Assignment 3 - Skaggs Manufacturing Case Study

CASE 5.1
Skaggs Manufacturing

John Andrews arrived promptly for his 10 am meeting with Martha Gillespie, the buyer for Skaggs Manufacturing. At 10:15, when she hadn't arrived, John asked her secretary if she was out of the office for the morning. The secretary smiled and said, "She'll probably be a few minutes late." John resented this delay and was convinced that Martha had forgotten the appointment.

Finally, at 10:20, Martha entered her office, walked over to John, said hello, and promptly excused herself to talk to the secretary about a tennis game scheduled for that afternoon. Ten minutes later, Martha led John into her office. At the same time, a competing salesperson entered the office for a 10:30 appointment. With the door open, Martha asked John, "What's new today?" As John began to talk, Martha began reading letters on her desk and signing them. Shortly after that, the telephone began to ring, whereupon Martha talked to her husband for 10 minutes.

As she hung up, Martha looked at John and suddenly realized his frustration. She promptly buzzed her secretary and said, "Hold all calls." She got up and shut the door. John again began his presentation when Martha leaned backward in her chair, pulled her golf shoes out of a desk drawer, and began to brush them.

About that time, the secretary entered the office and said, "Martha, your 10:30 appointment is about to leave. What should I tell him" "Tell him to wait; I need to see him." Then she said, "John, I wish we had more time. Look, I think I have enough of your product to last until your next visit. I'll see you then. Thanks for coming by."

John quickly rose to his feet, did not shake hands, said "OK," and left.

Review case 4-1 on page 129.

1. List a minimum of 5 nonverbal cues that John Alvez experienced during this meeting.
2. For each of these actions, how should John have responded and why?
3. How could John have reduced his stress when he found out the client was running late?
4. Based on the client's behaviour, which communication barriers do you think were present?
5. Determine if the client showed Caution or Disagreement signals. Describe the attributes and logic of your choice and the keys steps for overcoming this problem.
6. Explain how John could have used empathy in this situation and why empathy is important in sales success.
7. Find an image that represents John's feelings during this meeting. Include Image Citation.

Assume that you manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 38%. The T-bill rate is 5%. Your client chooses to invest 85% of a portfolio in your fund and 15% in a T-bill money market fund.

a. What is the expected return and standard deviation of your client's portfolio? (Round your answers to 2 decimal places.)

What is the reward-to-volatility ratio (S) of your risky portfolio and your client's overall portfolio? (Round your answers to 4 decimal places.)

NPV

A project has annual cash flows of $3,500 for the next 10 years and then $6,000 each year for the following 10 years. The IRR of this 20-year project is 13.14%. If the firm's WACC is 11%, what is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

$___

The following information is from Andy's Pharmaceutical Inc.’s financial statements:

Part A

Using the above listed ratios and data, compute the balance of the following accounts. Assume all sales are on credit and a 360-day year. Round to the nearest dollar. [Hint: use ratio formulas to derive the requested values. The book presents 13 ratio formulas on pages 60 - 64]. Please show your work.

A) Current assets

B) Average daily credit sales

C) Accounts Receivable

D) Inventory

E) Current liabilities

The Clifford Corporation has announced a rights offer to raise $15 million for a new journal, the Journal of Financial Excess. This journal will review potential articles after the author pays a nonrefundable reviewing fee of $4,000 per page. The stock currently sells for $32 per share, and there are 2.7 million shares outstanding.

a. What is the maximum possible subscription price? What is the minimum? (Leave no cells blank - be certain to enter "0" wherever required.)

b. If the subscription price is set at $24 per share, how many shares must be sold? How many rights will it take to buy one share? (Do not round intermediate calculations. Round your rights needed answer to 2 decimal places, e.g., 32.16.)

c. What is the ex-rights price? What is the value of a right? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

d. A shareholder with 2,000 shares before the offering has no desire (or money) to buy additional shares offered as rights. What is his portfolio value before and after the rights offer? (Do not round intermediate calculations and round your answers to nearest whole number, e.g., 32.)

a.The maximum possible subscription price is-

The minimum possible suscription price-

b.Number of new shares-

Number of rights needed-

c.Ex-rights price-

Value of a right-

d.Portfolio value before rights-

Portfolio value after rights-

If you currently have$200’000 in your retirement account , and plan to contribute $10,000 per year and can earn 8%(annually) , how long will it take you to reach your goal of $1,000,000?

Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$30,000 1 12,200 2 14,900 3 16,800 4 13,900 5 –10,400

The company uses an interest rate of 8 percent on all of its projects.

Calculate the MIRR of the project using all three methods. a. MIRR using the discounting approach.

b. MIRR using the reinvestment approach.

c. MIRR using the combination approach.

Challenge question

I.Michael is shopping for a special automobile. He finds the exact car he​ wants, a 1966 dark blue Pontiac GTO. This car is currently the property of a​ neighbor, so to buy it for the​ agreed-upon price of 45,000​, Michael must secure his own financing. He visits four different financial institutions and gets the following available​ loans:

Bank​ 1: 3636 monthly payments of $1,399.78

Bank​ 2: 6060 monthly payments of $891.05

Bank​ 3: 312312 weekly payments of $177.97 ​(Assume a​ 52-week year.)

Bank​ 4: 1616 quarterly payments of $3,297.87

Which loan should Michael​ take?  ​Hint:  Which loan has the lowest​ EAR?

If Michael selects Bank 1 for the​ loan, what is the periodic interest rate on the​ loan?

. 6250​%

If Michael selects Bank 1 for the​ loan, what is the EAR on the​ loan?

  ​(Round to two decimal​ places.)

1. Citing the Digital Millennium Copyright Act (DMCA), Airbnb is challenging the New York law and others in the United States, arguing that it merely operates a digital marketplace, and thus is not responsible for the content that users place on its site. Do you think Airbnb has a strong argument? Why or why not?

2. Are you concerned that the concept of the sharing economy could be abused by unscrupulous “entrepreneurs” and thus give the entire novel concept a bad reputation? Why or why not? Explain.

“The most appropriate financing pattern would be one in which asset buildup and length of financing terms is perfectly matched.” Discuss the difficulty involved in achieving this financing pattern.  

Below are numbers from a balance sheet and income statement. Based on these numbers calculate the financial ratios requested below.

All answers must be rounded to TWO decimal places including percentages

421756

313053

10000

5000

29408

1000

30000

52175

50000

11000

10000

50000

62175

0. Based on these values calculate:

   1. Current ratio

   2. Quick ratio

   3. NWC-to-total-Assets (Working capital to assets)

   4. Ratio of total debt and liabilities to total assets

   5. Ratio of total debt and liabilities to shareholder’s equity

   6. Interest coverage

   7. Net profit margin

   8. Sales to total assets (Asset turnover)

   9. Return on assets

   10. Equity multiplier

   11. Return on equity