FOUND.OF FINANCIAL MANAGEMENT-ACCESS
17th Edition
ISBN: 9781260519969
Author: BLOCK
Publisher: MCG
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Chapter 20, Problem 4DQ
Summary Introduction
To explain:Â The difference between vertical and horizontal integrations and the effect of the anti-trust policy on mergers.
Introduction:
Vertical integration:
A vertical integration is one in which the acquirement of firms with the same production process within the same industry is done.
Horizontal integration:
A horizontal integration is one in which the acquirement of firms with the same level of value chain in an industry is done.
Anti-trust policy:
Anti-trust laws are statues of the U.S. to ensure the prevention of consumer exploitation by implementing healthy competition in an open-market economy.
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QUESTION #1:
A) What is the Net Operating Profit After Tax (NOPAT) for 2024?B) What is the Operating Cash Flow for 2024?
C) What is the Free Cash Flow for 2024?
Note: Marketable securities are non-operating current assets, and short-term debt (bank loan) is a non-operating current liability. Both of these items are excluded from the calculation of net operating working capital.
D) If the stock trades for $85 per share at the end of 2024, and there are 315,000 shares outstanding, what is the MVA in 2024?
E) Given that the firm’s WACC is 14%, what is the EVA during 2024?
F) Create common size income statement and balance sheet for 2024, 2023 and 2022.
G) Using 2022 as the base year, create income statement and balance sheet percentage change analysis for 2024 and 2023.
QUESTION #2:
In addition to the AAA Ltd. financial statements in Problem One, you are given more information as follows.
Sales are forecast to increase by 80% in 2025.
Short-term Debt, Long-term Debt, and Common…
Chapter 20 Solutions
FOUND.OF FINANCIAL MANAGEMENT-ACCESS
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