FINC400-Final assignment

ABC 2. You examine information from the following firms Firm Net Income Sales Assets Equity I A9 9 110 98 50 B 58 642 660 322 C 137 1210 1408 761 Use the DuPont Method to answer the following questions. • Which firm is the most profitable? • Which firm is the most efficient? Which firm uses the most leverage? Which firm has the safest ROE? D 358 3698 4002 1989 I

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How has the petroleum industry turned the fortunes of nations in the 20th century?

9.4. Canton Corporation is a privately owned firm that engages in the production and sale of industrial chemicals, primarily in North America. The firm's primary product line consists of organic solvents and intermediates for pharmaceutical, agricultural, and chemical products. Canton's managers have recently been considering the possibility of taking the company public and have asked the firm's investment banker to perform some preliminary analysis of the value of the firm's equity.To support its analysis, the investment banker has prepared pro forma financial statements for each of the next four years under the (simplifying) assumption that firm sales are flat (i. e., have a zero rate of growth), the corporate tax rate equals 30%, and capital expenditures are equal to the estimated depreciation expense. (Look at the picture sent) In addition to the financial information on Canton, the investment banker has assembled the following information concerning current rates of return in the…

9.4. Canton Corporation is a privately owned firm that engages in the production and sale of industrial chemicals, primarily in North America. The firm's primary product line consists of organic solvents and intermediates for pharmaceutical, agricultural, and chemical products. Canton's managers have recently been considering the possibility of taking the company public and have asked the firm's investment banker to perform some preliminary analysis of the value of the firm's equity.To support its analysis, the investment banker has prepared pro forma financial statements for each of the next four years under the (simplifying) assumption that firm sales are flat (i. e., have a zero rate of growth), the corporate tax rate equals 30%, and capital expenditures are equal to the estimated depreciation expense. (Look at the picture sent) In addition to the financial information on Canton, the investment banker has assembled the following information concerning current rates of return in the…

Hello, This question is from the critical thinking questions of CHAPTER 1, Introduction to Corporate Finance from Fundamentals of corporate finance, the 11th Canadian edition   thank you,

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Q1:Great West States (GWS) is a railroad company operating in the western United States.Juanita Salazar is risk manager of GWS. At the direction of the company’s chief executiveofficer, she is searching for ways to handle the company’s risks in a more economical way.The CEO stressed that Juanita should consider not only pure risks but also financial risks.Juanita discovered that a significant financial risk facing the organization is a commodityprice risk—the risk of a significant increase in the price of fuel for the company’slocomotives. A review of the company’s income and expense statement showed that lastyear about 28 percent of its expenses were related to fuel oil. Juanita was also asked todetermine whether the installation of a new sprinkler system at the corporate headquartersbuilding would be justified. The cost of the project would be $40,000. She estimates theproject would provide an after-tax net cash flow of $25,000 per year for three years, withthe first of these cash…

The examples below are all examples of a U.S. capital outflow except a . General Motors invests in an automobile plant in France. b . Charles Schwab, Inc., invests mutual fund money in the Japanese stock market. c . All answers are capital outflows. d . Microsoft opens a new office in Detroit

Read the following selected quotes from senior executives and explain the role of capital investment analysis for these companies. CEO, Worthington Industries (a high-technology steel company): “We try to find the best technology, stay ahead of the competition, and serve the customer. … We'll make any investment that will pay back quickly … but if it is something that we really see as a must down the road, payback is not going to be that important.” Chairman of Amgen Inc. (a biotech company): “You cannot really run the numbers, do net present value calculations, because the uncertainties are really gigantic. … You decide on a project you want to run, and then you run the numbers [as a reality check on your assumptions]. Success in a business like this is much more dependent on tracking rather than on predicting, much more dependent on seeing results over time, tracking and adjusting and readjusting, much more dynamic, much more flexible.” Chief financial officer of Merck & Co.,…

During the wake of the financial crisis, Ben Bernanke, chairman of the Federal Reserve, said that “shortening the cash cycle and better use of working capital” are the most important factors as private-sector businesses struggle to overcome the current economic volatility and difficulty in accessing capital markets (IBM Global Business Services, “Managing Working Capital in the New Economic Environment, http://www-935.ibm.com/services/uk/bcs/pdf/working_capital_paper.pdf). Given the importance of working capital management, consider the case of Purple Dandelion Flower Inc. and both the amount of working capital that it is using being used in the firm and explore the prospects of how its working capital will be financed. Purple Dandelion Flower Inc. reported the following results for current assets and liabilities on its most recent balance sheets. Interestingly, the company’s sales did not change—it reported sales of $27,750 for its most recent year as well as for last year. The…

Companies borrow from various institutions in the capital market to finance their businesses for short and long term periods. The concept of a weighted cost of capital may be new to some of you, but if you were a financial manager why would the weighted cost of capital be important to you as you examine the cost of borrowing on behalf of your firm? Why or why not?

3. Corporate finance, capital markets, and investments Finance professionals make decisions that fall into three distinctive areas: corporate finance, capital markets, and investments. Below is a set of decisions made by finance professionals. Categorize the decisions according to the area of finance to which they belong. Capital Corporate Finance Decision Markets Investments Radford is a small company that manufactures automobile bearings. Managers at the company must make decisions on the kind and the cost of equipment to buy. Jackson works for an investment bank and makes decisions about the sale of new common stock by ABCL Inc. Tyler works for a financial advising firm. He must create a financial plan and come up with a list of securities in which his client can invest. Tyler must make decisions regarding the investments that he should recommend to his clients to include in their portfolio.

The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk. The relationship between interest rates and exchange rates can be represented through the concept of interest rate parity. Consider the following:   Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$):   Spot Exchange Rate One-Year Forward Exchange Rate Canadian dollar (U.S. dollar/Canadian dollar) 0.8798 0.8935   The current one-year interest rate on U.S. Treasury securities is 8.03%. If interest rate parity holds, what is the expected yield on one-year Canadian…

What has been the main growth driver of the largest market in the world? The growth of the stock market The growth of private corporations The increased spending of governments over the last century