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1. If at the end of week three of a project you discover you that SV is negative but SPI is 1.06. What does this mean?
2. What is the difference between percent complete and percent complete with gates Earned value (EV) measurement rules? What advantage does the latter have over the former?
3. Cost Variance (CV) and Cost Performance Index (CPI) can both be used to determine whether a project is on budget, under budget, or over budget at a particular point in time. What should a PM look for when reviewing CV and CPI information? What additional EVM analyses/calculations are supported by CPI?
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2. Advanced Medical Technology is a new, rapidly growing firm that produces specialized medical instruments. They sell to hospitals and other surgical units, and a substantial portion of their sales are to foreign governments. Typical payable terms in the industry are payment with 30 days.
They recently reported the following financial information:
Sales $225,000
Cost of sales 180,000
Inventory 33,000
Accounts receivable 72,000
Accounts payable 30,000
# of Days per year 365
Compute the additional working capital financing period for Advanced Medical.
Comment on their working capital financing period. What actions might Advanced take to improve their situation?
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Loki Labs is experience rapid growth due the increased demand for dog treat products that are low in calories and high in nutrition. Current sales of $125,000, which increased from $90,000 the previous month, are expected to grow at a 25 percent rate. Costs of sales are stable at 75% of sales revenue. Loki's sales are for 30 percent cash with the remaining 70 percent collected the following month. Inventory-on-hand is maintained at a level to support the following month's sales. Inventory is paid in full at the time of receipt. Loki's cash balance at the start of the period was $75,000.
A. For the current month and the following three months, determine Loki's
B. Is Loki's gross profit increasing or declining?
C. Is Loki's cash flow increasing or declining?
D. What is Loki's cash balance at the end of the four-month period?
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What is Wealthtech in the future for you personally?
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Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio.
Consider the following case:
Polk Software Inc. has a quick ratio of 2.00x, $32,850 in cash, $18,250 in accounts receivable, some inventory, total current assets of $73,000, and total current liabilities of $25,550. The company reported annual sales of $100,000 in the most recent annual report.
Over the past year, how often did Polk Software Inc. sell and replace its inventory?
8.01x
5.03x
2.86x
4.57x
The inventory turnover ratio across companies in the software industry is 5.027x. Based on this information, which of the following statements is true for Polk Software Inc.?
Polk Software Inc. is holding less inventory per dollar of sales compared with the industry average.
Polk Software Inc. is holding more inventory per dollar of sales compared with the industry average.
You are analyzing two companies that manufacture electronic toys—Like Games Inc. and Our Play Inc. Like Games was launched eight years ago, whereas Our Play is a relatively new company that has been in operation for only the past two years. However, both companies have an equal market share with sales of $100,000 each. You’ve collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $255,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. You’ve collected data from the companies’ financial statements. This information is listed as follows: (Note: Assume there are 365 days in a year.)
Data Collected (in dollars)
| Like Games | Our Play | Industry Average | |
| Accounts receivable | 2,700 | 3,900 | 3,850 |
| Net fixed assets | 55,000 | 80,000 | 216,750 |
| Total assets | 95,000 | 125,000 | 234,600 |
Using this information, complete the following statements to include in your analysis.
| 1. | A days of sales outstanding represents an efficient credit and collection policy. Between the two companies, is collecting cash from its customers faster than , but both companies are collecting their receivables less quickly than the industry average. |
| 2. | Our Play’s fixed assets turnover ratio is than that of Like Games. This could be because Our Play is a relatively new company, so the acquisition cost of its fixed assets is than the recorded cost of Like Games’s net fixed assets. |
| 3. | Like Games’s total assets turnover ratio is , which is than the industry’s average total assets turnover ratio. In general, a higher total assets turnover ratio indicates greater efficiency. |
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Expedition manufacturers a variety of specialty clothing for skiing and mountain climbing. The company has decided to begin production on two new parkas designed for use in extremely cold weather: the Mount Everest Parka and the Rocky Mountain Parka. Expedition’s manufacturing plant only has 120 hours of cutting time and 140 hours of sewing time available. There is plenty of material to make the coats, except the fact that the zipper union is on strike and there are only 340 zippers. Because management believes that the Mount Everest Parka is a unique coat that will enhance the image of the firm, management has specified that at least 80 of this model must be produced. Each Mount Everest Parka requires 30 minutes of cutting time and 45 minutes of sewing time; the Labor and Material cost is $150 and the retail price is $250. Each Rocky Mountain Parka requires 20 minutes of cutting time and 15 minutes of sewing time; the Labor and Material cost is $50 and the retail price is $200. How many units of each model should be produced?
Using Solver in Excel, how do you put this in?
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|
Masters Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $385,000 is estimated to result in $145,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $45,000. The press also requires an initial investment in spare parts inventory of $20,000, along with an additional $3,100 in inventory for each succeeding year of the project. The shop’s tax rate is 22 percent and its discount rate is 9 percent. Refer to Table 10.7. |
| Calculate the NPV of this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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|
Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: |
| Year | Unit Sales | |||
| 1 | 74,100 | |||
| 2 | 79,500 | |||
| 3 | 85,000 | |||
| 4 | 82,400 | |||
| 5 | 69,100 | |||
|
Production of the implants will require $1,470,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $3,750,000 per year, variable production costs are $142 per unit, and the units are priced at $324 each. The equipment needed to begin production has an installed cost of $18,400,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 15 percent of its acquisition cost. The company is in the 22 percent marginal tax bracket and has a required return on all its projects of 16 percent. MACRS schedule. |
|
What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
|
What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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Pistol Pete's Platinum Palace has outstanding 5 year corporate bonds with a current yield of 6.50%. 5-Year T-Bonds have a current yield of 4.00%. The default risk premium for Pete's bonds is DRP = 0.40%. The liquidity premium on Pete's bonds is 1.70%. The current inflation premium is 1.5% and the maturity risk premium on 5 year bonds is 0.40%. What is the real risk-free rate, r*?
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The management estimates total sales for the period January, 2019 through June, 2019 based on actual sales from the immediate past six months. The following assumptions are made: The Sales were $140,000 in July 2018 and then the sales grew by 2% each month in the first three months (i.e., from August to October 2018) and by 5% in the next two months (i.e., in November and December 2018). The sales are expected to grow by 1% each month thereafter. 35% of the Sales are collected in the same month. 33% of the sales are collected in the following month. 31% of the sales are collected after two months and the remainder are not collected. The Purchases are 70% of each month’s sales and paid in the same month. Wages and Salaries are $25,000 each month and paid in the same month. Other administrative expenses are $15,000 and paid in the same month. Depreciation expense is $5,000 each month. An electrical device worth $30,000 will be purchased in April 2019. 50% of the amount due will be paid immediately and the balance will be paid in May, 2019. The company had previously taken a loan of $125,000. The annual interest rate on the loan amount is 5%. The interest is paid twice a year in June and December each year. Assume that no principal repayments are made in this period, only interest payments are made. The company pays rent of $3,500 quarterly (in March, June, September, and December each year).
Questions: 1. Determine the total cash inflows, the total cash outflows, and the expected change in cash for each month from January to July, 2019. Show your work in excel using excel functions. Based the findings, explain in your own words whether the company should borrow/invest and how much and in which months. [4.50 points]
2. Describe in your own words some of the short-term borrowing options that the company may adopt. Please write your answer in another tab on the same excel file, no need to upload another Word Document file or type your answer elsewhere. [0.50 points]
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National Advertising just paid a dividend of D0 = $0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 1.35, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price?
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You are contemplating an investment in a new factory expected to generate revenues of $1 million per year for as long as you maintain it. You expect maintenance costs will begin at $500,000 per year and increase by 5% per year into the future. Given that the series of revenue and maintenance costs are end-of-year cash flows, you plan to run the operation as long as positive cash flows continue. Assume the factory can be operational immediately for a cost of $3.5 million. If the interest rate is 2.5% per year, should you invest in the factory?
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Five years ago you took out a 5/1 adjustable rate mortgage and the five-year fixed rate period has just expired. The loan was originally for
$300,000 with 360 payments at 4.2% APR, compounded monthly.
a. Now that you have made 60 payments, what is the remaining balance on the loan?
b. If the interest rate increases by 1%, to 5.2% APR, compounded monthly, what will be your new payments?
a. Now that you have made
60 payments, what is the remaining balance on the loan? The remaining balance on the loan is? (Round to the nearest cent.)
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Stewart Inc.'s latest EPS was $3.50, its book value per share was $22.75, it had 162,500 shares outstanding, and its debt-to-assets ratio was 46%. How much debt was outstanding?
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