Assignment: 1.Give some examples of the punishments that were in place during the drafting and ratification of the American Constitution. How did these punishments change after the Constitution was put in place?
2. Contrast the crimes for which the death penalty is made mandatory against the three classes of offenders who are not death-penalty eligible. How would you define “irreparable corruption” from Montgomery v. Louisiana 136 S.Ct. 718 (2016)? Why do you think these distinctions have been put into law? Do you agree with them? Why or why not?
3. Research the case that marked the beginning of the Supreme Court’s capital punishment sentencing reforms and explain what this case held.
4. Make a compelling argument for “humane punishment” with the understanding that it has not always been practiced. Include the present constitutionally acceptable forms of punishment that must be carried out in a humane fashion. Include how the United States’ punishment compares to the punishment in several Middle Eastern or African countries.
Union Vs Human Resources
According to Beer et al (1984), human resources management (HRM) has developed as a way to serve workers’ interests, albeit internally within the workplace. This challenges the role of worker advocacy. Historically, workers’ interests have been served by external representatives from labor unions, and have also been protected through government interventions such as laws and regulations. The purpose of this assignment is to understand the roles of unions and the role of HRM, and examine whether workers have adequate support and protections in the modern workplace. After reading the text chapters for Week One and Week Two and reviewing the resources provided:
- Explain how unions, human resources management personnel, and government interventions (such as laws and regulations) serve to address worker rights and worker safety.
- Evaluate whether unions and HRM have unique roles for different groups (i.e., the organization, management, and the workers) or if there are areas of overlap.
- Assess the following statement, “Workers in the modern workplaces of America are well protected and well supported.” Explain whether you agree or disagree with this statement, based on what you now know about government interventions, unions, HRM, and worker advocacy. Be sure to support your agreement or disagreement with statements of reasoning from your analysis.
The paper must be four to five double-spaced pages in length (excluding the title and reference pages) and formatted according to APA style. You must use at least three scholarly sources (which can be found in the Ashford University Library) other than the textbook to support your claims. Cite your sources in text and on the reference page. For information regarding APA samples and tutorials, visit the Ashford Writing Center, within the Learning Resources tab on the left navigation toolbar, in your online course. In particular, it would be helpful for you to review.
Constitutional Law II Asssingment
Start by reading and following these instructions:
1. Quickly skim the questions or assignment below and the assignment rubric to help you focus.
2. Read the required chapter(s) of the textbook and any additional recommended resources. Some answers may require you to do additional research on the Internet or in other reference sources. Choose your sources carefully.
3. Consider the discussion and the any insights you gained from it.
4. Create your Assignment submission using at least three scholarly references . Cite your sources using APA style as required. Check your spelling, 500-600 words minimum, all work will be ran through Turn It In.
Assignment:
1. If you are a government employee, can your boss instruct you to post election signs in your yard to support the mayoral candidate of his choosing or risk losing your job if you don’t? Explain your answer in detail.
2. What must a police officer establish in order to successfully challenge a police department regulation as a violation of substantive due process? Do you agree with this process? Why or why not?
3.Identify and describe three kinds of discrimination claims that can be brought under Title VII. Use an example to explain each.
4. Do you think police departments should be able to set a maximum weight for officers in order for them to be physically capable of performing their job? Why or why not? If so, what should the maximum weight be for men and women? Should muscle vs. fat be a factor? What about height? Why did you pick the numbers you did? If you think police departments shouldn’t be able to, why do you think this?
situation of Computron Industries
Ratios
| Chapter 3 Mini Case | ||||
| The first part of the case, presented in Chapter 2, discussed the situation of Computron Industries after an expansion program. A large loss occurred in 2016, rather than the expected profit. As a result, its managers, directors, and investors are concerned about the firm’s survival. | ||||
| Jenny Cochran was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position. Cochran must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers. | ||||
| Input Data: | ||||
| 2015 | 2016 | 2017E Bart Kreps: Projections |
||
| Year-end common stock price | $8.50 | $6.00 | $12.17 | |
| Year-end shares outstanding | 100,000 | 100,000 | 250,000 | |
| Tax rate | 40% | 40% | 40% | |
| Lease payments | $40,000 | $40,000 | $40,000 | |
| Balance Sheets | ||||
| Assets | 2015 | 2016 | 2017E | |
| Cash and equivalents | $9,000 | $7,282 | $14,000 | |
| Short-term investments | $48,600 | $20,000 | $71,632 | |
| Accounts receivable | $351,200 | $632,160 | $878,000 | |
| Inventories | $715,200 | $1,287,360 | $1,716,480 | |
| Total current assets | $1,124,000 | $1,946,802 | $2,680,112 | |
| Gross Fixed Assets | $491,000 | $1,202,950 | $1,220,000 | |
| Less Accumulated Dep. | $146,200 | $263,160 | $383,160 | |
| Net Fixed Assets | $344,800 | $939,790 | $836,840 | |
| Total Assets | $1,468,800 | $2,886,592 | $3,516,952 | |
| Liabilities and equity | ||||
| Accounts payable | $145,600 | $324,000 | $359,800 | |
| Notes payable | $200,000 | $720,000 | $300,000 | |
| Accruals | $136,000 | $284,960 | $380,000 | |
| Total current liabilities | $481,600 | $1,328,960 | $1,039,800 | |
| Long-term bonds | $323,432 | $1,000,000 | $500,000 | |
| Total liabilities | $805,032 | $2,328,960 | $1,539,800 | |
| Common stock (100,000 shares) | $460,000 | $460,000 | $1,680,936 | |
| Retained earnings | $203,768 | $97,632 | $296,216 | |
| Total common equity | $663,768 | $557,632 | $1,977,152 | |
| Total liabilities and equity | $1,468,800 | $2,886,592 | $3,516,952 | |
| Income Statements | ||||
| 2015 | 2016 | 2017E | ||
| Net sales | $3,432,000 | $5,834,400 | $7,035,600 | |
| Costs of Goods Sold Except Depr. | $2,864,000 | $4,980,000 | $5,800,000 | |
| Depreciation and amortization | $18,900 | $116,960 | $120,000 | |
| Other Expenses | $340,000 | $720,000 | $612,960 | |
| Total Operating Cost | $3,222,900 | $5,816,960 | $6,532,960 | |
| Earnings before interest and taxes (EBIT) | $209,100 | $17,440 | $502,640 | |
| Less interest | $62,500 | $176,000 | $80,000 | |
| Pre-tax earnings | $146,600 | ($158,560) | $422,640 | |
| Taxes (40%) | $58,640 | ($63,424) | $169,056 | |
| Net Income before preferred dividends | $87,960 | ($95,136) | $253,584 | |
| EPS | $0.880 | ($0.951) | $1.014 | |
| DPS | $0.220 | $0.110 | $0.220 | |
| Book Value Per Share | $6.638 | $5.576 | $7.909 | |
| Cochran must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions should be taken. Your assignment is to help her answer the following questions. Provide clear explanations, not yes or no answers. | ||||
| a. Why are ratios useful? What three groups use ratio analysis and for what reasons? | ||||
| b. (1.) Calculate the current and quick ratios based on the projected balance sheet and income statement data. | ||||
| Calculated Data: Ratios | Industry | |||
| 2015 | 2016 | 2017E | Average | |
| Liquidity ratios | ||||
| Current Ratio Bart Kreps: Current Assets divided by Current Liabilities. |
||||
| Quick Ratio Bart Kreps: Current Assets minus Inventories divided by Current Liabilities. |
||||
| (2.) What can you say about the company’s liquidity position? We often think of ratios as being useful (1) to managers to help run the business, (2) to bankers for credit analysis, and (3) to stockholders for stock valuation. Would these different types of analysts have an equal interest in the liquidity ratios? | ||||
| c. Calculate the inventory turnover, days sales outstanding (DSO), fixed assets turnover, operating capital requirement, and total assets turnover. How does Computron’s utilization of assets stack up against other firms in its industry? | ||||
| Industry | ||||
| Asset Management ratios | 2015 | 2016 | 2017E | Average |
| Inventory Turnover Bart Kreps: COGS divided by Inventories. |
6.10 | |||
| Days Sales Outstanding Bart Kreps: Accounts Receivable divided by average daily sales. |
32.00 | |||
| Fixed Asset Turnover Bart Kreps: Sales divided by Net Fixed Assets. |
7.00 | |||
| Total Asset Turnover Bart Kreps: Sales divided by Total Assets. |
2.50 | |||
| d. Calculate the debt ratio, liabilities-to-assets ratio, times-interest-earned, and EBITDA coverage ratios. How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios? | ||||
| Industry | ||||
| Debt Management ratios | 2015 | 2016 | 2017E | Average |
| Debt Ratio | 32.0% | |||
| Liabilities-to-assets Ratio Bart Kreps: Total Debt divided by Total Assets. |
50.0% | |||
| Times Interest Earned Bart Kreps: EBIT divided by interest charges. |
6.20 | |||
| EBITDA Coverage Ratio Bart Kreps: (EBITDA + Lease Payments) / (Interest + Loan Payments + Lease Payments) |
8.00 | |||
| e. Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios? | ||||
| Industry | ||||
| Profitability ratios | 2015 | 2016 | 2017E | Average |
| Net Profit Margin Bart Kreps: Net Income divided by sales. |
3.6% | |||
| Operating Margin Bart Kreps: EBIT divided by sales. |
7.1% | |||
| Gross Profit Margin Bart Kreps: Net Income divided by (Sales – COGS). |
15.5% | |||
| Basic Earning Power Bart Kreps: EBIT divided by Total Assets. |
17.8% | |||
| Return on Assets Bart Kreps: Net Income divided by Total Assets. |
9.0% | |||
| Return on Equity Bart Kreps: Net Income divided by Common Equity. |
18.0% | |||
| f. Calculate the price/earnings ratio, price/cash flow ratio, and market/book ratio. Do these ratios indicate that investors are expected to have a high or low opinion of the company? | ||||
| Industry | ||||
| Market Value ratios | 2015 | 2016 | 2017E | Average |
| Price-to Earnings Ratio Bart Kreps: Price per share divided by Earnings Per Share. |
14.20 | |||
| Price-to-Cash Flow Ratio Bart Kreps: P/CF ratio is calculated by dividing the price by the net cash flow per share. |
7.60 | |||
| Market-to-Book Ratio Bart Kreps: Market Price per share divided by Book value per share. |
2.90 | |||
| Book Value Per Share Bart Kreps: Common Equity divided by shares outstanding. |
na | |||
| g. Perform a common size analysis and percent change analysis. What do these analyses tell you about Computron? | ||||
| See the worksheet with the TAB “Common Size and % Change” | ||||
| h. Use the extended DuPont equation to provide a summary and overview of Computron’s projected financial condition. What are the firm’s major strengths and weaknesses? | ||||
| DuPont Analysis | ROE = | P.M. X | T.A.T.O. X | Equity Multiplier |
| Computron | 2015 | |||
| Computron | 2016 | |||
| Computron | 2017E | |||
| Industry Average | 18.00% | 0.0% | 2.5 | 2.00 |
| i. What are some potential problems and limitations of financial ratio analysis? | ||||
| j. What are some qualitative factors analysts should consider when evaluating a company’s likely future financial performance? |
Common Size and % Change
| Common Size Statements | ||||
| Balance Sheets | 2015 | 2016 | 2017E | Industry |
| Assets Bart Kreps: Percentage of Total Assets. |
||||
| Cash and equivalents | 0.3% | |||
| Short-term investments | 0.3% | |||
| Accounts receivable | 22.4% | |||
| Inventories | 41.2% | |||
| Total Current Assets | 64.1% | |||
| Net Fixed Assets | 35.9% | |||
| Total Assets | 100.0% | 100.0% | 100.0% | 100.0% |
| Liabilities and equity Bart Kreps: Percentage of Total Liabilities and Equity. |
||||
| Accounts payable | 11.9% | |||
| Notes payable | 2.4% | |||
| Accruals | 9.5% | |||
| Total current liabilities | 23.7% | |||
| Long-term bonds | 26.3% | |||
| Total common equity | 50.0% | |||
| Total liabilities and equity | 100.0% | 100.0% | 100.0% | 100.0% |
| Income Statements | 2015 | 2016 | 2017E | Industry |
| Net sales Bart Kreps: Percentage of Net Sales. |
100.0% | |||
| COGS except depr. | 84.5% | |||
| Depreciation | 4.0% | |||
| Other Expenses | 4.4% | |||
| EBIT | 7.1% | |||
| Less interest | 1.1% | |||
| Pre-tax earnings | 5.9% | |||
| Taxes (40%) | 2.4% | |||
| Net Income before preferred dividends | 3.6% | |||
| Percentage Change Analysis | ||||
| Balance Sheets | 2015 | 2016 | 2017E | |
| Assets | ||||
| Cash and equivalents | 0% | |||
| Short-term investments | 0% | |||
| Accounts receivable | 0% | |||
| Inventories | 0% | |||
| Total Current Assets | 0% | |||
| Net Fixed Assets | 0% | |||
| Total Assets | 0% | |||
| Liabilities and equity | ||||
| Accounts payable | 0% | |||
| Notes payable | 0% | |||
| Accruals | 0% | |||
| Total current liabilities | 0% | |||
| Long-term bonds | 0% | |||
| Total common equity | 0% | |||
| Total liabilities and equity | 0% | |||
| Income Statements | 2015 | 2016 | 2017E | |
| Net sales | 0% | |||
| Costs of Goods Sold | 0% | |||
| Depreciation | 0% | |||
| Other Expenses | 0% | |||
| EBIT | 0% | |||
| Less interest | 0% | |||
| Pre-tax earnings | 0% | |||
| Taxes (40%) | 0% | |||
| Net Income before preferred dividends | 0% |
Common Size Analysis and Percent Change Analysis In common size analysis, all income statement items are divided by sales, and all balance sheet items are divided by total assets. In percent change analysis, all items are expressed as a percent change from the first year, called the base year, of the analysis.
Financial Accounting – Prof Linda Pinc
| Solution | 7/16/15 | ||
| Chapter: | 3 | ||
| Problem: | 15 | ||
| Joshua & White Technologies: December 31 Balance Sheets | |||
| (Thousands of Dollars) | |||
| Assets | 2016 | 2015 | |
| Cash and cash equivalents | $21,000 | $20,000 | |
| Short-term investments | 3,759 | 3,240 | |
| Accounts Receivable | 52,500 | 48,000 | |
| Inventories | 84,000 | 56,000 | |
| Total current assets | $161,259 | $127,240 | |
| Net fixed assets | 218,400 | 200,000 | |
| Total assets | $379,659 | $327,240 | |
| Liabilities and equity | |||
| Accounts payable | $33,600 | $32,000 | |
| Accruals | 12,600 | 12,000 | |
| Notes payable | 19,929 | 6,480 | |
| Total current liabilities | $66,129 | $50,480 | |
| Long-term debt | 67,662 | 58,320 | |
| Total liabilities | $133,791 | $108,800 | |
| Common stock | 183,793 | 178,440 | |
| Retained Earnings | 62,075 | 40,000 | |
| Total common equity | $245,868 | $218,440 | |
| Total liabilities and equity | $379,659 | $327,240 | |
| Joshua & White Technologies December 31 Income Statements | |||
| (Thousands of Dollars) | |||
| 2016 | 2015 | ||
| Sales | $420,000 | $400,000 | |
| COGS except excluding depr. and amort. | 300,000 | 298,000 | |
| Depreciation and Amortization | 19,660 | 18,000 | |
| Other operating expenses | 27,600 | 22,000 | |
| EBIT | $72,740 | $62,000 | |
| Interest Expense | 5,740 | 4,460 | |
| EBT | $67,000 | $57,540 | |
| Taxes (40%) | 26,800 | 23,016 | |
| Net Income Michael C. Ehrhardt: Due to rounding, the numbers calculated in the Chapter 2 problem may differ slightly from these. |
$40,200 | $34,524 | |
| Common dividends | $18,125 | $17,262 | |
| Addition to retained earnings | $22,075 | $17,262 | |
| Other Data | 2016 | 2015 | |
| Year-end Stock Price | $90.00 | $96.00 | |
| # of shares (Thousands) | 4,052 | 4,000 | |
| Lease payment (Thousands of Dollars) | $20,000 | $20,000 | |
| Sinking fund payment (Thousands of Dollars) | $5,000 | $5,000 | |
| Ratio Analysis | 2016 | 2015 | Industry Avg |
| Liquidity Ratios | |||
| Current Ratio | 2.58 | ||
| Quick Ratio | 1.53 | ||
| Asset Management Ratios | |||
| Inventory Turnover (Total COGS/Inventories) | 7.69 | ||
| Days Sales Outstanding | 47.45 | ||
| Fixed Assets Turnover | 2.04 | ||
| Total Assets Turnover | 1.23 | ||
| Debt Management Ratios | |||
| Debt Ratio (Total debt-to-assets) | 20.0% | ||
| Liabilities-to-assets ratio | 32.1% | ||
| Times-interest-earned ratio | 15.33 | ||
| EBITDA coverage ratio | 4.18 | ||
| Profitability Ratios | |||
| Profit Margin | 8.86% | ||
| Basic Earning Power | 19.48% | ||
| Return on Assets | 10.93% | ||
| Return on Equity | 16.10% | ||
| Market Value Ratios | |||
| Earnings per share | NA | ||
| Price-to-earnings ratio | 10.65 | ||
| Cash flow per share | NA | ||
| Price-to-cash flow ratio | 7.11 | ||
| Book Value per share | NA | ||
| Market-to-book ratio | 1.72 | ||
| a. Has Joshua & White’s liquidity position improved or worsened? Explain. | |||
| b. Has Joshua & White’s ability to manage its assets improved or worsened? Explain. | |||
| c. How has Joshua & White’s profitability changed during the last year? | |||
| d. Perform an extended Du Pont analysis for Joshua & White for 2008 and 2009. | |||
| ROE = | PM x | TA Turnover x Equity Multiplier | |
| 2016 | |||
| 2015 | |||
| e. Perform a common size analysis. What has happened to the composition | |||
| (that is, percentage in each category) of assets and liabilities? | |||
| Common Size Balance Sheets | |||
| Assets | 2016 | 2015 | |
| Cash and cash equivalents | |||
| Short-term investments | |||
| Accounts Receivable | |||
| Inventories | |||
| Total current assets | |||
| Net fixed assets | |||
| Total assets | |||
| Liabilities and equity | 2016 | 2015 | |
| Accounts payable | |||
| Accruals | |||
| Notes payable | |||
| Total current liabilities | |||
| Long-term debt | |||
| Total liabilities | |||
| Common stock | |||
| Retained Earnings | |||
| Total common equity | |||
| Total liabilities and equity | |||
| Common Size Income Statements | 2016 | 2015 | |
| Sales | |||
| COGS except excluding depr. and amort. | |||
| Depreciation and Amortization | |||
| Other operating expenses | |||
| EBIT | |||
| Interest Expense | |||
| EBT | |||
| Taxes (40%) | |||
| Net Income | |||
| f. Perform a percent change analysis. What does this tell you about the change in profitability | |||
| and asset utilization? | |||
| Percent Change Balance Sheets | Base | ||
| Assets | 2016 | 2015 | |
| Cash and cash equivalents | |||
| Short-term investments | |||
| Accounts Receivable | |||
| Inventories | |||
| Total current assets | |||
| Net fixed assets | |||
| Total assets | |||
| Base | |||
| Liabilities and equity | 2016 | 2015 | |
| Accounts payable | |||
| Accruals | |||
| Notes payable | |||
| Total current liabilities | |||
| Long-term debt | |||
| Total liabilities | |||
| Common stock | |||
| Retained Earnings | |||
| Total common equity | |||
| Total liabilities and equity | |||
| Base | |||
| Percent Change Income Statements | 2016 | 2015 | |
| Sales | |||
| COGS except excluding depr. and amort. | |||
| Depreciation and Amortization | |||
| Other operating expenses | |||
| EBIT | |||
| Interest Expense | |||
| EBT | |||
| Taxes (40%) | |||
| Net Income |
Build a Model
Build a Model
| Solution | 7/16/15 | ||||
| Chapter: | 2 | ||||
| Problem: | 15 | ||||
| a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for the most recent year. | |||||
| Lan & Chen Technologies: Income Statements for Year Ending December 31 | |||||
| (Thousands of Dollars) | 2016 | 2015 | |||
| Sales | $945,000 | $900,000 | |||
| Expenses excluding depreciation and amortization | 812,700 | 774,000 | |||
| EBITDA | $132,300 | $126,000 | |||
| Depreciation and amortization | 33,100 | 31,500 | |||
| EBIT | $99,200 | $94,500 | |||
| Interest Expense | 10,470 | 8,600 | |||
| EBT | $88,730 | $85,900 | |||
| Taxes (40%) | 35,492 | 34,360 | |||
| Net income | $53,238 | $51,540 | |||
| Common dividends | $43,300 | $41,230 | |||
| Addition to retained earnings | $9,938 | $10,310 | |||
| Lan & Chen Technologies: December 31 Balance Sheets | |||||
| (Thousands of Dollars) | |||||
| Assets | 2016 | 2015 | |||
| Cash and cash equivalents | $47,250 | $45,000 | |||
| Short-term investments | 3,800 | 3,600 | |||
| Accounts Receivable | 283,500 | 270,000 | |||
| Inventories | 141,750 | 135,000 | |||
| Total current assets | $476,300 | $453,600 | |||
| Net fixed assets | 330,750 | 315,000 | |||
| Total assets | $807,050 | $768,600 | |||
| Liabilities and equity | |||||
| Accounts payable | $94,500 | $90,000 | |||
| Accruals | 47,250 | 45,000 | |||
| Notes payable | 26,262 | 9,000 | |||
| Total current liabilities | $168,012 | $144,000 | |||
| Long-term debt | 94,500 | 90,000 | |||
| Total liabilities | $262,512 | $234,000 | |||
| Common stock | 444,600 | 444,600 | |||
| Retained Earnings | 99,938 | 90,000 | |||
| Total common equity | $544,538 | $534,600 | |||
| Total liabilities and equity | $807,050 | $768,600 | |||
| Key Input Data | |||||
| Tax rate | 40% | ||||
| Net operating working capital | |||||
| 2016 | NOWC = | Operating current assets | – | Operating current liabilities | |
| 2016 | NOWC = | Kenneth D. Jackson: Short-Term Investments are not part of current operating assets | – | ||
| Kenneth D. Jackson: Notes Payable are not part of current operating liabilities | 2016 | NOWC = | |||
| 2015 | NOWC = | Operating current assets | – | Operating current liabilities | |
| 2015 | NOWC = | – | |||
| 2015 | NOWC = | ||||
| Total net operating capital | |||||
| 2016 | TOC = | NOWC | + | Fixed assets | |
| 2016 | TOC = | + | |||
| 2016 | TOC = | ||||
| 2015 | TOC = | NOWC | + | Fixed assets | |
| 2015 | TOC = | + | |||
| 2015 | TOC = | ||||
| Investment in total net operating capital | |||||
| 2016 | 2015 | ||||
| 2016 | Inv. In TOC = | TOC | – | TOC | |
| 2016 | Inv. In TOC = | – | |||
| 2016 | Inv. In TOC = | ||||
| Net operating profit after taxes | |||||
| 2016 | NOPAT = | EBIT | x | ( 1 – T ) | |
| 2016 | NOPAT = | x | |||
| 2016 | NOPAT = | ||||
| Free cash flow | |||||
| 2016 | FCF = | NOPAT | – | Net investment in operating capital | |
| 2016 | FCF = | – | |||
| Michael C. Ehrhardt: Change in total net operating capital (TOC) from the previous year to the current year. | 2016 | FCF = | |||
| Return on invested capital | |||||
| 2016 | ROIC = | NOPAT | / | Total net operating capital | |
| 2016 | ROIC = | / | |||
| 2016 | ROIC = | ||||
| b. Assume that there were 15 million shares outstanding at the end of the year, the year-end closing stock price was $65 per share, and the after-tax cost of capital was 8%. Calculate EVA and MVA for the most recent year. | |||||
| Additional Input Data | |||||
| Stock price per share | $65.00 | ||||
| # of shares (in thousands) | 15,000 | ||||
| After-tax cost of capital | 8.0% | ||||
| Market Value Added | |||||
| MVA = | Stock price | x | # of shares | – | Total common equity |
| MVA = | x | – | |||
| MVA = | – | ||||
| MVA = | |||||
| Economic Value Added | |||||
| EVA = | NOPAT | – | (Operating Capital | x | After-tax cost of capital) |
| EVA = | – | x | |||
| EVA = | – | ||||
| EVA = |
Ch02 Mini Case
Ch02 Mini Case
| Chapter 2 Mini Case | ||||||
| Situation | ||||||
| Jenny Cochran, a graduate of The University of OBO with 4 years of experience as an equities analyst, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components. During the previous year, Computron had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Cochran was assigned to evaluate the impact of the changes. She began by gathering financial statements and other data. | ||||||
| Computron’s Income Statement | ||||||
| 2015 | 2016 | |||||
| INCOME STATEMENT | ||||||
| Net sales | $ 3,432,000 | $ 5,834,400 | ||||
| Cost of Goods Sold Except Depr. | 2,864,000 | 4,980,000 | ||||
| Depreciation and amortization | 18,900 | 116,960 | ||||
| Other Operating Expenses | 340,000 | 720,000 | ||||
| Total Operating Costs | $ 3,222,900 | $ 5,816,960 | ||||
| Earnings before interest and taxes (EBIT) | $ 209,100 | $ 17,440 | ||||
| Less interest | 62,500 | 176,000 | ||||
| Pre-tax earnings | $ 146,600 | $ (158,560) | ||||
| Taxes (40%) | 58,640 | (63,424) | ||||
| Net Income | $ 87,960 | $ (95,136) | ||||
| Dividends | $22,000 | $11,000 | ||||
| Tax rate | 40% | 40% | ||||
| a. (1.) What effect did the expansion have on sales and net income? | ||||||
| Computron’s Balance Sheets | ||||||
| 2015 | 2016 | |||||
| Assets | ||||||
| Cash and equivalents | $ 9,000 | $ 7,282 | ||||
| Short-term investments | 48,600 | 20,000 | ||||
| Accounts receivable | 351,200 | 632,160 | ||||
| Inventories | 715,200 | 1,287,360 | ||||
| Total current assets | $ 1,124,000 | $ 1,946,802 | ||||
| Gross fixed assets | $ 491,000 | $ 1,202,950 | ||||
| Less: Accumulated depreciation | 146,200 | 263,160 | ||||
| Net plant and equipment | $ 344,800 | $ 939,790 Bart Kreps: Property, Plant and Equipment minus Depreciation |
||||
| Total assets | $ 1,468,800 | $ 2,886,592 | ||||
| Liabilities and equity | ||||||
| Accounts payable | $ 145,600 | $ 324,000 | ||||
| Notes payable | 200,000 | 720,000 | ||||
| Accruals | 136,000 | 284,960 | ||||
| Total current liabilities | $ 481,600 | $ 1,328,960 | ||||
| Long-term bonds | $ 323,432 | $ 1,000,000 | ||||
| Common Stock | 460,000 | 460,000 | ||||
| Retained Earnings | 203,768 | 97,632 | ||||
| Total Equity | $ 663,768 | $ 557,632 | ||||
| Total Liabilites and Equity | $ 1,468,800 | $ 2,886,592 | ||||
| a. (2.) What effect did the expansion have on the asset side of the balance sheet? | ||||||
| Computron’s Statement of Cash Flows Bart Kreps: The statement of cash flows provides information about cash inflows and outflows during an accounting period. |
||||||
| 2016 | ||||||
| Operating Activities | ||||||
| Net Income before preferred dividends | $ (95,136) | |||||
| Noncash adjustments | ||||||
| Depreciation and amortization | 116,960 | |||||
| Due to changes in working capital | ||||||
| Change in accounts receivable | (280,960) Bart Kreps: Change is negative because accounts receivable went up in 2001. This means that more sales revenue has been reflected in net income than has been collected in cash. |
|||||
| Change in inventories | (572,160) Bart Kreps: Inventories went up meaning that Computron used cash to purchase inventories. |
|||||
| Change in accounts payable | 178,400 Bart Kreps: This is positive because accounts payable went up. Computron bought on credit from suppliers and did not dispense cash. |
|||||
| Change in accruals | 148,960 Bart Kreps: Accruals increased in 2001. Cash flow is positive because it recognizes an increased expense prior to the payment of cash. |
|||||
| Net cash provided by operating activities | $ (503,936) | |||||
| Investing activities | ||||||
| Cash used to acquire fixed assets | $ (711,950) Bart Kreps: Make sure to add back annual Depreciation to Net PP&E. |
|||||
| Change in short-term investments | 28,600 Bart Kreps: Short term investments went down in 2001. Computron received cash through the sale or maturity of these assets. |
|||||
| Net cash provided by investing activities | $ (683,350) | |||||
| Financing Activities | ||||||
| Change in notes payable | $ 520,000 Bart Kreps: Notes payable went up in 2001. Computron received cash from creditors. |
|||||
| Change in long-term debt | 676,568 Bart Kreps: Long term debt went up in 2001. Computron received cash from creditors. |
|||||
| Payment of cash dividends | (11,000) Bart Kreps: Computron used cash to pay dividends to shareholders. |
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| Net cash provided by financing activities | $ 1,185,568 | |||||
| Net change in cash and equivilents | $ (1,718) | |||||
| Cash and securities at beginning of the year | 9,000 | |||||
| Cash and securities at end of the year | $ 7,282 | |||||
| b. What do you conclude from the statement of cash flows? | ||||||
| c. What is free cash flow? Why is it important? What are the five uses of FCF? | ||||||
| d. What is Computron’s net operating profit after taxes (NOPAT)? What are operating current assets? What are operating current liabilities? How much net operating working capital and total net operating capital does Computron have? | ||||||
| Net Operating Profit After Taxes | ||||||
| NOPAT is the amount of profit Computron would generate if it had no debt and held no financial assets. | ||||||
| 2016 | NOPAT = | EBIT | x | ( 1 – T ) | ||
| = | x | |||||
| = | ||||||
| 2015 | NOPAT = | EBIT | x | ( 1 – T ) | ||
| = | x | |||||
| = | ||||||
| Net Operating Working Capital | ||||||
| Those current assets used in operations are called operating current assets, and the current liabilities that result from operations are called operating current liabilities. Net operating working capital is equal to operating current assets minus operating current liabilities. | ||||||
| 2016 | NOWC = | Operating current assets | – | Operating current liabilities | ||
| = | – | |||||
| = | ||||||
| 2015 | NOWC = | Operating current assets | – | Operating current liabilities | ||
| = | – | |||||
| = | ||||||
| Total Net Operating Capital | ||||||
| The Total OperatingCapital is Net Operating Working Capital plus any fixed assets. | ||||||
| 2016 | TOC = | NOWC | + | Fixed assets | ||
| = | + | |||||
| = | ||||||
| 2015 | TOC = | NOWC | + | Fixed assets | ||
| = | + | |||||
| = | ||||||
| e. What is Computron’s free cash flow (FCF)? What are Computron’s “net uses” of its FCF? | ||||||
| Free Cash Flow | ||||||
| Computron’s Free Cash Flow caluclation is the cash flow actually availabe for distribution to investors after the company has made all necessary investments in fixed assets and working capital to sustain ongoing operations. | ||||||
| 2016 | FCF = | NOPAT | – | Net Investment in Operating Capital | ||
| = | – | |||||
| = | ||||||
| Uses of FCF: | 2016 | |||||
| After-tax interest payment = | ||||||
| Reduction (increase) in debt = | ||||||
| Payment of dividends = | ||||||
| Repurchase (Issue) stock = | ||||||
| Purchase (Sale) of short-term investments = | ||||||
| Total uses of FCF = | ||||||
| f. Calculate Computron’s return on invested capital. Computron has a 10% cost of capital (WACC). Do you think Computron’s growth added value? | ||||||
| 2015 | 2016 | |||||
| Cost of Capital (WACC) | 10% | 10% | ||||
| Return on Invested Capital | ||||||
| The Return on Invested Capital tells us the amount of NOPAT per dollar of operating capital. | ||||||
| 2016 | ROIC = | NOPAT | ÷ | Operating Capital | ||
| = | ||||||
| = | ||||||
| 2015 | ROIC = | NOPAT | ÷ | Operating Capital | ||
| = | ||||||
| = | ||||||
| Operating Profitability | ||||||
| The operating profitability (OP) ratio shows how many dollars of operating profit are generated by each dollar of sales. | ||||||
| 2016 | OP = | NOPAT | ÷ | Sales | ||
| = | ||||||
| = | ||||||
| 2015 | OP = | NOPAT | ÷ | Sales | ||
| = | ||||||
| = | ||||||
| Capital Utilization | ||||||
| The capital utilization (CR) ratio shows how many dollars of operating assets are needed to generated a dollar of sales. | ||||||
| 2016 | CR = | Total Op. Cap. | ÷ | Sales | ||
| = | ||||||
| = | ||||||
| 2015 | CR = | Total Op. Cap. | ÷ | Sales | ||
| = | ||||||
| = | ||||||
| Operating profitability declined and the capital utlization worsened, each contributing to the big decrease in ROIC. | ||||||
| g. What is Computron’s EVA? The after-tax cost of capital was 10 percent in both years. | ||||||
| Economic Value Added | ||||||
| Economic Value Added represents Computron’s residual income that remains after the cost of all capital, including equity capital, has been deducted. | ||||||
| 2016 | EVA = | NOPAT | – | Operating Capital x | WACC | |
| = | – | x | 10% | |||
| = | – | $0.0 | ||||
| = | ||||||
| 2015 | EVA = | NOPAT | – | Operating Capital x | WACC | |
| = | $0 | – | $0 | x | 10% | |
| = | $0 | – | $0.0 | |||
| = | $0 | |||||
| h. What happened to Computron’s market value added (MVA)? | ||||||
| Year-end common stock price | $8.50 | $6.00 | ||||
| Year-end shares outstanding (in millions) | 100,000 | 100,000 | ||||
| Earnings per share (EPS) | ||||||
| Bart Kreps: An increase in Earnings Per Share either means the company is generating more net income or they are reducing the amount of common shares outstanding. Shares that are repurchased by the company are called Treasury stocks. | Dividends per share (DPS) | Bart Kreps: The same rational holds for interpreting Dividends Per Share data. If the company increases their dividend payout policies or reduces shares outstanding, DPS will increase. | $0.11 | $0.22 | ||
| Market Value Added | ||||||
| Assume that the market value of debt is equal to the book value of debt. In this case, Market Value Added (MVA) is the difference between the market value of Computron’s stock and the amount of equity capital supplied by shareholders. | ||||||
| 2016 | MVA = | Stock price | x | # of shares | – | Total common equity |
| = | x | – | ||||
| = | $0 | – | ||||
| = | ||||||
| 2015 | ||||||
| MVA = | Stock price | x | # of shares | – | Total common equity | |
| = | x | – | ||||
| = | $0 | – | ||||
| = | ||||||
| i. Assume that a corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $10,000 of dividend income. What is the company’s tax liability? | ||||||
| Operating income = | $100,000 | |||||
| Interest income = | $5,000 | |||||
| Dividends = | $10,000 | |||||
| Taxable dividends= | ||||||
| Taxable Income: | ||||||
| Corporate Tax Rates | ||||||
| If a corporation’s taxable income is between: | It pays this amount on the base of the bracket: | Plus this percentage on the excess over the base | ||||
| (1) | (2) | (3) | (4) | |||
| $0 | $50,000 | $0 | 15.0% | |||
| $50,000 | $75,000 | $7,500 | 25.0% | |||
| $75,000 | $100,000 | $13,750 | 34.0% | |||
| $100,000 | $335,000 | $22,250 | 39.0% | |||
| $335,000 | $10,000,000 | $113,900 | 34.0% | |||
| $10,000,000 | $15,000,000 | $3,400,000 | 35.0% | |||
| $15,000,000 | $18,333,333 | $5,150,000 | 38.0% | |||
| $18,333,333 | and up | $6,416,667 | 35.0% | |||
| Base amount of tax | <– Might need a VLOOKUP formula. | |||||
| Marginal tax rate in bracket | <– Might need a VLOOKUP formula. | |||||
| Income above base of bracket | <– Might need a VLOOKUP formula. | |||||
| Tax on income above base | ||||||
| Total tax liability: | ||||||
| j. Assume that you are in the 25 percent marginal tax bracket and that you have $5,000 to invest. You have narrowed your investment choices down to California bonds with a yield of 7 percent or equally risky ExxonMobil bonds with a yield of 10 percent. Which one should you choose and why? At what marginal tax rate would you be indifferent to the choice between California and ExxonMobil bonds? | ||||||
| Taxable vs. Tax Exempt bonds | ||||||
| ExxonMobil bonds at 10% vs. California muni bonds at 7% | ||||||
| Amount to invest | $5,000 | |||||
| ExxonMobil Yield | 10% | |||||
| California Yield | 7% | |||||
| Tax Rate | 25.0% | |||||
| ExxonMobil = | Yield * (Investment) | – | Yield * (Investment) * (Tax Rate) | |||
| ExxonMobil = | ||||||
| California = | Yield * (Investment) | – | 0 | |||
| California = | ||||||
| Tax rate which you would be indifferent | ||||||
| Solve for T | ||||||
| Muni Yield = | Corp Yield *(1-Tax rate) |
U3 Decision-Making Project
Unit 3: Decision-Making
- Describe the use of contribution margin analysis in product costing.
- Use cost-volume-profit analysis to evaluate the financial consequences of alternative decisions.
Unit 3 Individual Project
Due by: Wed, 1/24/18
Points Possible: 100
Deliverable Length: 2–3 pages not including title or references
In a paper of 2–3 pages, describe the following:
- 1)What are the features of cost-volume profit (CVP) analysis.
- 2)Why are managers interested in the break-even analysis point?
- 3)Compare contribution margin and fixed costs.
Be sure to cite your sources using proper APA format.
Government
Due in 24 hours or less. Answer and discuss the 6 questions in 75 words or more. Please separate each question, give them each a title, even the sub questions and number them 1 through 6. NO PLAGIARISM, cite and reference all, do not be late and follow all my instructions. References should not be older than 10 years. Do not summarize the subjects from the video transcripts use your own words. I will have a total of 12 questions, but I am sending 8 for now. The next 6 will be due within 24 hours of when I ask for them. I will only pay 25 for all 12, if you want more money do not reply. If I cannot understand your work or my instructor I will ask for a redo. Warning if you deviate from any part of my instructions including be being late, I will ask for a full refund or dispute. Once we make a deal I will send all required materials.
MRP Inventory and Customer Service
MRP Inventory and Customer Service
Explain how MRP can decrease a company’s inventory while improving its customer service level. Include a real-life example. Your initial post should be 200-250 words.
Guided Response: Respond to at least two of your classmates’ posts. Include additional improvements and/or challenges if MRP is appropriate