users have an interest in the businesses final accounts. They are individuals or groups from outside the business. (Cox, Fardon) They are also interested in the capability of a business to pay dividends. They may estimate the future cash flows using the past cash flow. The main external users consist of shareholders, creditors/suppliers, government, customers and lenders. (Elliot B and Elliot J) Shareholders are interested in dividends and profits. As they invest their own money in to the business
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of that asset. The impairment test rules applied to impairment of property, plant, and equipment are different from those used in measuring goodwill. For tangible assets to be held and used, a recoverability test is performed when possible impairment exists, to determine whether an impairment has occurred. The first step of the test is to estimate the future net cash flow expected from the use of that asset and its eventual disposition. If the future cash flow is less than the carrying amount of
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∑(Expected CFt)/(1+r)t – Investment * Perpetuity – pays a fixed amount C per period forever * P(C,r) = C/r requires cash flow to begin NEXT period. If begin now, then PV = C + C/r * Annuity – fixed stream of cash flows that has a final period t * A(C,r,t) = C/r [1-1/(1+r)t] * Growing Perpetuity – G(C,r,g) = C/(r-g) C is initial cash flow, r is discount rate, g is growth rate * P/E = 1/(r-g) * High P-E multiple means the firm has good growth opportunities (high
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shareholder’s wealth or lead the company to insolvency. Under the net present value method, the weighted average cost of capital is used as the discount rate to calculate the present value of future cash inflows. Hence, for the case study, we will compute for the WACC, prepare projected cash flows then compute the NPV. Solution WACC The all-equity beta (β) of Dixon is 1.06. We assume that we could have a beta of 1.9 for the production of sodium chlorate, basing from the betas of
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MINICASE Jack Tar, CFO of Sheetbend & Halyard, Inc., opened the company confidential envelope. It contained a draft of a competitive bid for a contract to supply duffel canvas to the U.S. Navy. The cover memo from Sheetbend's CEO asked Mr. Tar to review the bid before it was submitted. The bid and its supporting documents had been prepared by Sheetbend's sales staff. It called for Sheetbend to supply 100,000 yards of duffel canvas per year for 5 years. The proposed selling price was fixed
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Kimberly Pulda Mini Case A. Corporate finance is important to all managers because it helps identify the goals of the company. These goals are: a. Identifying b. Creating c. Delivering highly valued products and services to customers The goals require the three attributes which are first, successful companies have skilled people at all levels inside the company. Second, successful companies have a strong relationship outside the company. Third, successful companies have
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following: 1. Current assets (short-term): short term assets that transform into cash and within the next year or the operating business cycle of the company. a. Cash and cash equivalents: Highly liquid assets, that can be easily convertible to cash such as bonds, marketable securities. b. Short-term investments: represents the reported values of shares of other companies as investment of access cash c. Trade receivables: When a company sells it products on credit, and receives
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Introduction “Cash is king" is a common line found in the business world. Cash flow is the life-blood of a company and without it a company will fail (Hicks, 2012). There are many things that can occur that makes companies take risks that could potentially jeopardize their cash flow such as new projects, growth, capital budgeting. The Chief Financial Officer (CFO) of TaxCats, a struggling tax preparation company is assigned to fix the problem and help with the company’s cash flow. The company still
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need to know in order to have an understanding of the basics of finance. Some of the important terms are finance, efficient market, primary market, secondary market, risk, security, stock, bonds, capital, debit, yield, return on investment, and cash flow. If you want to be in the business work of finance, or in the business world in general one must know and come to understand these terms. Finance According to dictionary.com finance is the management of revenues; the conduct or transaction
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need to know in order to have an understanding of the basics of finance. Some of the important terms are finance, efficient market, primary market, secondary market, risk, security, stock, bonds, capital, debit, yield, return on investment, and cash flow. If you want to be in the business work of finance, or in the business world in general one must know and come to understand these terms. Finance According to dictionary.com finance is the management of revenues; the conduct or transaction
Words: 1001 - Pages: 5
