6. Companies and growth ratesFuture value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales andrevenues in the future, and so forth.Consider the following case:Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States butalso a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branchof the Coca-Cola Co. opened in Essen.Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939.Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II. With the previous data given, calculate thecompany's sales growth rate for each time period in the following table:Years1934-19361936-19391934-1939Growth Rate(Source: "Coca-Cola GmbH and World War Two," www.gettherealfacts.co.uk/docs/gmbh.pdf) During World War II, Coca-Cola Co. cut off all syrup sales to Germany in 1940, resulting in no sales from 1943 to 1945. If Coca-Cola's sales had grownfrom 1939 to 1945 at the same rate that they grew between 1934 and 1939, its sales in 1945 would have been approximatelycases. (Hint: Use sales data from 1939 as the present value.)Coca-Cola's worldwide sales as of December 31, 2011, was 26.7 billion cases. Assume the following sales distribution:Unit Case VolumeGermanySpainBGreat Britain12%Italy9%France8%21%OtherEastern Europe 20%16%14%If Coca-Cola's worldwide growth were to continue at the same growth rate as it did in Germany between 1939 and 2008, when sales grew at the rateof 10.26%, its hypothetical sales in Germany in 2053 (42 years from 2011) would be approximatelybillion cases. (Note: For this question,ignore other factors that affect sales.)

Name: 6. Companies and growth ratesFuture value and present value concepts
Uploaded: 2024-03-20T06:51:32.000Z
Channel: Bartleby
Description: 6. Companies and growth ratesFuture value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales andrevenues in the future, and so forth.Consider the following case:Pharmacist Joh

As per Bartleby guidelines, If multiple questions are posted, only the first 1 question will be…

Business

Finance

Future value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales and revenues in the future, and so forth. Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen. Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939. Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II. With the previous data given, calculate the company's sales growth rate for each time period in the following table:

Future value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales and revenues in the future, and so forth. Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen. Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939. Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II. With the previous data given, calculate the company's sales growth rate for each time period in the following table:

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 3QE

See similar textbooks

Similar questions

6. Companies and growth rates Future value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales and revenues in the future, and so forth. Consider the following case: Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen. Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939. Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II. With the previous data given, calculate the company’s sales growth rate for each time period in the following table: Years Growth Rate 1934–1936 1936–1939 1934–1939…
6. Companies and growth rates Future value and present value concepts are applied in various ways, such as calculating growth rates, earnings per share, expected sales and revenues in the future, and so forth. Consider the following case: A. Pharmacist John S. Pemberton invented a soft drink in 1886 that eventually became not only an integral part of everyday life in the United States but also a symbol of consumerism worldwide. In 1929 the first Coca-Cola vending machines were installed in Germany, and in 1930, the German branch of the Coca-Cola Co. opened in Essen. Coca-Cola sales in Germany were 243,000 cases in 1934, 1 million cases in 1936, and 4.5 million cases in 1939. Germany was a growing market for Coca-Cola, along with other countries in Europe, before World War II. With the previous data given, calculate the company’s sales growth rate for each time period in the following table: Years Growth Rate 1934–1936 1936–1939 1934–1939…
Konawalski’s Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The company began business three years ago in rural North Carolina and grew quickly as the product became known. Konawalski is now poised for national growth. Some analysts call the firm the next Krispy Kreme. The company pays a dividend of $0.10 per share. Earnings per share are currently $0.40, and analysts expect both earnings and dividends to grow at 20 percent per year for the next 5 years. The stock price is expected to increase in value by 70 percent over the next 3 years. If you believe that investors require a 20 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Konawalski? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent.
The financial manager for "ERR" industrial Company would extend the credit terms from "net 30" to "net 45" in order to stimulate credit sales. 'ERR' Company also benefits from relaxing of terms from its suppliers from "net 30" to "net 35". The manager is wondering how to estimate the financial impact of these alternatives would have on the shareholder's wealth. The financial manager estimates that the daily sales increase at a growth rate equals 10% following the extension of DSO. You gathered the following information:Purchase amount = 40% of sales amount Annual sales amount = $31,025,000 The annual cost of capital = 10% Inventory turnover =18.25 1- Calculate the daily NPV of the current terms. 2- Calculate the daily NPV of the proposed terms. 3- Based on your own calculations, what is your recommendation? Why? 4- Calculate the NPVCCP of the present terms. Interpret. 5- Calculate the ANPVCCP-aggregate of the Company. Interpret.
ZNet Co. is a web-based retail company. The company reports the following for the past year. The company’s CEO believes that sales for next year will increase by 20% and both profit margin (%) and the level of average invested assets will be the same as for the past year. 1. Compute return on investment for the past year. 2. Compute profit margin for the past year. 3. If the CEO’s forecast is correct, what will return on investment equal for next year? 4. If the CEO’s forecast is correct, what will investment turnover equal for next year? Sales . $5,000,000 Operating income . $1,000,000 Average invested assets . $12,500,000
It has been suggested that when applied to the percentage growth rate in a business, the law of large numbers implies that as a business grows, it becomes increasingly difficult to maintain its high growth rate in the past. What do you think of this argument? Can you provide an example to support your point of view? What does this mean for the FP&A in forecasting sales? What does it mean in terms of forecasting profit margins?
The following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015).“There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges,society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”.Required:a) Explain the above statement in the context of corporate social responsibility. [Word limit 150-200words] b) Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies?Explain. [Word limit 200 – 250]
The following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015). “There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”. Required: a) Explain the above statement in the context of corporate social responsibility.b) Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies? Explain.
The following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015). “There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”. Required: a) Explain the above statement in the context of corporate social responsibility
Looking at Morningstars Profitability ratios, what has happened to Hewlett Packards profit margin (net margin %) over the past 10 years? What has happened to its return on assets (ROA) and return on equity (ROE) over the past 10 years?
The firm's self-supporting growth rate is influenced by the firm's capital intensity ratio. The more assets the firm requires to achieve a certain sales level, the lower its sustainable growth rate will be. Many experts argue that it is better for an organization to grow organically or by putting the money back into the business and not taking on debt. Consider your own organization that you currently work for or have worked for in the past. What is their approach to growing the business? How would you advise your company based on what you have learned this week in terms of self-supporting growth?
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.