Use the amounts you calculated for the 2020 income statement as needed.

1.What is the Cash from Operating Activities in 2020 ($millions)?

2.What is the Cash from Investing Activities in 2020 ($millions)?

3.What are the Dividends in 2020 ($millions)?

4.What is the Net Change in Cash in 2020 ($millions)?

5.Calculate the Free Cash Flow. What is the Change in Net Operating Working Capital in 2020 ($millions)?

6.What is the Free Cash Flow in 2020 ($millions)?

Nina's Fashions, Inc., operates a chain of retail clothing stores in Michigan, Wisconsin, and Illinois. The company has been in business since 1953, and until about 15 years ago, all of its stores were in older, downtown locations. However, in the late 1970s, the chain opened its first suburban store which differed significantly from the older stores. The new store was much larger, stocking many more items than the old stores. Many new stores followed, which were primarily located in shopping malls and shopping centers.

The new stores were a resounding success, and over the past ten years, Nina's has been aggressively selling its older locations and opening suburban stores. The downtown areas in many of Nina's locations have been revitalized and are now filled with high-rise office buildings and upscale retail outlets, so downtown property values have skyrocketed. Thus, the sale of its old store properties resulted in large cash inflows to Nina's. Since the company's strategic plans call for it to lease the new suburban stores rather than to purchase them, the firm now has a "war chest" of excess cash.

Many alternative uses have been discussed for the excess cash, ranging from repurchases of stock or debt to higher dividend payments. However, management has decided to use the cash to make one or more acquisitions, since they believe an expansion would contribute the most to stockholders' wealth. One of the acquisition candidates is Chic, a chain of eleven stores which operates in northern Illinois. The issues now facing the company are (1) how to approach Chic's management and (2) how much to offer for Chic's stock.

Executives at Nina's are good at running retail clothing stores, but they are not finance experts and have no experience with acquisitions. Bob Sharpe, the treasurer, has an accounting background, but he did attend a three-day workshop on mergers at Harvard University last year specifically to learn something about the subject. Nina's had no acquisition plans at that time; Sharpe just felt that it would be useful to become familiar with the subject.

Table 1 contains some basic data that Sharpe developed relating to the cash flows Nina's could expect if it acquired Chic. The interest expense listed in the table includes (1) the interest on Chic's existing debt, (2) the interest on new debt that Nina's would issue to help finance the acquisition, and (3) the interest on new debt that Nina's would issue over time to help finance expansion within the new division. The required retentions shown in Table 1 represent earnings generated within Chic that would be earmarked for reinvestment within the acquired company to help finance growth. Note too that all the estimates in Table 1 are the incremental flows Chic is expected to produce and to make available to Nina's if it is acquired. Although specific estimates were only made for 2018 through 2021, the acquired company would be expected to grow at a 5 percent rate in 2022 and beyond.

Table 1

Incremental Cash Flows to Nina’s if Chic is Acquired

Chic currently finances with 30 percent debt; it pays taxes at a 20 percent federal-plus-state tax rate; and its beta is 1.3. If the acquisition takes place, Nina's would increase Chic's debt ratio to 60 percent, and consolidation, coupled with expected earnings improvements, would move Chic's federal-plus-state tax rate up to that of Nina's, 25 percent.

One part of the analysis involves determining a discount rate to apply to the estimated cash flows. Bob Sharpe remembers from the Harvard workshop that Professor Robert Hamada had developed some equations that can be used to unlever and then relever betas, and Sharpe believes that these equations may be helpful in the analysis:

Formula to unlever beta: bu= bL/ 1+(1-T)(D/s)

Formula to relever beta: bL= bu[1+(1-T)(D/s)]   

Here, b_U is the beta that Chic would have if it used no debt financing, T is the applicable corporate tax rate, and D/S is the applicable market value debt-to-equity ratio. Sharpe notes that the T-bond rate is 6 percent, and a call to the company's investment bankers produced an estimate of 11 percent market return.

Assume that you were recently hired as Bob Sharpe's assistant, and he has asked you to answer some basic questions about mergers as well as to do some calculations pertaining to the proposed Chic acquisition. Then, you and Sharpe will meet with the board of directors, and it will decide whether or not to proceed with the acquisition, how to start the negotiations, and the maximum price to offer. As you go through the questions, recognize that either Sharpe or anyone on the board could ask you follow-up questions, so you should thoroughly understand the implications of each question and answer. Your predecessor was fired for "being too mechanical and superficial," and you don't want to suffer the same fate.

Current amount of debt financing for Chic is $3,214,300 and no non-operating assets.

Questions

1.         Use the data contained in Table 1 to construct Chic's free cash flow and tax shields for 2018 through 2021. (Use APV method to value Chic)

2.         Conceptually, what is the appropriate discount rate to apply to the cash flows developed in question 2?

3.         What is the terminal value of Chic using both Free cash flows and tax shield; that is, what is the 2021 value of these cash flows that Chic is expected to generate beyond 2021? What is Chic's value to Nina's shareholders?

4.         Chic has 5 million shares of common stock outstanding. The shares are traded infrequently and in small blocks, but the last trade, of 500 shares, was at a price of $1.50 per share. Based on this information, and on your answers to Questions 1-3, what is the maximum price per share that should Nina's offer for Chic?

INTEGRATED MARKETING COMMUNICATION CASE STUDY

BMW is a German multinational company which produces luxury cars. BMW vehicles are sold mostly to consumers who look for high standards for quality, luxury, and performance which BMW is known for. In Melbourne, there are several BMW dealerships and most new car sales took place through these dealerships after customers take a test drive and have an opportunity to inspect the vehicle and consider different options available. Due to the COVID-19 restrictions, car dealerships including, BMW showrooms, are closed in Melbourne since 6 August. However, the customers may request a test drive or arrange to purchase a car over the phone or reach out to a salesperson via other online methods. This situation will likely continue until December 2020. How could BMW dealerships in Melbourne use the Integrated Marketing Communication approach and its positive brand image to maintain car sales during this period?

Base your answer on information available online and your observations and support it with the theoretical knowledge acquired in the Unit.

Above critical thinking case study and you need analyse it with relevant Integrated Marketing Communication theory learned to identify solutions to the problems in the scenario.

The following condensed income statements of the Jackson Holding Company are presented for the two years ended December 31, 2021 and 2020:

On October 15, 2021, Jackson entered into a tentative agreement to sell the assets of one of its divisions. The division qualifies as a component of an entity as defined by GAAP. The division was sold on December 31, 2021, for $5,270,000. Book value of the division’s assets was $4,580,000. The division’s contribution to Jackson’s operating income before-tax for each year was as follows:

Assume an income tax rate of 25%.

Required: (In each case, net any gain or loss on sale of division with annual income or loss from the division and show the tax effect on a separate line.)
1. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
2. Assume that by December 31, 2021, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $5,270,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.
3. Assume that by December 31, 2021, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,990,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures.

Assume that by December 31, 2021, the division had not yet been sold but was considered held for sale. The fair value of the division’s assets on December 31 was $3,990,000. Prepare revised income statements according to generally accepted accounting principles, beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted should be indicated with a minus sign.)

While on vacation, Kyle Kingston, the president and chief executive officer of Remstat, Inc., is called by the CEO of Viokam Corporation, who asks Kingston if Remstat would be interested in buying 25 percent of the outstanding shares of Viokam. Remstat is a billion dollar conglomerate which has contemplated acquiring Viokam for some time. Kingston tells Viokam's CEO that Remstat is not interested. Kingston tells Viokam’s CEO, however, that KKIM, Inc., would be willing to buy the shares of Viokam. Kingston is the 100 percent shareholder of KKIM. Viokam sells the shares to KKIM for $35 million. A year later, KKIM sells the shares for $55 million to a mutual fund company. When Remstat's directors discover KKIM's purchase and sale of the Viokam shares, they bring an action against Kingston on behalf of Remstat. Which of the following is correct?

1. Kingston may be held liable to Remstat because he usurped a corporate opportunity.
2. Kingston may not be held liable to Remstat because he became aware of this opportunity outside the scope of his duties as an officer of Remstat.
3. Kingston may not be held liable to Remstat because he acted within the discretion afforded him under the business judgment rule.
4. Kingston may be held liable to Remstat because he exceeded his authority to act for the corporation.

I am writing a paper on Financial Restructuring. I am required to pick a company that is in [potential] trouble of defaulting/bankruptcy. I have chosen Toys R Us.

I am required to:

1) Analyze the company's (Toys R Us) financial history and current financial situation.

2) Propose a financial restructuring proposal.

It is my understanding that I need to look at all possible financial statements, income statements, cash flows, and use financial tools to "financially restructure" and propose a "fix" to save Toys R Us.

What are the ways in which a company can turn itself around through the use of these financial restructuring methods?

I am not sure what to look into exactly, and how to approach this.

I am struggling with the thought of having to write 3pages on this....

The Dean of ASBE School of Business is concerned that grades in the MBA program are distributed appropriately. Too many high grades or too many low grades would pose a problem. We wish to test the claim that the mean GPA of ASBE students is smaller than 3.6 at the .01 significance level.

The null and alternative hypothesis would be:

• H0:μ=3.6
  Ha:μ<3.6
• H0:p=3.64/4
  Ha:p≠3.64/4
• H0:p=3.6/4
  Ha:p>3.6/4
• H0:p=3.6/4
  Ha:p>3.6/4
• H0:μ=3.6
  Ha:μ>3.6
• H0:p=3.6/4
  Ha:p<3.6/4
• H0:μ=3.6
  Ha:μ≠3.6

• The test is:

  two-tailed

  right-tailed

  left-tailed

  
  
  Based on a sample of 20 student grades, the sample mean GPA was 3.55 with a standard deviation of 0.08
  
  The test statistic is:  (Round to 3 decimals)
  
  Based on this we:
• Fail to reject the null hypothesis
• Reject the null hypothesis

The Dean of ASBE School of Business is concerned that grades in the MBA program are distributed appropriately. Too many high grades or too many low grades would pose a problem. We wish to test the claim that the mean GPA of ASBE students is smaller than 3.3 at the .005 significance level.

The null and alternative hypothesis would be:

• H0:p=3.34H0:p=3.34
  Ha:p>3.34Ha:p>3.34
• H0:μ=3.3H0:μ=3.3
  Ha:μ≠3.3Ha:μ≠3.3
• H0:p=3.34H0:p=3.34
  Ha:p<3.34Ha:p<3.34
• H0:μ=3.3H0:μ=3.3
  Ha:μ<3.3Ha:μ<3.3
• H0:p=3.34H0:p=3.34
  Ha:p≠3.34Ha:p≠3.34
• H0:μ=3.3H0:μ=3.3
  Ha:μ>3.3Ha:μ>3.3

The test is:

left-tailed

two-tailed

right-tailed

Based on a sample of 75 student grades, the sample mean GPA was 3.28 with a standard deviation of 0.02

The test statistic is:  (Round to 3 decimals)

Based on this we:

• Fail to reject the null hypothesis
• Reject the null hypothesis

A shareholders' group is lodging a protest against your company. The shareholders group claimed that the mean tenure for a chief exective office (CEO) was at least 9 years. A survey of 59 companies reported in The Wall Street Journal found a sample mean tenure of 7.3 years for CEOs with a standard deviation of s=s= 5 years (The Wall Street Journal, January 2, 2007). You don't know the population standard deviation but can assume it is normally distributed.

You want to formulate and test a hypothesis that can be used to challenge the validity of the claim made by the group, at a significance level of α=0.01α=0.01. Your hypotheses are:

      Ho:μ=9Ho:μ=9
      Ha:μ<9Ha:μ<9

What is the test statistic for this sample?
test statistic =  (Report answer accurate to 3 decimal places.)

What is the p-value for this sample?
p-value =  (Report answer accurate to 4 decimal places.)  

The p-value is...

• less than (or equal to) αα
• greater than αα

This test statistic leads to a decision to...

• reject the null
• accept the null
• fail to reject the null

As such, the final conclusion is that...

• There is sufficient evidence to warrant rejection of the claim that the population mean is less than 9.
• There is not sufficient evidence to warrant rejection of the claim that the population mean is less than 9.
• The sample data support the claim that the population mean is less than 9.
• There is not sufficient sample evidence to support the claim that the population mean is less than 9.