Question

In: Finance

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to...

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies—a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Correlation with Treynor Pie Company Sales ($ millions) Expected Earnings ($ millions) Standard Deviation in Earnings ($ millions) Treynor PieCompany + 1.0 $ 104 $ 8 $ 2.0 Gourmet restaurant + .7 64 8 1.5 Baby food company + .2 52 5 1.7 Nutritionalproducts company − .8 74 7 3.2 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as ".10"). Round your answers to 3 decimal places.) a-2. Which company is the least risky? Nutritional products company Gourmet restaurant Baby food company Treynor Pie Company a-3. Which company is the most risky? Nutritional products company Treynor Pie Company Baby food company Gourmet restaurant b. Which of the acquisition candidates is most likely to reduce Treynor Pie Company's risk? Nutritional products company Gourmet restaurant Baby food company

Solutions

Expert Solution


Related Solutions

Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to...
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies—a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Correlation with Treynor Pie Company Sales ($ millions) Expected Earnings ($ millions) Standard Deviation in Earnings ($...
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to...
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower its risks. It is examining three companies—a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Company Correlation with Treynor Pie Company Sales ($ millions) Expected Earnings ($ millions) Standard Deviation in Earnings ($...
Healthy Selections Cereals, Inc. (HSC) is a large food-processing company specializing in whole-grain, high-energy, low-calorie, and...
Healthy Selections Cereals, Inc. (HSC) is a large food-processing company specializing in whole-grain, high-energy, low-calorie, and low-fat cereals that appeal to the health-conscious consumer. HSC has a premium image in the market, and most of its customers are loyal and willing to pay a bit extra to get the healthy choice that HSC offers. HSC’s cereals are made in a series of processes that begin with sorting, cleaning, preparing, and inspecting the direct materials (grains, nuts, and other ingredients). The...
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On...
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 2019, the firm’s general ledger contained the accounts and balances that follow. ACCOUNTS AND BALANCES Cash $ 30,700 Dr. Accounts Receivable 35,800 Dr. Allowance for Doubtful Accounts 480 Cr. Merchandise Inventory 86,600 Dr. Supplies 11,000 Dr. Prepaid Insurance 6,120 Dr. Office Equipment 8,500 Dr. Accum. Depreciation—Office Equipment 2,710 Cr. Warehouse Equipment 31,600 Dr. Accum. Depreciation—Warehouse Equipment 10,800 Cr. Notes Payable—Bank 35,000 Cr....
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On...
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 2019, the firm’s general ledger contained the accounts and balances that follow. ACCOUNTS AND BALANCES Cash $ 30,600 Dr. Accounts Receivable 35,700 Dr. Allowance for Doubtful Accounts 470 Cr. Merchandise Inventory 86,500 Dr. Supplies 10,900 Dr. Prepaid Insurance 6,000 Dr. Office Equipment 9,800 Dr. Accum. Depreciation—Office Equipment 2,700 Cr. Warehouse Equipment 36,300 Dr. Accum. Depreciation—Warehouse Equipment 10,600 Cr. Notes Payable—Bank 34,500 Cr....
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On...
Healthy Eating Foods Company is a distributor of nutritious snack foods such as granola bars. On December 31, 2019, the firm’s general ledger contained the accounts and balances that follow. ACCOUNTS AND BALANCES Cash $ 30,300 Dr. Accounts Receivable 35,400 Dr. Allowance for Doubtful Accounts 440 Cr. Merchandise Inventory 86,200 Dr. Supplies 10,600 Dr. Prepaid Insurance 5,640 Dr. Office Equipment 9,700 Dr. Accum. Depreciation—Office Equipment 2,670 Cr. Warehouse Equipment 34,200 Dr. Accum. Depreciation—Warehouse Equipment 10,000 Cr. Notes Payable—Bank 33,000 Cr....
Which food groups are often missing from high-calorie, energy-dense diets?
Which food groups are often missing from high-calorie, energy-dense diets?
Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting...
Les Moore retired as president of Goodman Snack Foods Company but is currently on a consulting contract for $64,000 per year for the next 11 years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. If Mr. Moore’s opportunity cost (potential return) is 11 percent, what is the present value of his consulting contract? (Do not round intermediate calculations. Round your final answer to 2 decimal...
9. A company that produces snack foods uses a machine to package 454 grams bags of...
9. A company that produces snack foods uses a machine to package 454 grams bags of potato hips. A random sample of 49 bags of potato chips has a mean of 450 grams and standard deviation of 8.48 grams. Perform a hypothesis test at the 5% significance level to determine if the machine is working properly
Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current...
Sherwood, Inc., the parent company of Tasty snack foods and Super beverages, had the following current assets and current liabilities at the end of two recent years: Current Year (in millions) Previous Year (in millions) Cash and cash equivalents $4,622 $5,011 Short-term investments, at cost 3,283 9,307 Accounts and notes receivable, net 10,435 9,546 Inventories 2,751 1,834 Prepaid expenses and other current assets 917 678 Short-term obligations 367 3,894 Accounts payable and other current liabilities 8,684 7,938 Income taxes payable...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT