings Per Share (EPS) is the gauge of John Deere’s profitability. It is the portion of Deere’s profit allocated to each outstanding share of common stock. In 2013, EPS increase by $1.46 per share. This was two (2) years in a row that Deere’s EPS has increased substantially. 2. Price-Earnings Ratio Ratio | Formula | Purpose | 2013 | 2012 | Price-Earnings Ratio | Stock Price Per ShareEarnings Per Share | Reflects investors’ assessments of Deere’s future earnings. | 9.0081.849.09 | 11.1985.447.63 | This oft-quoted statistic measures the ratio of the market price of each common stock to EPS. Price-earnings ratio (P/E) is how John Deere’s stock is measured amongst investors. Deere’s P/E tells investors what the market is willing to pay for Deere’s earnings. 3. Gross Profit Ratio Ratio | Formula | Purpose | 2013 | 2012 | Gross Profit Ratio | Gross ProfitNet Sales | Determines ability to maintain adequate selling price above its cost of goods sold. | .279,33134,997.9 | .258,49333,500.9 | John...
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...Executive Summary - Valuation of Manufacturing Plant of American Chemical Corporation (ACC) Problem Statement This report discusses; 1- Determination of weighted average cost of capital (WACC), cash flows and NPV of ACC’s Collinsville Plant with and without Laminate technology. 2- Evaluation of plant’s acquisition proposal on economic grounds. 3- Evaluation of plant’s acquisition proposal on strategic grounds. 4- Strategic issues associated with the proposal. 5- At the given price and terms, should the proposal accepted. Alternatives, if any. Discussion Determination of WACC: For the purpose of determination of cash flow’s present value, WACC is determined as 16%, as shown in the attached Exhibit B. Present value of cash flows: The workings also show calculation for 5 years however, the plant have an expected life of 10 years and therefore, the cash flows are projected over 10 years. Without laminate technology, present value of 10 years free cash flows from plant (Exhibit C) is $9.2 million. The laminate technology enhances present value of plant’s free cash flows (Exhibit E) by generating $5 million over the period of 10 years mainly due to the savings accrued (which are net of tax) in power and graphite costs, giving relief (17.5% power cost is saved due to the introduction of laminate). The tax consequence of plant’s depreciation and scrap value (nil) and also enhances the laminate benefits. Terminal Value & NPV: For 10 years, Terminal value (Exhibit D) of the...
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...JetBlue Airways Corporation vs American Airlines Group Inc. JetBlue Airways Corporation vs American Airlines Group Inc. JetBlue Airways Corporation JetBlue Airways is an airline American of low cost belonging to the JetBlue Airways Corporation. The company is headquartered in Forest Hills, near the district of Queens in the city of New York. Its main base is located at the John F. Kennedy International Airport .In 2001 , JetBlue began operations at Long Beach Airport in Long Beach, California, and then in the Logan International Airport in Boston, Massachusetts, in 2004 . It also has operations in Fort Lauderdale, Washington-Dulles and the Orlando International Airport. The airline mainly serves destinations in the United States, with flights to the Caribbean, Bahamas, Bermuda, Mexico, Colombia, and Peru and from 25 February 2016 to Ecuador. David Needleman founded the company in February 1999 under the name "New Air". In September of that same year, the airline you were granted 75 tours in John F. Kennedy International Airport, and the formal authorization of the United States was received in February 2000, beginning operations on 11 February. JetBlue's founders had originally intended to call "taxi" and therefore wear yellow to associate the new airline to the city of New York. The idea was rejected for several reasons: the negative connotation of the taxis of New York; the ambiguity of the word cab with respect to air traffic control; and threats of investor JP Morgan...
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...American Corporation Analysis The purpose of this paper is for Team C to select an American Corporation to conduct a financial analysis. Team C has selected Walmart to conduct a comparative and ratio analysis to measure the company’s profitability and liquidity. Team C will use the following profitability ratios: earning per share, price earnings ratio, return on assets ratio, gross profit rate, asset turnover ratio, payout ratio and return on common stockholders’ equity ratio to analyze Walmart’s profitability over the last three years 2014, 2013, and 2012. In addition, to this Team C will use the following liquidity ratios: working capital, current ratio, cash ratio, inventory ratio, days in inventory ratio, receivables turnover ratio and average collection period to measure Walmart’s liquidity in 2014, 2013 and 2012. Walmart’s Profitability Profitability ratios measure the income or operating success of a company for a given period of time. According to My Accounting Course, “profitability ratios focus on a company’s return on investment in inventory and other assets. These ratios show how well a company can make profits from their operations” (2014, para. 1). Discussed here are Walmart’s comparative ratio analysis for gross profit rate, profit margin ratio, return on assets ratio, and asset turnover ratio. Gross Profit Rate Gross profit ratio shows the proportion of profits generated by the sales of products or services. The ratio reveals Walmart’s ability...
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...(1) Are all the benefits of the ERP investment reasonable? Are the costs reasonable? ERP systems are information systems that allow an organization to run a synchronized configuration that strategically connects all aspects of a business, especially with the decision making and flexibility of the information system. In addition to the performance incentives, there are some operational benefits too. The major benefits that the company will incur after this project implementation are as follows: * Inventory reduction (one-time, non-taxable): when you reduce inventory; it is similar to sell off some of inventory for cash, and brings the firm cash inflow. (but it is a one-time event; cash flow will turn to zero when inventory reduces to its target level) * Additional sales units due to product availability- which is ,persistent and taxable * Increased margin. (persistent and taxable) * Cost savings due to reduced size of staff (order desk, finance, warehouse space, bad debt expense, and information systems) Amongst the underlying expenses for this project implementation, there are costs that are likely to overrun than expected. * Capital Expenditure(equipment and software license) * Implementation cost Employees Consultants Task forces * On going operational and license costs * Training costs for using new system (the real participating personnel will be way over 50) * Cost of releasing (or relocating) the reduced staffs that...
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...General Electric’s Corporation Using all possible resources helps companies maintain control of the business and its finances. The success of a company relies on the data that is gathered. General Electric has provided billions in financing so business can build and grow their operations and consumers can build their financial futures (GE 2013.) GE works towards the satisfaction of consumers through reliable resources used in the everyday life. This paper provides information on the different resources that GE uses. These resources consist of comparative analysis and ratio analysis that help measure profitability and liquidity. General Electric Ratio Analysis GE’s ability to pay its debts as the debts come due is ratio analysis. GE’s consolidated ratio position is adequate. GE consolidated ratio position is adequate. GE’s ratio is supported both by the firm’s consistent earnings track record and its ability to quickly divest business or assets to fit its strategic goals. Consolidated cash and equivalents were $8.3 billion. On a consolidated basis GE had a total of around $56 billion of contractually committed lending arrangements. General Electric, a triple-A rated, frequent borrower, is in a stable position with regards to ratio. Its issuance policy is not based on market outlook but rather on a planned program of issuance to support its ongoing financial businesses and its addition of assets. Horizontal Analysis Horizontal or trend analysis is used to evaluate a...
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...American Chemical Case The American Chemical Corporation wanted to buy any and all shares of the Universal Paper Corporation because of their combined efforts in the production of sodium chlorate. To do so without violating the Clayton Act, American agreed to sell their Collinsville production plant to Dixon Corporation. Dixon wants to buy the Collinsville plant to help diversify its specialty chemical product line. This plant initially cost 12 million dollars with an additional 2.25 million dollars needed to buy laminate technology to increase efficiency and profitability of the plant in order. Cash flow analysis with and without the laminate technology will show whether or not Dixon should go further with purchasing the plant. The cost of equity can be calculated as follows. In the case, the yield on Treasury bonds is 9.5%, which is assumed to be the risk free rate. Using a historical equity risk premium 8.4%, the CAPM method says the cost of equity for this project is 9.5%+1.38*8.4% = 21.26%. Since little information about Dixon’s debt is provided in the case, I assumed that all debt Dixon intends to borrow is used in the acquisition of Collinsville plant at 11.25%. We also assume that debt is issued at par. The after-tax cost of debt is (1-0.48)*11.25% = 5.85%. Dixon’s target level of debt-to-asset ratio is 35%, which is used to find the cost of capital: WACC = D/V*After-tax cost of debt + E/V*Cost of equity = 0.35*5.85%+0.65*21.26% = 15.87%. Calculating NPV without...
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...American Home Products Corporation INTRODUCTION The chief executive of American Home Products (AHP), William F. Laporte, is a man who is debt averse. Mr. Laporte is a man who does not like to spend money and his management style has produced outstanding financial success. However, Mr. Laporte will be retiring soon, which could mean AHP will have a new executive who may wish to change the capital structure by adding debt in order to increase shareholder wealth. At the time, AHP had practically no debt on its balance sheet; while the most comparable company, Warner-Lambert had a debt ratio of 32% and a bond rating between AAA and AA. PROBLEM STATEMENT The inevitable retirement of AHP’s chief executive has analysts wondering what, if any, change to AHP’s capital structure might look like. Furthermore, analysts are curious to know what the size of the payoff would be with such a policy change. ENVIRONMENTAL ANALYSIS There are both advantages and disadvantages to leverage in a capital structure. If AHP chose to use leverage in their capital structure the interest expense would be tax deductible and therefore lower the cost of the loan and their tax liability. Additionally, by incorporating debt into their capital structure AHP would only have to pay back the loan principal plus interest; whereas with equity, shareholders have direct claim on future profits, if any. Conversely, the larger debt-to-equity ratio, the more risky AHP would appear to investors due to the greater possibility...
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