Corporate Finance Application Complete both parts of this assignment. You will work on some of these pieces earlier in the course when you submit the Module 3: Portfolio Milestone and the Module 5 Portfolio Milestone. Part One: Ratio Analysis Pick one debt ratio and one profitability ratio, which you did not analyze, from the week three portfolio milestone. Research a publicly traded technology company and access the financial statements needed to calculate those two ratios. Provide a cross-sectional analysis comparing the results from TechnoTCL Download TechnoTCLand your chosen company for the two ratios. Prepare a presentation (maximum of 4 slides – no speaker notes required) with the following information: Slide One: Analyze the two ratios including how the ratio is calculated and how it is used. Slide Two: Introduce the public company chosen, describe the information used for the ratios and calculate the two selected ratios. Slide Three: Show the two ratios for the two companies (your company and TechnoTCL) in a table. Slide Four: Compare and contrast the key differences between the ratios for the two companies and what they might indicate. Part Two: Require Return for Capital Funding Suppose that TechnoTCL is considering a new project. They are trying to determine the required rate of return for their debt and equity holders. See the information below: A 6.5% percent annual coupon bond with 15 years to maturity, selling for 96% of par. The bonds make annual payments. What is the before tax cost of debt? If the tax rate is 30%, what is the after-tax cost of debt? The firm's beta is 1.5. The risk-free rate is 4.0% and the expected market return is 10%. What is the cost of equity using CAPM? Use the balance sheet for TechnoTCL to determine the weighting for capital used by the company. What are the weightings for long-term debt and common equity? Calculate the WACC for TechnoTCL. If the company has three possible projects with the following characteristics and has $300,000 available to fund capital investments, what decision should be made for each project (A-C)? Why? Possible Company Projects Project Expected Return Capital Required A 8.8% $30,000 B 12.5% $150,000 C 9.6% $160,000 echnoTCL, Inc.($ 000's)12/31/2021 12/31/2022 12/31/2023Current AssetsCash And Cash Equivalents 9,157 10,607 8,719Short Term Investments 6,966 8,897 270Net Receivables 6,693 7,021 7,140Inventory 2,722 2,944 3,126Other Current Assets 31 43 2,042Total Current Assets 25,569 29,512 21,297Long Term Investments 1,949 2,039 2,407Property Plant and Equipment 16,590 17,237 17,587Goodwill 14,429 14,741 14,806Intangible Assets 13,432 13,835 15,823Other Assets 635 910 5,122Total Assets 72,604 78,274 77,042Current LiabilitiesAccounts Payable 6,157 6,724 7,211Short/Current Long Term Debt 4,400 4,017 3,951Other Current Liabilities 3,870 4,112 6,601Total Current Liabilities 14,427 14,853 17,763Long Term Debt 30,052 33,793 28,293Other Liabilities 11,102 14,522 12,611Total Liabilities 55,581 63,168 58,667Stockholders' EquityTotal Stockholder Equity 17,023 15,106 18,37512/31/2021 12/31/2022 12/31/2023RevenueTotal Revenue 56,519 57,902 51,728Cost of Revenue 25,400 25,340 23,502Gross Profit 31,119 32,562 28,226Operating ExpensesSelling General and Administrative 21,226 20,706 19,184Operating Income or Loss 9,893 11,856 9,042Income from Continuing OperationsOther Income/Expenses Net - -1,508 -1,507 -1,148Interest Expense 1,207 1,288 1,220Income Before Tax 7,178 9,061 6,674Income Tax Expense 1,957 4,130 2,696Net Income 5,221 4,931 3,978

Corporate Finance Application Complete both parts of this assignment. You will work on some of these pieces earlier in the course when you submit the Module 3: Portfolio Milestone and the Module 5 Portfolio Milestone. Part One: Ratio Analysis Pick one debt ratio and one profitability ratio, which you did not analyze, from the week three portfolio milestone. Research a publicly traded technology company and access the financial statements needed to calculate those two ratios. Provide a cross-sectional analysis comparing the results from TechnoTCL Download TechnoTCLand your chosen company for the two ratios. Prepare a presentation (maximum of 4 slides – no speaker notes required) with the following information: Slide One: Analyze the two ratios including how the ratio is calculated and how it is used. Slide Two: Introduce the public company chosen, describe the information used for the ratios and calculate the two selected ratios. Slide Three: Show the two ratios for the two companies (your company and TechnoTCL) in a table. Slide Four: Compare and contrast the key differences between the ratios for the two companies and what they might indicate. Part Two: Require Return for Capital Funding Suppose that TechnoTCL is considering a new project. They are trying to determine the required rate of return for their debt and equity holders. See the information below: A 6.5% percent annual coupon bond with 15 years to maturity, selling for 96% of par. The bonds make annual payments. What is the before tax cost of debt? If the tax rate is 30%, what is the after-tax cost of debt? The firm's beta is 1.5. The risk-free rate is 4.0% and the expected market return is 10%. What is the cost of equity using CAPM? Use the balance sheet for TechnoTCL to determine the weighting for capital used by the company. What are the weightings for long-term debt and common equity? Calculate the WACC for TechnoTCL. If the company has three possible projects with the following characteristics and has $300,000 available to fund capital investments, what decision should be made for each project (A-C)? Why? Possible Company Projects Project Expected Return Capital Required A 8.8% $30,000 B 12.5% $150,000 C 9.6% $160,000 echnoTCL, Inc.($ 000's)12/31/2021 12/31/2022 12/31/2023Current AssetsCash And Cash Equivalents 9,157 10,607 8,719Short Term Investments 6,966 8,897 270Net Receivables 6,693 7,021 7,140Inventory 2,722 2,944 3,126Other Current Assets 31 43 2,042Total Current Assets 25,569 29,512 21,297Long Term Investments 1,949 2,039 2,407Property Plant and Equipment 16,590 17,237 17,587Goodwill 14,429 14,741 14,806Intangible Assets 13,432 13,835 15,823Other Assets 635 910 5,122Total Assets 72,604 78,274 77,042Current LiabilitiesAccounts Payable 6,157 6,724 7,211Short/Current Long Term Debt 4,400 4,017 3,951Other Current Liabilities 3,870 4,112 6,601Total Current Liabilities 14,427 14,853 17,763Long Term Debt 30,052 33,793 28,293Other Liabilities 11,102 14,522 12,611Total Liabilities 55,581 63,168 58,667Stockholders' EquityTotal Stockholder Equity 17,023 15,106 18,37512/31/2021 12/31/2022 12/31/2023RevenueTotal Revenue 56,519 57,902 51,728Cost of Revenue 25,400 25,340 23,502Gross Profit 31,119 32,562 28,226Operating ExpensesSelling General and Administrative 21,226 20,706 19,184Operating Income or Loss 9,893 11,856 9,042Income from Continuing OperationsOther Income/Expenses Net - -1,508 -1,507 -1,148Interest Expense 1,207 1,288 1,220Income Before Tax 7,178 9,061 6,674Income Tax Expense 1,957 4,130 2,696Net Income 5,221 4,931 3,978

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section17.4: Analyzing Financial Statements Using Financial Ratios

Problem 1WT

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