Fin- 419 Assignments from the Readings Week V

Profitability ratio Earnings Per Share Book Value per Share Profit margin on sales Return on assets Return on shareholders’ equity Return on Investment: DuPont Model (ROI) Liquidity Ratio Current ratio Quick ratio (acid test) Working Capital 2009 2008 2007

Elimination of sales commision would affect the break-even volume to decrease, since the selling staff would have a lower incentive to sell due to having a cut of their commision salary. Eventually, this process would see a decrease in profit, since there would be no longer same selling jewellery incentive as before when the staff was paid in commissions. Therefore we strongly recommend to management to maintain selling commissions to to allow for an increased motivation, which would see an increased in the profit.

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I registered to take SEPS 405 summer 2015, but I had to drop it. I was having problems with finding a intern. job. My assigned director was Sharon Davis due to a glitch in the system but it should have been you. Sharon would have taken 195 hours and I would have to work 15 hours a week until the semester was over. Would this still be okay? I wanted to know, so I can present this to possible jobs. I will be registering to take it summer 2016. Hopefully you are still the correct person to speak with in regards to this matter. If not, can you please point me in the right direction.

Based on the suggestion that the focus should be on market values, compute the weights of debt, preferred stock, and common stock.

The cost of equity was found using CAPM, with the given market risk premium of 5%, a beta of .88, and risk-free rate of 4.03%. The beta was found by running a regression of Southwest’s percent change in stock price versus the S&P 500’s percent change in stock price for two years (June 28, 2000 to June 28, 2002). The risk-free rate was the return on a ten-year treasury note issued on June 28, 2002, according to the U.S. Treasury’s website. The tax rate of 39% was used to account for tax savings from leverage. In order to calculate the firm’s leverage, the market value of equity was found from the price per share on July 24, 2002 (Yahoo Finance) and the shares outstanding on the balance sheet of the July 10-Q report, as shown in Exhibit X. The debt value was approximated at the book value since data could not be found regarding its market value. This analysis resulted in a debt weight of 11.74% and equity weight of 88.26%. The final approximation for the weighted average cost of capital was 8.64%.

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

Complete an income statement, balance sheet and statement of cash flows for 2011. Please provide information on any assumptions you make not already stated in the case.

{. How many consecutives years the company has been profitable, its current ration and its ROE

Current and historical Financial Statements (Income Statement (I/S), Balance Sheet (B/S) and Statement of Cash Flows) from the three most current years for the firm

Nevertheless, the use of the Optimal Capital Structure (OCS) is the right techniques to be used in order to acquire the right combination of debt and equity that can maximize the

i. Calculate the rooms sold, occupancy %, and sales dollars he will need to achieve his desired profit if he opens the gift shop.

5. A complete analysis of the company’s financial statements for a minimum of the most recent three years of available data including a comparison of the company's ratios to most recent year’s peer company average ratios. Complete the ratio calculations yourself. Do not copy them from another source.

Question 4: Calculate each of the three products’ break even points using the data. Why is the sum of these three volumes not equal to the 1,100,000 unit’s aggregate break-even volume?

Generally, firms can choose among various capital structures in order to maximize overall market value of the company. It is proposed however, that