JohnBoy Industries has a cash balance of $52,000, accounts payable of $132,000, inventory of $182,000, accounts receivable of $217,000, notes payable of $127,000, and accrued wages and taxes of $40,500. How much net working capital does the firm need to fund? Net working capital funding need GA
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- As a financial analyst, you have been tasked with evaluating Randy Watson Music's free cash flow. Based on the 2022 income statement, BIT was $41 million, the tax rate was 21 percent, and its depreciation expense was $6 million. NOPAT gross fixed assets increased by $28 million from 2021 and 2022. The company's current assets increased by $18 million and current liabilities increased by $14 million. Calculate the Investment in operating capital (IOC) for 2022.Calculate the external financing needed given the following financial statements. Assume that all costs, all assets, and accounts payable change proportionally with sales. Sales are projected to grow by 25%. Also assume that the company is operating at full capacity. Current Statement of Comprehensive Income Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Addition to RE 2,275 Current Statement of Financial Position Cash $8,000 Accounts receivable 22,000 Inventory 30,000 Total current assets 60,000 Fixed assets 90,000 Total assets $150,000 Accounts payable $15,000 Notes payable 5,000 Total current liabilities 20,000 Long-term debt 40,000 Common stock 40,000 Retained earnings 50,000 Total owners’ equity 90,000 Total Liabilities and OE $150,000 Select one answer A- $33,750 B- $34,656.25 C- $30,906.25 D- $37,500 E- $22,500A firm with the following investment opportunities has a capital budget of $10,000. According to the net present value technique, which investments should the firm make if the firm's cost of capital is 10%? Investment A B C Cost $10,000 $7,000 $3,000 Cash Inflow $12,000. $8,600 $4,000
- The Hasting Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends. The Hasting Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends.Year 1: net income $18million, Profitable Capital Expenditure $7 million Year 2 : net income 16 million profitable capital expenditure 12 million Year 3: net income 11 million profitable capital expenditure 6 million Year 4: net income 22 million profitable capital expenditure 7 million Year 5: net income 20 million profitable capital expenditure 8 million The Hastings corporation has 12 million shares outstanding. a. If the marginal principle of retain earnings is…You are given the following information concerning a firm: Assets required for operation: $5,000,000 Revenues: $8,400,000 Operating expenses: $7,900,000 Income tax rate: 40%. Management faces three possible combinations of financing: 100% equity financing 30% debt financing with a 6% interest rate 60% debt financing with a 6% interest rate What is the implication of the use of financial leverage when interest rates change?What is the net effect on a firm's cash flow from changes in net working capital if a new project requires: $ 30,000 increase in inventory, $ 10,000 increase in accounts receivable, $35,000 increase in machinery, and a $20,000 increase in accounts payable?
- A company is considering a $166,000 investment in machinery with the following net cash flows. The company requires a 10% return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow $10,000 $28,000 $55,000 $42,000 $111,000 (a) Compute the net present value of this investment.(b) Should the machinery be purchased?You need to estimate the value of Laputa Aviation. You have the following forecasts (in millions of dollars) of its profits and of its future investments in new plant and working capital: Earnings before interest, taxes, depreciation, and amortization (EBITDA) Depreciation Pretax profit Tax at 30% Investment $ 87 DARIK a. Total value b. Laputa's equity 17 70 21 16 Year 2 $107 27 86 24 19 $122 32 27 22 4 $127 37 90 27 24 From year 5 onward, EBITDA, depreciation, and investment are expected to remain unchanged at year-4 levels. Laputa is financed 40% by equity and 60% by debt. Its cost of equity is 18%, its debt yields 9%, and it pays corporate tax at 30%. a. Estimate the company's total value. Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. b. What is the value of Laputa's equity? Note: Do not round intermediate calculations. Enter your answer in millions rounded to the nearest whole amount. (11Calculate Return on Investment (ROI) and Economic Value Added (EVA).Use the following data for Eastern Investments Company to calculate ROI and EVA for 2013 and 2014. Analyze the results. Eastern Investments 2013 2014 Sales $325,000,000 $395,000,000Net Operating Profit After Tax $55,000,000 $60,000,000Net Income $35,000,000 $42,000,000Invested Capital $125,000,000 $145,000,000Adjusted Average Invested Capital $350,000,000 $380,000,000Cost of Capital 11% 11%Required:Calculate ROI for 2013 and 2014Calculate EVA for 2013 and 2014Is Eastern Investments performance improving year on year? Why?
- A firm has $600,00 in current assets and $150,000 in current liabilities. If it uses cash to pay $50,000 in accounts recievalbes will the current ratio increase or decraese? Will the net working capital increase or decrease or stay the same? Why?The Hasting Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders could earn if the funds were paid out in the form of dividends. Year 1: net income $13 million, Profitable Capital Expenditure $7 million Year 2 : net income 20 million profitable capital expenditure 12 million Year 3: net income 18 million profitable capital expenditure 6 million Year 4: net income 14 million profitable capital expenditure 8 million Year 5: net income 19 million profitable capital expenditure 9 million The Hastings Corporation has 3 million shares outstanding. If the firm simply uses a payout ratio of 20% net income, how much in total cash dividends will be paid? if the firm pays a 20% stock dividend in years 2 through 5, and also pays a cash dividend of $3.40 per share for each of the five years, how much in total dividends will be paid? Assume the payout ratio in each…Suppose Alcatel-Lucent has an equity cost of capital of 10%, market capitalization of $10.8 billion, and an enterprise value of $14.4 billion. Suppose Alcatel-Lucent’s debt cost of capital is 6.1% and its marginal tax rate is 35%. The cash flow for the project is as follows, same as was given in the previous question. Year 0 1 2 3 FCF -100 50 100 Calculate FCFE for each year but only answer: What is the Percentage change in FCFE in Year 2 from Year 1? Please give your answer in Percentage up to 2 places of Decimal without giving the % sign.