PLEASE answer all of the following questions. Thank you.(a) Discuss the concept of the Agency Problem.(b) Is it ethical for tobacco companies to sell a product that is known to be addictive and a danger to the health of the user? Is it relevant that the product is legal?(c) Using the financial statements provided, compute the following ratios for WITCO for 2019and 2020.i. Debt to Equityii. Total Debt Ratioiii. Times Interest Earnediv. Cash Coveragev. Return on Equity - Using the Du Pont Identity(d) Briefly discuss the difference(s) between a Trend Analysis and a Peer Group Analysis? (e) Using the results of your calculation in part c (i–iv) above, perform a trend analysison WITCO’s financial leverage ratios (discuss if these ratios improved or deteriorated between 2019and 2020and suggest possiblereasons for increases/decreases where possible). Clearly indicate in your analysis whateach ratio measures/suggests about the company. West Indian Tobacco Company LimitedIncome StatementsFor the years ended December 31, 2019 & 202020192020('000s)935,385('000s)899,917SalesCost of Sales(208,980)728,375(211,020)688,897(10,005)(75,537)(15,241)Gross ProfitDistribution Costs(14,354)Administrative Expenses(83,072)Other Opersting Expenses(25,627)Interest Income2,9611,210Other Income/(Expenses)Earnings before Interest & TaxesInterest Expense8,537616,8209,552597,976(348)597,628(521)616,299Taxable IncomeTaxation(189,526)426,773(178,055)419,573Net IncomeDividends Paid292,415Add to Retained Earnings127, 158West Indian Tobacco Company LimitedStatement of Financial PositionAs at December 31, 2018 & 20192019202020192020('000s)('000s)('000s)('000s)ASSETSLIABILITIES & EQUITYCurrent AssetsCurrent LiabilitiesAccounts PayablesOther Current LiabilitiesInventories36,62748,91699,348117,408Accounts Receivables79.89350.81848,739148,08749.395Other Curent Assets5.0714,917188,801Cash & Equivelents300,018447.921421.609550,572Non-current Liabilites84,04784.580Non Current Assets, Net281,779258.251Total Liabilities232, 134231,361EquityShare Capital & Other ReservesRetained Earnings102,958102.008348,298475.458Total Equity451,254577,462TOTAL ASSET s683,388808,823TOTAL LIAB. & EQUITY683,388808,823ADDITIONAL NOTES to FINANCIAL STATEMENTS:> Depreciation Expense for 2019 = $11,385 ('000)> Depreciation Expense for 2020 = $11,751 ('000)> Change in Equity = Change in Share Capital & Other Reserves%3D Case Analysis: West Indian Tobacco Company LimitedThe West Indian Tobacco Company Limited (West Indian Tobacco) is a public company whoseshares are listed on the Trinidad and Tobago Stock Exchange and held by over 3000shareholders. The company was established in 1904 by Mr. John Phillips, businessman andfounder of the tobacco business in Trinidad and Tobago. In 1948, the manufacturing plantwas transitioned from Port-of-Spain to Champ Fleurs.Currently this plant supplies 25 brands in 137 stock keeping units (SKU's) both to the localTrinidad and Tobago market, and regionally to 16 CARICOM Members and Associatecountries. These include: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica,Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent andthe Grenadines, Suriname, Bermuda, British Virgin Islands and the Cayman Islands.The Company's mission is to sustain its market leadership position and to be the number onemanufacturing centre in the Caribbean. Locally we distribute through third party distributionto approximately 7000 outlets around Trinidad and Tobago. Our local product portfolio ismade up of three main brands, Dunhill, DuMaurier and Broadway in 14 stock keeping units.

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Answered: Discuss the concept of the Agency…

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS