Question

In: Finance

Please use the selected financial data for The Daily Grind, a Jersey City coffee shop chain,...

Please use the selected financial data for The Daily Grind, a Jersey City coffee shop chain, to answer the following questions:

Year	Free Cash Flow	Capital spending	Change in net working capital	Operating Cash Flow
2019		$200	$100	$1,000
2020		$600	$200	$950

4a. Please compute free cash flow for 2019 and 2020.

4b. In what year did shareholders and creditors have more money available to them? Why?

4c. In what year did The Daily Grind open up a new shop (made a large investment in fixed assets)? Why?

4d. In what year did The Daily Grind have the largest cash flow from their normal business of producing and selling coffee? Why?

Expert Solution

4a. Please compute free cash flow for 2019 and 2020.

2019 = Operating cash flow - Change in working capital - Capital Spending = $1000 - 100 - 200 = $700

2020 = Operating cash flow - Change in working capital - Capital Spending = $950 - 200 - 600 = $150

4b. In what year did shareholders and creditors have more money available to them? Why?

Shareholders and Creditors have more money available in the year 2019 because the free cash flow is higher in that year

4c. In what year did The Daily Grind open up a new shop (made a large investment in fixed assets)? Why?

The New shop should have been opened in 2020 because capital spending is higher in the year 2020

4d. In what year did The Daily Grind have the largest cash flow from their normal business of producing and selling coffee? Why?

Largest cash flow from business in 2019 = Operating cash flow - Change in working capital = $1000 - 100 = $900

Largest cash flow from business in 2020 = Operating cash flow - Change in working capital = $950 - 200 = $750

The company had higher cash flow from business in the year 2019 because the company's operating cash flow are higher than 2020's value and change in working capital is lower than 2020's value

jeff jeffy answered 1 year ago

A coffee shop takes daily data on the high temperature for the day in degrees F,...

A coffee shop takes daily data on the high temperature for the day in degrees F, and the number of cups of hot chocolate sold. They construct a scatterplot and examine the linear relationship.The least squares regression line equation is: y=76.42-1.38x (1)Using the slope value, describe the relationship in context. (2)Can this line equation be used to make a prediction for number of cups of hot chocolate sold when it's 60 degrees F outside? Explain.

Starbright Coffee Shop at the Galleria Mall serves two coffee blends it brews on a daily...

Starbright Coffee Shop at the Galleria Mall serves two coffee blends it brews on a daily basis, Pomona and Coastal. Each is a blend of three high-quality coffees from Colombia, Kenya, and Indonesia. The coffee shop has 4.5 pounds of Colombian, 3 pounds of Kenyan, and 5 pounds of Indonesian coffees available each day. Each pound of coffee will produce sixteen 16-ounce cups of coffee. The shop has enough brewing capacity to brew 20 gallons of these two coffee blends...

A firm operates a chain of coffee outlets in the city selling a coffee called “smart...

A firm operates a chain of coffee outlets in the city selling a coffee called “smart coffee”. The firm has estimated a regression model that suggests three variables are significant determinants of demand for “smart coffee”. The results obtained from the regression model is provided below. Q=1000-60P+20DF+1.5A Q: (dependent variable) is number of cups of “smart coffee” sold per week P: is the price in dollars of a cup of “smart coffee” DF: the price in dollars of a cup...

please use excel and provide the formulas The Times-Observer is a daily newspaper in Metro City....

please use excel and provide the formulas The Times-Observer is a daily newspaper in Metro City. Like many city newspapers, the TimesObserver is suffering through difficult financial times. The circulation manager is studying other papers in similar cities in the United States and Canada. She is particularly interested in what variables relate to the number of subscriptions to the paper. She is able to obtain the following sample information on 25 newspapers in similar cities. Ignore the data in the...

Selected financial data for Surf City and Paradise Falls are as follows: ($ in millions) Surf...

Selected financial data for Surf City and Paradise Falls are as follows: ($ in millions) Surf City Paradise Falls 2018 2017 2018 2017 Total assets $ 16,133 $ 14,922 $ 33,296 $ 34,121 Total liabilities 9,720 8,195 13,938 14,188 Total stockholders’ equity 6,413 6,727 19,358 19,933 Sales revenue $ 6,503 $ 14,616 Interest expense 318 408 Tax expense 44 Net income 568 2,324 1-a. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent...

Heine Brothers’, a coffee shop chain from Louisville, Kentucky, wants to determine if the amount of...

Heine Brothers’, a coffee shop chain from Louisville, Kentucky, wants to determine if the amount of time customers spend in the “Germantown” coffee shop is different from the “Crescent Hill” coffee shop. An employee at each location times the amount of time 20 customers spends in each coffee shop. For the “Germantown” location the sample mean is 56.70 minutes with a sample standard deviation of 13.48 minutes. For the “Crescent Hill” location, the sample mean is 77.25 minutes with a...

Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year...

Richard and Rachel operate a coffee shop, Richell Coffee Roaster Pty Ltd, with a financial year ending 30 June. On 1 July 2017, they purchased a new espresso machine for $23,000 (ignore GST). They then paid a further $500 (ignore GST) for delivery of the machine and $900 (ignore GST) to have it installed. All amounts were paid in cash. The company estimates that the machine has a 4 years useful life, and a residual value of $4,400 (ignore GST)....

You are the owner of a small pizzeria store in Jersey City. Please: 1) Identify what...

You are the owner of a small pizzeria store in Jersey City. Please: 1) Identify what Product Market factors would be relevant (3 points) 2) Identify what Labor Market factors would be relevan

Coffee shop chain Java the Hut just paid a $2.70 dividend. For the next two years,...

Coffee shop chain Java the Hut just paid a $2.70 dividend. For the next two years, you think it will grow by 12% a year, getting it back to its pre-recession level. After that, you expect it to grow at 5% a year forever. Assuming 13% required return, what is the value Java’s stock? can show using excel?

The table below shows selected 12/31/Y3 equity data for Snoyer’s Auto Shop. Use the information in...

The table below shows selected 12/31/Y3 equity data for Snoyer’s Auto Shop. Use the information in the table and the following 20Y4 additional facts to fill in the company’s equity values as of December 31, 20Y4. Snoyer uses the cost method to account for treasury stock transactions and has only had one common stock share issuance in its history. Stock reissuances are accounted for using FIFO and all treasury stock related APIC transactions are accounted for in the one account...