The Home Depot Case

8) What would BV's 1988 earnings per share be after all of the above adjustments?

The projected costs in 2004 (column 3) are calculated by dividing the actual costs for the first five months of 2004 (column 2) by the percent of 2003 costs that occurred in the first five months (column 1). For example, Atlanta’s actual 2004 costs of $40,228 divided by 2003’s 22.88% yields projected 2004 costs of approximately $175,822.

Table B compares the changes in the five components of ROE for the Boeing Company from 2009 to 2010. The tax-burden decreased slightly in 2010 from 2009, thus contributing to the decrease in the ROE. The interest burden increased slightly in 2010 from 2009, thus contributing to the increase in the ROE. The profit margin increased significantly in 2010 from 2009, thus contribution to the increase in the ROE. The asset turnover decreased slightly in 2010 form 2009, thus contributing to the decrease in the ROE. The financial leverage declined in 2010 from 2009, thus contributing to the decline in the ROE. Since total increase in interest burden and profit margin was substantially more than the total decrease in the tax burden,

What information to you need to find the 3 year forward rate starting 2 years from now?

The company has an agreement with a bank that allows the company to borrow the exact amount needed at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company will pay the bank all of the accrued interest on the loan and as much of the loan as possible while still retaining at least $50,000 in cash.

c. Determine the firm’s EPS at the above debt levels. If EPS goes up with the higher debt level,

Gross Profit Rate: The average year on year increase in gross profit rate over the past 10 years was 19.85% (Annexure 2, Table). This indicator peaked in 1999 at 32.54% and gradually reduced over the past 6 years and ended at 11.83% for the 2005 financial year which is the lowest over the last 9 years. This is of major concern as it seams that the company can’t stop the deterioration in the gross profit rate.

a. How much would the payment be if rate of interest is 5% and you only financed the truck for 48 months?

A person deposited $500 in a savings account that pays 5% annual interest that is compounded yearly. At the end of 10 years, how much money will be in the savings account? (Bluman, A. G. 2005, page 230).

If a person looks at the horizontal analysis it will give more information. There are two different ways to do a formula for this. The first would be using the current year and subtract from the base year. The second formula you would divide the current year amount from the base amount.

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

1. Assignment of Borrowing and Lending Activity: Presentation of cash flows from the revolving line of credit.

$15.3 million. The return on average invested capital in 1984 was around 20%. Over the past five

(Compound value solving for I) at what annual rate would the following have to be investe

1994 Liabilities and Equity Short-term borrowings Accounts payable Progress collections and price adjustments accrued Dividends payable Taxes accrued Other costs and expenses accrued Current liabilities Long-term borrowings Other liabilities Total liabilities Minority interest in equity of consolidated affiliates Preferred stock Common stock Amounts received for stock in excess of par value Retained earnings Deduct common stock held in treasury Total shareowners’ equity Total liabilities and equity $644.9 696.0 1,000.5 72.8 337.2 1,128.1 $3,879.5 1,195.2 518.9 5,593.6 $ 71.2 $ — $465.2 414.5 3,000.5 $3,880.2 (175.9 ) $3,704.3 $9,369.1 $665.2 673.5 718.4 72.7 310.0 1,052.6 $3,492.4 917.2 492.1 4,901.7 50.1 — $463.8 409.5 2,683.6 $3,556.9 (184.5 ) $3,372.4 $8,324.2 $ $120.6 376.2 300.5 58.7 318.3 392.6 $1,566.9 364.1 221.0 2,152.0 41.4 — $455.8 266.9 1,384.5 $2,107.2 — $2,107.0 $4,300.6 1993 1985