Unit 4 Discussion Post

Small Fry, Inc. plans to re-invest all of its earnings to expand its operations. Dividends were $2.00 per share this past year and are expected to grow at a rate of 12% per year until the end of year 4.  At that time, competitors are likely to bring out the next sensational new vegan product.  Analysts predict that at the end of year 4, Small Fry, Inc. will slow down production and dividend growth will slow to 6%.  Small Fry’s current cost of capital is 8%.  Find the value of Small Fry’s stock today.

M. K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a nationalexchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted thatthe company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expectedfor the year, and Gallant concluded within two weeks of the end of the fiscal year that it would be impossible to ultimately report an increase in earnings as large as predicted unless some drastic action was taken.Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the newyear—including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Gallant ordered the company’scontroller to carefully scrutinize all costs that are currently classified as period costs and reclassify as manyas possible as product costs. The company is expected to have…

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

K. Gallant is president of Kranbrack Corporation. A company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Gallant concluded within two weeks of the end of the fiscal year that it would be impossible to report an increase in earnings as large as predicted unless some drastic action was taken. Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year-including cancelling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Gallant ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have…

Tobin Supplies Company expects sales next year to be $500,000. Inventory and accounts receivable will increase $90,000 to accommodate this sales level. The company has a steady profit margin of 12 percent with a 40 percent dividend payout.    How much external financing will Tobin Supplies Company have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

Tomey Supply Company’s financial statements for the most recent fiscal year are shown below. The company projects that sales will increase by 11 percent next year. Assume that all costs and assets increase directly with sales. The company has a constant 35 percent dividend payout ratio and has no plans to issue new equity. Any financing needed will be raised through the sale of long-term debt. Prepare pro forma financial statements for the coming year based on this information, and calculate the EFN for Tomey.  Tomey Supply Company Income Statement and Balance Sheet Income Statement   Balance Sheet Revenues $1,768,121   Assets   Costs 1,116,487   Current Assets $280,754 EBT 651,634   Net Fixed Assets 713,655 Taxes (35%) 228,072   Total assets $994,409 Net Income $423,562             Liabilities and Equity:         Current Liabilities $167,326       Long-term debt 319,456       Common Stock 200,000       Retained Earnings 307,627       Total liabilities…

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

What is the projected increase in Retained Earnings on these financial accounting question?

For the next fiscal​ year, you forecast net income of ​$50,900 and ending assets of ​$507,100. Your​ firm's payout ratio is 9.7%. Your beginning​ stockholders' equity is ​$295,800 and your beginning total liabilities are ​$119,200. Your​ non-debt liabilities such as accounts payable are forecasted to increase by ​$9,700. What is your net new financing needed for next​ year?The Tax Cuts and Jobs Act of 2017 temporarily allowed​ 100% bonus depreciation​ (effectively expensing capital​ expenditures). However, we will still include depreciation forecasting in this chapter and in these problems.Question content area bottomPart 1The net financing required will be ​$

For the next fiscal year, you forecast net income of $48,700 and ending assets of $506,100. Your firm's payout ratio is 10.1%. Your beginning stockholders' equity is $295,600 and your beginning total liabilities are $119,300. Your non-debt liabilities such as accounts payable are forecasted to increase by $10,500. What is your net new financing needed for next year? The Tax Cuts and Jobs Act of 2017 temporarily allowed 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems. The net financing required will be $ (Round to the nearest dollar.)

Vijay

Roland & Company has a new management team that has developed an operating plan to improveupon last year’s ROE. The new plan would place the debt ratio at 55 percent, which will result ininterest charges of $7,000 per year. EBIT is projected to be $25,000 on sales of $270,000, it expects tohave a total assets turnover ratio of 3.0, and the average tax rate will be 40 percent. What does Roland& Company expect its return on equity to be following the changes?

Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the table below. Happy Time now only has one outstanding debt with a face value of $110 million to be repaid in the next year. The current market value for the debt is $67 million. The tax rate is zero. If you invest in the corporate debt of Happy Time Inc. today, what is your expected percentage return on this investment? Cash flow in the next year Economy Probability Amount Boom 0.3 Normal 0.4 Recession 0.3 O 36.87% O -26.37% 64.8% O-16.63% $110 million $101 million $61 million