FNC 440
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FINC 440
Student’s Name
Institutional Affiliation
Instructor
Due Date
2
FINC 440
1.
WACC
WACC = Wd × Rd × (1 - t) + Wp × rp + We × Re
Wd = the percentage of the form's existing debt that is used when further funds are raised
Rd is an abbreviation for the marginal cost of debt pre-tax.
T = the tax rate at the margin
Wp is the percentage of preferred stock that the company issues in order to raise additional
capital.
Rp is an abbreviation for "marginal cost of preferred stock."
When it comes to obtaining additional cash, "we" refers to the share of stock that the company
utilizes.
R = the equity's marginal cost of capital
In order to determine the WACC, many rates must be used, including the return on the
firm’s ordinary stock, the return on its preferred stock, and the return on its long-term debt. The
business's WACC may be determined by using the information provided in the company form,
including the cost of equity, total equity, total debt, cost of capital, and corporation tax. Only the
cost of debt and the cost of equity need to be determined.
Cost of Debt
= Interest Expenses/Total Debt
= 2063 / 64522.5 = 3.1973 percent.
13.47 percent is the most recent two-year average tax rate.
3
Cost of Equity
= Risk-free rate of return + beta × (Expected rate of return – risk-free rate of
return)
Cost of Equity
= 3.507 percent + 0.90 (6 percent) = 8.907 percent
Weighted Average Cost of Capital
=
E / (E + D) × Cost of Equity + D / (E + D) × Cost of
Debt × (1 - Tax Rate)
=
0.9662 × 8.907% + 0.0338 × 3.1973% × (1 - 13.47%)
WACC
=
8.7%
2.
Beta
The beta measure of the asset's susceptibility to changes in the market's anticipated
return. Beta for Microsoft is at 0.90. A high beta indicates not just high risk but also high profits.
A lower beta indicates that there is less volatility in the stock (
Giese et al., 2019)
.
3.
Managing Earnings
Microsoft Company appears to manage earnings. For the three months ending in December
2022, Microsoft's Cost of Goods Sold amounted to $17,488,000,000. For the quarter ending in
December 2022, revenue was $52,747,000,000. For the quarter ending in December of 2022,
Microsoft's Cost of Goods Sold to Revenue ratio was 0.33. The company's bottom line is
influenced by its COGS because of the relationship between the two metrics of Gross Margin
and Cost of Goods Sold. For the fiscal quarter ending in December of 2022, Microsoft had a
gross margin of 66.85 percent, thus Microsoft appears to manage the earnings. When a
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company's yearly profits fluctuation is modest or nonexistent, it is a sign that the company's
earnings have stabilized.
4.
Most Important Things Learned
Readings and studying this week taught me how to compute the WACC, which is the
most significant thing I picked up, and I also gained more knowledge about the firm I chose to
analyze for this class. Those discoveries will be of use to me with the tasks that are to come in
this class.
5
Reference
Giese, G., Lee, L. E., Melas, D., Nagy, Z., & Nishikawa, L. (2019). Foundations of ESG
investing: How ESG affects equity valuation, risk, and performance.
The Journal of
Portfolio Management
,
45
(5), 69-83.
Related Questions
Match each term with it's definition.
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Aa v
AaBbCcDdEe
AaBbCcDdE
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Body Text
List Paragraph
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Table Par
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Question 1: In the table below, you are given the financial performance indicators forCari Farm
during the period 2018 to 2020.
田
Cari Farm
Industry
Performance Area
2018
2019
2020
2018
2019
2020
Leverage:
Assets/Equity
Debt/Equity (%)
Interest Coverage
0.81
1.21
0.92
1.00
1.20
1.15
101.3
81.5
81.6
73.0
77.0
81.0
1.63
2.78
2.04
4.00
3.50
3.30
Liquidity:
Current Ratio
1.22
1.49
1.45
2.00
1.70
1.50
Acid-test Ratio
1.10
1.30
1.20
1.00
0.90
0.90
Profitability:
Profit Margin (%)
11.77
15.58
10.81
15.60
15.71
15.80
Efficiency:
Revenue/Assets
0.47
0.49
0.50
0.60
0.62
0.68
Please use the table above to answer the following questions:
a. Discuss the trend analysis on how Cari Farm performed over the period for each ratio
category.
b. Report on how Cari Farm performed as compared to the industry norms for each ratio
category.
c. Calculate the return on assets (ROA) as a percent and the return on…
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Financial statement analysis
2. Given below are the summarized accounts of Belper Ltd for the past five years. These
the basis for the questions which follow.
Summarized profit and loss accounts of Belper Ltd
Sales
Cost of sales
Trading profit
Depreciation
Interest
Net profit before tax
Taxation
Net profit after tax
Extraordinary items
Dividends
Retained profits
Retained at start of year
Retained at end of year
Fixed assets
Freehold land and buildings
Leasehold land and buildings
Plant and machinery
Total gross fixed assets
Depreciation freehold
Depreciation leasehold
Depreciation plant, etc.
Total depreciation
Net fixed assets
Intangible fixed assets
Goodwill
Investments
Patents and trade marks
Current assets
Stock
Debtors
Bank and cash
Current liabilities
Creditors
Taxation
Dividends
Bank loans and overdraft
19X4
Net current assets
£000
Financed by
Ordinary share capital
Share premium account
Retained profits
Revaluation reserves
93,930
81,750
12,180
1,023
2,727
8,430
2,517
5,913…
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In column A, identify the account to which element it belongs whether Current Asset (CA), Noncurrent Assets (NCA), Current Liabilities (CL), Noncurrent liabilities (NCL) or Shareholders’ equity (SHE). In column B, indicate the line item to which the account belongs. Column A Column B1. Share Capital2. Accounts Payable 3. Plant Expansion Fund4. Trading Securities 5. Employees income tax payable6. Goodwill 7. Raw Materials8. Share Premium 9. Advances from customers
10. Serial bonds not collectible currently 11. Investment in Bonds 12. Notes Payable 13. Prepaid Insurance 14. Income Tax Payable 15. Land
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Please help prepare Financial position and comprehensive income statement
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PLS HELP ASAP
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Multiple choice pls answer
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Solve #35 please
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Prepare a classied balanced sheet in good form
1. Common Stock
2. Discountedd on Bonds Payable
3. Treasury Stock (at cost)
4. Notes Payable (short-term)
5. Raw Materials
6. Prefered Stock Investments (long-term)
7. Unearned Rent Revenue
8. Work in Process. 9. Copyrights
10. Buildings
11. Notes Recievable (short-term).
12. Cash.
13. Salaries and Wages Payable.
14. Accummlated Depreciation--Buildings
15. Restricted Cash for Plant Expansion
16. Land Held for Future Plant Site
17. Allowance for Doubtful Accounts
18. Retained Earnings
19. Paid-in capitial in Excess of Par -Common Stock
20. Unearned Subscriptions Revenue
21. Receivables--Officers (due in one year)
22. Inventory (finished goods)
23. Accounts Receivable
24. Bonds Payable (due in 4 years)
25. Noncontrolling Interest
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tests.mettl.com/test-window/f55ac827#/testWindow/0/16/1
EY
Accounting Assessment O
Total 00:54.47
Finish Test
Section 1 of 1 Section #1 v
10
11
12
13
14
15
16
17
18
19
20
17 of 45
All
2
43
Question # 17
G Revisit
Choose the best option
Which of the following formula best describes the acid test or quick ratio?
Current assets: Current liabilities.
Debtors: Creditors
O (Current assets stock) Current liabilities.
O Current assets: (Current liabilities - bank overdraft).
Frev Cueston
Next Question
+91-82878-03040
Zaineh | Support +1-650-924-9221
metil
413 PM
1/16/2021
Type here to search
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ok
7
ences
The balance sheet of XYZ Company is shown below. What is the Net Working Capital for the company?
LIABILITIES & OWNERS' EQUITY
Current liabilities
Long-term debt
Owners' equity
Total liabilities and equity
Mc
graw
Hill
!
1
ASSETS
Current assets
Net fixed assets
A
Total assets
N
Multiple Choice
@
2
C
W
S
$180
$860
$1,800
$1,560
#3
X
80
E
$ 300
1,500
D
$1,800
4
R
F
olo 5
%
U
00 *
$ 240
700
860
$1,800
8
A
J
(
1
9
K
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)
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Pls Solve question g
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Examus
student.use.examus.net/?ridban=1&sessi.
ACCT101 FEX_2021_2_Male
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Stockholders' equity consists of:
96
18 - 34
a.
Long-term assets
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95
par value
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Retained earnings and cash
d.
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Is the balance column for profit and loss (capital equity) a CR or DR?
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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
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TEST YOUR UNDERSTANDING
A Review of Ratio Analysis
Activity 10 Y
ORACLE CORPORATION
Ear the fiscal year ended.
Current ratio
5/31/97
5/31/98
1.74
5/31/99
(PAL/S)
1.79
1.70
(P/L/S)
Debt ratio
0.491
0.492
0.488
(P/L/S)
Return on sales
0.15
0.11
´ 0.14
(РLIS)
Return on assets
0.18
0.14
0.18
Source: Disclosure, Ina, Compact D/SEC, 2000.
1.
In the left-hand margin above, circle whether the ratio measures (P)rofitability, short-term (L)iquidity -
the ability to pay current debt, or long-term (S)ölvency - the ability to pay long-term debt.
2. For each short-term liquidity ratio above, circle the ratio indicating the greatest ability to pay current
liabilities for the `three years of information presented.
This company appears to (have / not have) the ability to pay current debt.
3. For each long-term solvency ratio above, circle the ratio indicating the least amount of debt financing for
the three years of information presented.
This company relies more heavily on (debt / equity) to finance…
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Melissa Jucarez
u/22/2021
Corporate finance
TRB Of the fallowing see of ccsh flous?
Year
what
19 the
COsh Flows
-18.700
1
9,400
10,400
3
6is00
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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
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15. You work for the CEO of a new company that plans to manufacture and sell a new product, a watch that has an
embedded TV set and a magnifying glass crystal. The issue now is how to finance the company, with only equity or with
a mix of debt and equity. Expected operating income is $510,000. Other data for the firm are shown below. How much
higher or lower will the firm's expected ROE be if it uses some debt rather than all equity, i.e., what is ROEL - ROEU? Do
not round your intermediate calculations.
0% Debt, U
60% Debt, L
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Question 4
An analyst collects the following financial information to assess the credit quality of Company
Y and Company Z, relative to each other and their industry average.
Company Z
2 250 000
Company Y
550 000
300 000
40 000
Earnings before interest and tax
Funds from operations
Interest expense
Total debt
Total capital
1 000 000
4 000 000
500 000
Goodwill
Present value of operating leases 300 000
Net pension liability
0
850 000
160 000
2 500 000
6 500 000
Industry average
1 400 000
600 000
100 000
2 400 000
6 000 000
200 000
200 000
0
200 000
Calculate adjusted financial ratios for both companies and the industry, and evaluate the
relative creditworthiness of Company Y and Company Z.
(4)
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Karan
Subject: acounting
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Princip X
Princip X
Princip X
L Accorc X
* Sophia X
Premie X
UNIT
Princip X
https://strayer.sophia.org/spcc/principles-of-finance-practice-milestone-1-1/4
Question
Unit 1 Tutorials
6 If your
Consider the P/E ratios of the following companies:
Company A: 5.34
• Company B: 3.33
Company C: 7.90
Company D: 6.75
Company C is more
per unit of current net income than Company B.
O expensive
O economical
O volatile
O affordable
SAVE AND CONTINUE
"pe here to search
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Partial Income Statement
Excel Exercise
Compute the Following
ՀԱՐ
Sales
COGS
SG&A
Depreciation
Debt Int. Rate
Tax Rate*
2019
100
40
EBITDA
EBIT
25
Interest
10
EBT
0.08
Tax
0.25
Net Income
?
?
?
?
?
?
Partial Balance Sheet
Debt and Loans
150
Total Equity
150
Total Assets
300
Inv. Change
10
A/R Change
A/P Change
35
20
Net Profit Margin
Equity Multiplier
Verify Dupont ROE
?
סיי
?
?
?
?
?
* Assume all taxes paid in current period (no accrued taxes) for rest of course
CF from Operations
ROE
Asset Turnover
CED
Tt O
24
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Problem 17-5 (AICPA Adapted)
Investment in Hall Company at equity
statement of financial position:
Accounts receivable, net of allowance
Fearsome Company showed the following comparative
2021
2020
Cash and cash equivalents
2,350,000
600,000
1,000,000
2,200,000
2,000,000
5,000,000
1,050,000) ( 800,000)
400,000
350,000
700,000
850,000
2,000,000
1,500,000
4,000,000
Inventory
Land
Property, plant and equipment.
Accumulated depreciation
Goodwill
400,000
12,500,000
9,000,000
Accounts payable
Note payable - long term
Bonds payable
Share capital, P100 par
Share premium
Retained earnings
Treasury shares, at cost
600,000
500,000
1,600,000
5,250,000
2,700,000
1,850,000
550,000
2,100,000
4,000,000
1,750,000
1,300,000
700,000)
12,500,000
9,000,000
Additional information for 2021
1. The net income for the current year was P3,050,000.
2. Cash dividend paid amounted to P2,500,000.
3. The entity sold equipment costing P200,000, with carrying
amount of P50,000, for P70,000 cash.
4. The entity issued…
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QUESTION # 1
a)
In an accounting conference, discussion turned to the possibility of preparing financial statements from a few key accounts together with financial or cost ratios. The assistant controller of a participating firm provided the following data: Pretax income $ 2100000/-. Pre tax Income rate on sales 20%, Gross Profit rate 45%, Rate of marketing expense to sales 25%, 5% Bond Payable represent 37.5 % of the total liabilities of $ 1000000/-.
Required: - An Income statement for the year based on the above information.
b)
If amongst the cost of goods sold in the above question 40% is Direct material and remaining is FOH and Direct Material. FOH is 75% of Direct labour. In the coming year it is expected that material would increase by 20% and amongst total FOH 40% is fixed. If margin rate is 40% and the ratio between Variable FOH and Direct Labour remains same find out the new selling price.
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answer plz
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Don't give answer in image format
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A28
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Please give me true answer this financial accounting question
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Q7 Prepare common size Balance Sheet of XRI Ltd. from the following information:
Particulars
I. Equity and Liabilities
1. Shareholders' Fund
a) Share capital
b) Reserves and surplus
2. Non-current liabilities
Long-term borrowings
3. Current liabilities
Trade Payable
Total
II. Assets
1. Non-current assets
a) Fixed assets
- Tangible asset
Total
Plant & machinery
- Intangible assets
Goodwill
b) Non-current investments
2. Current assets
Inventories
Note No. March 31,
2016
15,00,000
5,00,000
6,00,000
14,00,000
March 31,
2017
16,00,000
10,00,000
12,00,000
5,00,000
15,50,000
10,50,000
41,50,000 32,50,000
5,00,000
8,00,000
12,00,000
10,00,000
1,50,000
2,50,000
41,50,000 32,50,000
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- Match each term with it's definition.arrow_forwardAa v AaBbCcDdEe AaBbCcDdE AaBbCcDdEe Normal Body Text List Paragraph No Spacing Table Par -Ov A v Question 1: In the table below, you are given the financial performance indicators forCari Farm during the period 2018 to 2020. 田 Cari Farm Industry Performance Area 2018 2019 2020 2018 2019 2020 Leverage: Assets/Equity Debt/Equity (%) Interest Coverage 0.81 1.21 0.92 1.00 1.20 1.15 101.3 81.5 81.6 73.0 77.0 81.0 1.63 2.78 2.04 4.00 3.50 3.30 Liquidity: Current Ratio 1.22 1.49 1.45 2.00 1.70 1.50 Acid-test Ratio 1.10 1.30 1.20 1.00 0.90 0.90 Profitability: Profit Margin (%) 11.77 15.58 10.81 15.60 15.71 15.80 Efficiency: Revenue/Assets 0.47 0.49 0.50 0.60 0.62 0.68 Please use the table above to answer the following questions: a. Discuss the trend analysis on how Cari Farm performed over the period for each ratio category. b. Report on how Cari Farm performed as compared to the industry norms for each ratio category. c. Calculate the return on assets (ROA) as a percent and the return on…arrow_forwardFinancial statement analysis 2. Given below are the summarized accounts of Belper Ltd for the past five years. These the basis for the questions which follow. Summarized profit and loss accounts of Belper Ltd Sales Cost of sales Trading profit Depreciation Interest Net profit before tax Taxation Net profit after tax Extraordinary items Dividends Retained profits Retained at start of year Retained at end of year Fixed assets Freehold land and buildings Leasehold land and buildings Plant and machinery Total gross fixed assets Depreciation freehold Depreciation leasehold Depreciation plant, etc. Total depreciation Net fixed assets Intangible fixed assets Goodwill Investments Patents and trade marks Current assets Stock Debtors Bank and cash Current liabilities Creditors Taxation Dividends Bank loans and overdraft 19X4 Net current assets £000 Financed by Ordinary share capital Share premium account Retained profits Revaluation reserves 93,930 81,750 12,180 1,023 2,727 8,430 2,517 5,913…arrow_forward
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