Scenario # 2 : Chicken International Group

You are the CEO of a chicken-processing company. The Vice President of marketing informs you that if you label your chicken as “free range” you can charge 20% more and greatly improve profit margins.

You find out that all that needs to be done to legally use the term “free range” is to open the door to the hen house for 5 minutes a day. This provides the chickens with access to the outdoors when, in fact, very few chickens will wander out when the door is open for 5 minutes. Moreover, the term “free range” may be used regardless of space per chicken, number of chickens, or amount of time spent outside.

700 word minimum

1. What is the ethical dilemma or issue?

2. Identify and discuss at least 3 alternatives (options) that the company could consider. For each option
indicate if it is legal and ethical, probably legal, but unethical, or illegal, and unethical.

3 What are your recommendations? In other words, of the several alternatives you identified, what do you think the company should do?

4 What is your rationale for your recommendations? In other words, why do you recommend this course of action?

You are the CEO of a newly formed company that provides computer maintenance services to Fortune 1000 companies. Before she considers the company’s business loan application, your banker requests pro forma income statements and balance statements for the next two years from you. Describe the process that you will use to conduct your forecasts. Do you see any problems with the forecasting process that you describe?

As the new financial manager of your company, the CEO has asked you to provide a brief analysis of the company’s performance to present at the upcoming board of directors meeting. The CEO has asked that you assess the company’s performance against your company’s industry. Thus, to do this, you will need to use ratio analysis or other techniques to determine areas in which the company is doing well, as well as areas that management should look at.

( you can pick the company)Determine which company you will analyze. As such, be sure that the company has debt on its balance sheet, as this will be a requirement for future projects.

Go to the website for your company and download the 10-K report for the most recent year.

Perform your ratio analysis on your company:

A good place to start would be to perform a complete DuPont analysis of the company. The DuPont analysis might provide guidance as to what particular areas of the company should be examined next and what ratios should be calculated. Be sure to include ratios that cover the following areas:

i. Profitability

ii. Debt Management

iii. Liquidity

iv. Asset Management

v. Market Value

In addition to the DuPont analysis ratios, be sure to present and discuss at least six relevant ratios that your team feels may best assess the company’s performance.

Using an online database, such as bizstats.com or a similar database, capture the ratio averages for your company’s industry to evaluate your company’s performance.

Provide an analysis that compares your company’s ratios to the industry standards. There is no need to explain the purpose of the ratios. Rather, be sure to provide an interpretation of the results. This may entail some research from news sources on the company’s recent performance.

URGENT: NEED ANSWER ASAP

PLEASE RESPOND WITH COPY AND PASTE, NOT ATTACHMENT USE ORIGINAL CONTENT NOT USED BEFORE ON CHEGG

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There is no additional information for it, you can wing it and just answer the best way you can, I'll take that.

The CEO of Z-Corp is puzzled as to why the company has run into bank overdraft when it has been profitable in the past year. The financial statements appear below:-

Comparative Balance Sheets as at December 31

Assets 2019 2020

Bank          $ 28,600          $     -
Accounts receivable 21,850 38,000
Merchandise inventory 30,700 45,400
Prepaid expenses 5,520 4,900
Property, plant, and equipment           118,000           155,000
Accumulated depreciation            (54,500)          (65,400)
Total           150,170           177,900

Liabilities and Stockholders’ Equity 2019                2020

Bank overdraft           $     -          $ 39,200
Accounts payable 35,170 27,100
Income taxes payable 10,300 8,200
Bonds payable 30,000 10,000
Common stock 45,000 55,000
Retained earnings 29,700 38,400
Total           150,170           177,900

Income Statement for the year ended December 31, 2019

Sales                          250,000
Cost of goods sold      130,000
Gross profit                120,000
Selling expenses 45,000
Administrative expenses 19,000 64,000
Income from operations 56,000
Interest expense                1,500
Income before income taxes 54,500
Income tax expense        15,800
Net income after tax         38,700

Additional information regarding the year ended December 31, 2019

1) Dividends declared and paid were $30,000.
2) During the year an old equipment costing $15,000 was sold for $2,800 at a loss of $1,000. New equipment costing $22,000 was purchased to replace the old equipment.
3) Total depreciation expenses of $22,100 and the loss on sale of equipment are included in
            selling expenses.
4) Purchased property costing $30,000, full cash payment was made.
5) Bonds were redeemed at face value.
6) Additional shares of stock were issued for cash at par.
      
Required:
Prepare a cash flow statement for the year ended December 31, 2019 using the indirect method. (Show all relevant workings)

Chapter 18

1Mr. De Cat is the CEO of an oil company. If he decides to drill, he will drill only one well. He believes the outcomes of the drilling are

Dry Well                                              $0

Small Amount                                   Large Amount

$25 Million                                          $60 Million

It costs $ 10 million to drill a well. Mr. De Cat’s u-curve is

u1x2 = 56.37*x - 324.5

Mr. De Cat asks the company geologist to assess the probabilities of each possibility. The geologist says this assessment depends on whether or not a dome exists. The geologist says there is a 0.7 chance that a dome does exist. He also provides Mr. De Cat with the following information:

5Dry Hole兩Dome, &6 = 0.5 5

Small amount of oil 兩Dome, &6 = 0.3 5

Dry Hole兩No Dome, &6 = 0.7 5

Small amount of oil 兩 no dome, &6 = 0.25

a. What is Mr. De Cat’s certain equivalent for this drilling site?

b. What is the value of information on the presence of the dome?

c. What is the value of information on the amount of oil present?

Using the 2017 UPS Annual Report

The CEO of the company is convinced that financial analysis should hinge only on what is happening internally within the company. Convince him otherwise based on the following:

A. Analyze the implications of interest rate changes on any of the calculations you performed. Be sure to substantiate your claims.

B. How might an issue (negative or positive) within the overall stock market impact the company’s stock valuation numbers, other financial variables, or its overall portfolio management? Be sure your response is supported by evidence.

C. Analyze the impact of any external factor (i.e., external to the company) discussed throughout the course on the company’s financial position. Be sure to justify your reasoning.

Assume that you are the CEO of a small publicly traded company. The company’s stock price has fallen recently, and you believe that the market does not fully understand the company’s potential. You wonder about ways to increase cash flow for the year. At your direction, your CFO provides you with the following recommendations that are designed to increase your cash flow in the current period. Your hope is that these will bring the stock price back up to where you believe it should be.

1. Lengthen the time taken to pay accounts payable (“lean on the trade”) to increase net cash flows from operating activities.
2. Cut spending on R&D by 10%, which improves cash flow but also operating performance measures.
3. Decrease discretionary spending on marketing and promotion activities.
4. Offer deep discounts (during the last quarter of fiscal year only) to favored customers to provide incentives for them to increase the quantities they purchase from you in the current period.
5. Delay certain capital expenditures to push the cash outflow to a subsequent period.

Evaluate TWO of the CFO’s recommendations. In your evaluation, consider whether each recommendation will increase free cash flow in the short-term and the long-term. Will any of these ideas improve the stock price?

Mr. Lee, CEO of a company has been asked to quote a price for a special contract. The customer is not a current customer of the company, but Mr. Lee wants to try and win the contract as he believes that this may lead to more contracts in the future. As a result, he intends to quote a competitive price for the contract. The following information should be considered:

1. One of the company’s salesmen has been to visit the customer, to give them a presentation about the company’s product, together with a complimentary lunch, the costs of which totaled $1,000.

2. The contract would require 12,000 square meters of Material A. This material is regularly used by the company for producing a profitable product. There is currently 15,000 square meters in inventory, which was bought for $13 per square meters. The current market price of Material A is $13.5 per square meter, and the inventory could be sold for $12.5 per square meter.

3. The contract would require 1,500 square meters of Material B. 1,000 square meters is in inventory at a cost of $5 per square meter. There is no alternative use of the material and can be sold for $3 per square meter. The current market price of Material B is $10 per square meter.

4. The contract would require 300 litres of Material C. This is not a material that is regularly used by the company and there are 600 litres of this material in inventory. The current market price is $10 per litre. It is dangerous and if not used in this contract will have to be disposed of at a cost of $30 per litre.

5. The contract would require 900 hours of skilled labor that is hard to recruit. The skilled labour will be transferred to the contract from a production department. The hourly rate is $80 per hour. At a recent meeting, the production department manager claimed that if the men were returned to him they could generates sales of $200,000. The material costs for the sales will be $50,000.

6. The contract would utilizes a special equipment which cost $18,000 that was purchased two years ago. The net book value is $6,000. This special equipment is currently not used for any production and can be disposed now at a net realizable value of $9,000. If used in the contract, the net realizable value after use is estimated to be $2,000.

7. The contract would be supervised by a senior engineer who currently works 150 hours per month and is paid an annual salary of $720,000. The contract is expected to take one month to complete, and if it goes ahead is likely to take up 10% of the supervisor’s time during that month. If necessary the supervisor will work overtime which is unpaid.

8. This is based on 500 machine hours for the contract at a predetermined fixed overhead rate of $20 per machine hour.

Required:

a. You are employed as assistant Management Accountant by Mr. Lee. For each of the items identified you are to:

(1) discuss whether or not you agree with the valuation provide in the proposed tender

(2) prepare a revised schedule of relevant costs for the tender and determine the minimum price .

b. From a decision-making point of view, should joint costs be allocated among joint products? What guideline should be used in determining whether a joint product should be sold at the split-off point or processed further?

A wine company CEO is frustrated with the company's lack of success in consistently reaching profitability. Employees have been reduced, pay and benefits frozen and even business travel curtailed such that G&A expenses cannot be managed down much further. What is the other big expense item that management should be closely examining?