Financial Valuations

Alderson Metals is compiling a cash balance projection by quarter for next year. Which one of the following adjustments to this projection will decrease the cumulative surplus?  A.  Reducing payroll costs from its current projection amount   B.  Decreasing the accounts receivable period by changing the firm's credit policy effective the first of next year   C.  Receiving more favorable credit terms from the firm's suppliers   D.  Increasing the dividend per share on the firm's outstanding common stock   E.  Refinancing the firm's long-term debt at a lower interest rate

(Liquidity analysis) The Mitchem Marble Company has a target current ratio of 2.1 but has experienced some difficulties financing its expanding sales in the past few months. At present, the firm has a current ratio of 2.7 and current assets of $2.15 million. If Mitchem expands its receivables and inventories using its short-term line of credit, how much additional short-term funding can it borrow before its current ratio standard is reached? ... The additional amount of receivables and inventories (short-term debt) is $ = |million. (Round to two decimal places.)

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Which of the following would most likely signal that a company may be using aggressiveaccrual accounting policies to shift current expenses to later periods? Over the last fi veyear period, the ratio of cash fl ow to net income has:A . increased each year.B . decreased each year.C . fl uctuated from year to year.

(Evaluating liquidity) The Allen Marble Company has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months. At present, the firm has current assets of $2.5 million and a current ratio of 2.5. If Allen expands its receivables and inventories using its short-term line of credit, how much additional short-term funding can it borrow before its current ratio standard is reached? The addition to current assets is $ (Round to the nearest dollar.)

Data on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365 day year. Do not round yourData on Shick Inc. for last year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365-day year. Do not round your intermediate calculations. Sales $103, 000 Accounts receivable $16,000 Days Sales Outstanding (DSO) 56.699 Benchmarks' Days Sales Outstanding (DSO) 19.000 a. $9,805 b. $11,471 c. $10, 638 d. $4,529

HouseholdCo, a large household products firm, recently reported $6.2 billion in accrued and other liabilities and $49.0 billion in revenues, such that accrued and other liabilities equaled 12.6 percent of revenues. Using data from the annual report's footnote 4 provided below, discuss why a forecast ratio of 12.6 percent going forward would distort your forecast of free cash flow. How should the balance sheet be reorganized to prevent this? Note 4-Supplemental financial information Selected components of current and noncurrent liabilities were as follows: $ million Accrued and other liabilities-current Year 1 2,833.0 Marketing and promotion Compensation expenses Accrued ShaveCo exit costs 1,846.0 456.0 Taxes payable 922.0 Other 102.0 Total 6,159.0

DAS Co. is preparing its financial forecast for next year and its AFN is negative. This means that Select one: O a. the predicted change in total assets must be negative. O b. sales growth must be negative. O c. the dividend payout ratio must be greater than the predicted growth rate in sales. O d. the predicted change in spontaneous liabilities must be greater than the predicted change in total assets.

Halverson's times interest earned ratio was 2.98 in 2022, 2.79 in 2021, and 2.31 in 2020. Which of the following statements about the ratio is correct? Multiple Choice The increasing ratio implies increased long-term debt financing The increasing ratio indicates decreasing levels of debt on which interest is incurred The increasing ratio would be considered by creditors to be an indicator of higher risk The increasing ratio indicates the strategy of pursuing growth by investment in other companies, which has increased debt, but Halverson's profts have not yet increased from those investments.

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DURING 2024, SPLISH BROTHERS'S SALES INCREASED BY 26.0%. IF ACCOUNTS RECEIVABLE INCREASED BY 37.0%, THIS MAY INDICATE THAT A. THE COMPANY'S COLLECTION POLICIES HAEV BECOME MORE AGGRESSIVE. B. THE COMPANY'S MANAGEMENT IS FOCUSING ON CASH SALES. C. THE COMPANY MAYBE INCREASING SALES BY LOOSENING IS CREDIT POLICIES. D. THE COMPANY'S COLLECTIONS HAVE IMPROVED.

Consider the following data for this company (image) True or False and why: This company raised cash in 2020 by increasing borrowing from suppliers. True or False and why: Despite having lower operating cash flow in 2020, this company managed to maintain its investments in the business during 2020 by reducing cash holdings  True or False and why: This company raised cash from investors to manage the crisis in 2020 and suspended any payments to investors during 2020

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This is an example prioblem. I need help understanding the math that is being done?

A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?   1. b. Reduce   the company's days' sales outstanding to the industry average and use the   resulting cash savings to purchase plant and equipment.   2. d. Borrow   using short-term debt and use the proceeds to repay debt that has a maturity   of more than one year.   3. e. Issue new   stock and then use some of the proceeds to purchase additional inventory and   hold the remainder as cash.   4. a. Use cash   to increase inventory holdings.   5. c. Use cash   to repurchase some of the company's own stock.

H5. Solve both question with proper step by step calculation

The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Current assets Income Statement Cash Accounts receivable Inventory Fixed assets Total assets Assets The firm $ 250,000 184,800 $ 65,200 8,600 $ 56,600 16,600 $ 40,000 $ 16,000 Balance Sheet (in $ millions) $ 221,000 Liabilities and Stockholders' Equity $ 4,000 Accounts payable Accrued wages 53,000 68,000 Accrued taxes $ 125,000 96,000 Current liabilities Notes payable Long-term debt…

The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 30 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends Cash Accounts receivable Inventory Current assets Fixed assets Income Statement Total assets Assets $ 280,000 222,800 $ 57,200 7,800 $ 49,400 15,800 $ 33,600 $ 6,720 Balance Sheet (in $ millions) Liabilities and Stockholders' Equity $ 5,000 Accounts payable Accrued wages 86,000 77,000 Accrued taxes $ 168,000 88,000 Current liabilities Notes payable Long-term debt Common stock Retained…

2. Does the company have enough cash and liquidity to survive an economic slowdown? Enhance the answer with a clear conclusion   Ans. The financials of WeWork doesn't seem to be much profitable, we can assume that is because of the pandemic. In the year 2022, the revenue of the first quarter was $765 million which is an increase of 6-7% in a quarter. Net loss was $504 million. Because of the increase in interest rates, it is hard for WeWork to get more loans to finish off its debt and the investors are not much interested as they can interpret the future outcomes by looking at the current balances of the company. The revenue in the third quarter was $817 million which is an increase of 24% year-over-year. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million. As the cash and liquidity of WeWork…

A. Quantitative Problem: Beasley Industries' sales are expected to increase from $5 million in 2017 to $6 million in 2018, or by 20%. Its assets totaled $3 million at the end of 2017. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2017, current liabilities are $790,000, consisting of $140,000 of accounts payable, $400,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 60%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations.  B. What is Mitchell's Target fixed assets/Sales ratio as percent?  C. If Mitchell's sales increase 50%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?

(Related to Checkpoint 13.1) (Forecasting cash flows using the expected value) Koch Transportation is contemplating the acquisition of LH Transport, a competing trucking firm. Koch's CFO estimates that during the next year LH Transport's cash flows from the acquisition will vary depending on the state of the local economy: a. Calculate the expected cash flow for next year using the estimates provided above. b. Assume the probability of a recession increases to 38 percent, the normal scenario probability remains at 53 percent, and the expansion probability drops to only 9 percent. What is your estimate of the expected cash flow for next year under these circumstances? c. Your analysis of the acquisition suggests that for the investment to have at least a zero NPV, it must produce an annual expected cash flow of $83,610 per year over the next five years. Assuming that the cash flow you estimated in part a is the expected cash flow for Years one through five, what would you like to know…