...Financial Managment – First Investments, Inc.: Analysis of Financial Statements Team 4: Nathalie Strookman, Dieter Wolfram, Demis Busropan Background Problem Definition The 1994 Basic Industries annual report shows a decline in the return on owners’ equity. This has got the portfolio people worried. An analysis has to be made of the way the company has achieved its return on equity over the last 10 years. The focus should especially be on the 1993-1994 period and the quality of the returns on equity of 1985 and 1994 should be compared, as well as other key financial ratios. By doing these financial analysis we hope to find out why the return on shareholders’ equity is varying in time. {draw:frame} {draw:frame} {draw:frame} Results {draw:frame} {draw:frame} {draw:frame} Analysis In order to analyze the company’s financial performance, we make use of financial ratios; leverage ratios to show how heavily the company is in debt; liquidity ratios how easy cash can become available; efficiency ratios to measure the productive use of the assets; profitability ratios to measure the return on investments. This is done for the period 1985-1994 where possible, and the total analysis can be found in the added excel file. 1985-1994 {draw:frame} If the operating profit margin increases than every sales gives you more money which results in a higher return on equity. If the asset turnover increases, more sales are generated for every unit of asset and the...
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...Supply chain management Time context Success Inc, as per the provided case, is a manufacturing entity that sources for its raw materials from ABC GmbH (O¨ string). The firm is wishes to start producing a new product in the future with the only problem being that there is uncertainty in relation to whether ABC GmbH has the capacity to produce the components needed in the manufacture of the new product (O¨ string). The main concern is that the supplier doesn’t have adequate production capacity to manufacture large volumes of the required components. Even though ABC GmbH has plans to acquire bigger production facilities, the company doesn’t have sufficient financial resource to make the investment (O¨ string). The implication is that Success Inc will have to fund the supplier in acquiring and installing the new production lines. The telephone conversation between Jack Smith, Success Inc’s production manager and Jill Turner reveals that the firm risks experiencing a production crisis as a result of ABC GmbH financial inefficiencies. There is need to come up with immediate solution or else the proposed production of the new products will be put into jeopardy. View point Success Inc analysis of its supplier takes the approach of ascertaining the manufacturing capabilities of the company. This is of great importance considering that Success Inc expects ABC GmbH to produce large volumes of the components which will be used in making the firm’s new products (O¨ string). When Jack...
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...Strategy Introduction Investment Objectives Investment Strategies Section 2. Company Profiles Novellus Systems, Inc. Dollar Tree, Inc. Steven Madden, Ltd. Exxon Mobil Johnson Controls, Inc. Canadian National Railway Company Microsoft Corporation Baidu, Inc. Telecomunicacoes de Sao Paulo SA, Inc. Kellogg Company Spreadtrum Technologies, Inc. Section 3. Security Transactions Section 4. Portfolio Breakdown Industry Diversification Portfolio Beta Section 5. Investment Results Portfolio Performance vs. Benchmark Indices Section 6. Summary Section 1. Objective and Strategy Introduction The JMYJ Equity Fund (the “Fund” or the “portfolio”) is an equity fund with an initial capitalization of $100,000. The Fund is managed by a group of four xxxxxx Graduate School of Business students. The Fund made its first investments on September 12, 2010. This report covers the period from September 12, 2010 until November 8, 2010. Throughout this report we refer to this period as the “investment period”. Investment Objective The Fund is allocated so that it may accomplish three objectives: growth of capital and the conservation both principal and current income. Investment Strategies The Fund invests...
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...CHAPTER 13 investments and fair value accounting 1 DISCUSSION QUESTIONS 1. A business might invest in another company’s stock to earn dividends or in expectation of market price increases. In addition, a business may want to purchase another company outright for strategic reasons, such as (1) reducing costs, (2) replacing management, (3) expanding operations, or (4) integrating operations. 2. A gain or loss can occur when the fair value of the bond upon sale differs from the cost. The price of bond investments can change due to changes in the market rate of interest. As the market interest rate increases, the fair value of the bond investment will decline. As market interest rates decrease, the fair value of the bond will increase. 3. The cost method is used for equity investments representing less than 20% of the outstanding shares of the investee. 4. Under the cost method, a dividend received is treated as dividend revenue. Under the equity method, a dividend received is not treated as dividend revenue, but is treated as a reduction in the book value of the investment. Thus, a dividend under the cost method has an income statement impact, while a dividend under the equity method does not. 5. An investment greater than 50% of the investee is considered to be an investment that exerts control. Thus, the financial statements of the investee are consolidated (combined) with that of the investor. 6. Both portfolios are reported at fair value. However, changes in the...
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...over a specific time. The time could be by month, or by year. My team was assigned the task of investing 120,000 dollars over ten years. We were to invest 80% of 120,000 dollars in stocks and 20% in bonds. We invested in six different stocks and two bonds. Also, we split the money. Therefore, we each invested 6,000 dollars per year in three stocks and one bond. The first stock I decided to invest in was Nike Inc. Nike Inc. is a strongly advertised and a well-distributed company (Nike). Nike Inc. is known well across the world (Nike). When it comes to shoes, clothes, or sports apparel, everyone has at least one item of Nike. In most cases, people own multiple things of Nike equipment. Nike Inc. spends great amounts of time and money on their products (Nike). Also, Nike Inc. is extremely popular among sports. That is relevant because I am an athlete, and own many Nike products. Almost every pair of shoes I own is Nike, besides dress shoes. This all proceeded to tell me, as an investor, to get involved in a part of the company. I took 2,000 dollars of the 6,000 dollars and invested in Nike Inc. Every year for ten years I bought...
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...1.) Business risk: • Diversification into non-‐core businesses such as video and television programming and pen and pencils may create difficulties to manage the group in a united and control manner. These diversification strategies may also signal the fact that managers are indeed exploiting their cash freedom in UST Inc with rent-‐seeking intentions such as empire building or simply out of their own interest • UST Inc has not realized strong sales in the foreign markets while competitors are already doing so in the lights of a declining domestic market. • Federal government would attempt to pay for the proposed health care reform by dramatically increasing the excise tax on smokeless Tabaco. Financial risks: • The unusually low amount of leverage (0%) might signal the fact that management does not want to have any debt constraints that could mitigate their rent-‐seeking behavior. ...
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...Business plan Zoltany Inc. 200 Cashflow Ave Suite 100 Irvine, Ca 92614 949-555-4545 949-444-5454 949-345-8588 Excecutives@ZoltanyInc.com www.ZoltanyInc.com Contact: Laszlo Zoltany, Founder, CEO (Writing Partner: Derek Basset) Contents Page 1. Executive Summary.........................................................................................................................3 2. General Company Description.....................................................................................................4 3. Products and Services......................................................................................................................6 4. Marketing Plan..................................................................................................................................8 5. Operational Plan..............................................................................................................................12 6. Management and Organization..................................................................................................15 7. Startup Expenses and Capitalization.........................................................................................20 8. Financial Plan.....................................................................................................................................27 9. Appendices.......................................................................................
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...Metalcrafters INC. Metalcrafters Inc produces specialized polished and anodized aluminum hardware and molding parts for the auto industry. Metalcrafters, Inc. has long had a reputation for being on the conservative side when it came to taking on investments. It is now tasked with analyzing the financial payoffs of four potential investments along with two contracts of the budget committee. Metalcrafters task is to subject the investments and ultimately decide which of the investments are worth the companies time and money. Two of the proposed four investments were in new equipment. The first of these two was the purchase of a new stamping press. Metalcrafters had been experiencing a high amount of costs associated with the repairs to the old machine, and management felt that it was time to invest in a new one. There were two stamping presses being considered. The first was the SX-65. The SX-65 would cost $60,000 initially, but would save the company $28,000 a year over its five year life. After five years, the SX-65 could be sold for $5,000. The other stamping press being considered, the MD-40, varies slightly in its variables. The MD-40 would cost the firm $90,000 initially, but would last ten years, which at that time would hold salvage value of $5,000. To start, I would calculate the criteria of the NPV, IRR, Profitability index and the payback period. metalcrafters Inc. would have more of an advantage at deciding which investment to recommend to the budget...
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...all necessary journal entries related to the investment in bonds. Answer: May 1 Long-Term Investment in Bonds 275,000 Cash 275,000 Nov. 1 Cash 9,000 Interest Revenue ($300,000 × 6% × 6/12) 9,000 Nov. 1 Long-Term Investment in Bonds 2,500 Interest Revenue ($300,000 - $275,000) × (6/60) 2,500 Dec 31 Interest Receivable 3,000 Interest Revenue ($300,000 × 6% × 2/12) 3,000 Dec. 31 Long-Term Investment in Bonds 833 Interest Revenue ($300,000 - $275,000) × (2/60) 833 On April 2, Smith Co. purchased 25% of Wesson Inc.’s stock for $600,000. On August 1, Wesson paid a cash dividend of $340,000 and on August 31 reported net income for the year of $2,000,000. On October 1, Smith sold all the stock in Wesson Inc. for $1,200,000. Record the Wesson-related transactions in the journal of Smith Co. Answer: April 2 Long-Term Investment in Wesson $600,000 Cash $600,000 August 1 Cash ($340,000 X .25) $85,000 Long-Term Investment in Wesson $85,000 August 31 Long-Term Investment in Wesson ($2,000,000 X .25) $500,000 Investment Revenue $500,000 October 1 Cash $1,200,000 Long-Term Investment in Wesson $1,015,000 Gain on Sale of Investment ($1,200,000 - $1,050,000) $185,000 Compute the total amount to be reported on the consolidated balance sheet of Parent, Inc. The first item is completed as an...
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...Stock Trak Investment Report [Portfolio Investment Analysis] Portfolio management is an important factor that determines the performance of the portfolio. To perform well in the portfolio, it is not only essential to develop personal investment strategies, but analyzing current financial trend is also vital. Stock Trak is an online portfolio simulation that allows students to try out different investment strategies, and also get a hand on experience in what the real market trading conditions are. By managing the portfolio, I have acquired some new knowledge of investment strategies and also become more familiar with the current market by following closely to the financial headlines. My portfolio composed of only a few specific stocks of some large information technology companies. The main compositions are Apple Inc., Google Inc., and International Business Machines Corp (IBM). By investing different stocks in the same industry, it comes to my attention that even though they are in the similar category, the life cycles of these stocks are still very different. It is interesting to compare and analyze the different progress of those companies, and also to see how different factors affecting the performance of a specific stock and the portfolio as a whole. [Portfolio Performance Analysis] My overall return is 7.92%, which is about average and is a little over performed comparing to the S&P 500 average of 7.71% during the same period of time. Analyzing the historical data...
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...show that the market interest rate and the securities value increases. The Fish Corporation wants to sale two securities as soon as the value increases. The first type of investment is stock (equity) securities in Carroll Corporation which is planned to be held for many years (long term). The second type of investment is a debt security which is planned to be sale as soon as it increases values. Stock investment (Equity Securities) Equity securities are a claim to partial ownership of a portion of another company usually a corporation. When a company buys other company equity they need to record the JE to the financial statement. To record the stock (Equity) purchase of the Carroll Corporation, the accountant will make JE, Account Debit Credit The Carroll Corporation Investment XXXXXX Cash XXXXX The corporation evaluates investment’s value at the end of the each period as long as they hold it. When company purchases other company share with intent to sell them quickly for profit this classified them as trading securities. For Example, ABC Inc. purchased equity securities at a fair market value of 40,000 on June, 25 as a short term investment. The ABC Company planned to resell the shares quickly so it classified them as Trading Securities. Following is the Journal entry for the purchase of these securities by ABC Inc. Date Account Debit Credit June, 25 Trading Securities S40,000.00 Cash $40,000.00 By September, 28 the fair market value of the equity has dropped...
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...Risk & Return Analysis: Analyzing an equally weighted portfolio of investments in Amazon, Inc., Yahoo! Inc., and Direct TV stock compared to the S&P 500 Introduction: Every day, millions of investors spend countless hours following the stock market in the hopes of striking it rich. Making the right moves at the right moments is crucial when one looks to make large returns in the market. While luck affords many investors the opportunity to make lucrative returns in the stock market, this reward does not come without risk. In order to balance their returns and the amount of risk that they are exposed to, many investors create an investment portfolio as a means to mitigate risks in the market at the expense of foregoing potentially higher returns on their investment. To illustrate the effects that a diversified portfolio can have on the amount of risk an investor takes on as well as the returns that the investment generates, a sampling of three random stocks and the S&P 500 index was created to examine the effects that diversification has on investment risk. Investments: For this analysis, monthly stock data from December 1, 2009 – December 1, 2014 was compiled on three stocks and the S&P 500. The three investments chosen for the portfolio were Amazon.com Inc. (AMZN), Yahoo! Inc. (YHOO), and DirectTV. (DTV), and each represent 25% of the portfolio. In order to analyze the risks associated with each stock, a Risk-Free rate of interest must be established in order...
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...evaluates the investments by analyzing cash flows. Internal Rate of Return uses percentage that is similar to the rate of interest in comparing potential investments with other possible or existing kind of investments. The method involves dividing the expected profits from the potential investment by the expected expenditure in order to arrive at the rate of return. Evaluating capital investments is an essential task for Johnson Controls Inc. in order to understand the viability of its capital budget before venturing into the emerging markets. Evaluating investments helps the company determine if the investments in question are worthwhile. Johnson Controls Inc. may have many investment opportunities in the emerging market but it must measures the potential of each opportunity preferably in isolation and make comparison of each in order to select the a few or just one that maximizes the value of the firm and reduce the potential risk. For example, Johnson Controls Inc. might be trying to determine if venturing into the emerging market will require buying new equipment or using the existing ones. The company might also be interested in determining if there is need to invest in research and development before venturing into the emerging market with a new or existing product. The company can therefore supplement its traditional methods of evaluating investments (such as payback period) with Net Present Value (NPV) and Internal Rate of Return (IRR) as well as Multiple Techniques. ...
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...Papers Search Video Concepts, Inc In: Business and Management Video Concepts, Inc Executive Summary Whether to remain in the business with increase in Rental to $ 2.49 whereby increasing the profitability of the business due to stiff competition from the Blockbuster or to sell it off or hire a manager for the shop and start doing job at some other place, has to be evaluated on the basic objectives of economics of the firm. The main objective of the firm is to maximize the profit and thereby maximize the return on investment. In order to attain this at the same market share it is suggested to sell the business to the competitors, if they are interested. Word Counts: 102 Table of Content SITUATION ANALYSIS | 2 | THE PROBLEM STATEMENT | 5 | OPTIONS | 5 | CRITERIA FOR EVALUATION | 6 | EVALUATION OF OPTIONS | 7 | RECOMMENDATIONS | 9 | ACTION PLAN | 9 | Situation Analysis Outlook of Video Rental business in Lexington In Research conducted by the Chad Rowan for the business of Video Rentals when it was relatively a new business, it was found that it is profitable enough to earn more than the average rate of return on investments. So it was possible to start with the store of 200 square feet with the 500 video tape library in Lexington, North Carolina, a town of 28,000 people. Due to innovative ideas and marketing strategies, it was possible to generate the sales volume of $64,000 in the first year itself which was further invested...
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...sector. The company’s production is estimated to account for about 28% of the $4 billion sold in their product category, generating revenue of $681 million in 2007. The company was recently presented an opportunity by its largest retail customer to significantly increase its share in their private label manufacturing. The prospect of growth was risky, since it required an initial investment larger than any HPL had previously encountered. The 3-year contract offered was also relatively short. The company would be running the risk of discontinued business after expiration and subsequent heavy losses. However, the upside was obvious. If the company succeeds by locking in long-term business with a powerful retailer, it will surely pay off for many years to come. A special quality of the private label business is that manufacturers generally produce at levels demanded by the retailers they produce for. Even though private labels have been steadily gaining market penetration due to quality improvements, growth in the overall market were modest, leaving manufacturers little opportunities for big investments. Therefore, HPL had a major decision to make. Either take a big risk at a chance for big returns, or stay conservative and remain a middle of the pack player in the industry. 2. Using assumptions made by Executive VP of Manufacturing, Robert Gates, estimate the project’s FCFs. Are Gates’ projections realistic? If not what changes might you incorporate? The FCF is calculated in...
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