Discuss the observed trend in the cash conversion cycle for publicly traded firms

With all else constant, what impact will an increase in the DPO have on the cash conversion cycle and the company's cash and marketable securities?

answer should be a least 3 pages long

1. Fictitious data—real data is available and would be interesting]

In the period 1980-2004, 8.7% of named Atlantic tropical storms were measured as “strong” hurricanes (Category 3 or higher at some point in their active “lifetime”).

As a test of one predicted effect of climate change, we want to see if this proportion has remained the same for the period 2005-2017. Assume there were 183 named Atlantic tropical storms in this period. Assume also that the 8.7% is (at least very close to) the true long-term proportion of these storms [which is the correct approach for this test].

1. What are the mean proportion and the standard deviation in that proportion for the sample of 183 storms?
2. Can we use the normal approximation for the proportion?
3. How likely would it be to find more than 10% “strong” hurricanes in the 2005-2017 period? How about 12.5%? If 12.5% of the 2005-2017 storms were strong, would you classify this as very unusual?

(b) State the model found when performing a regression using seasonal binaries. (A negative value should be indicated by a minus sign. Round your answers to 4 decimal places.

y_t =___ + _____t +_____ Q1 +_____ Q2 +______ Q3

(b) State the model found when performing a regression using seasonal binaries. (A negative value should be indicated by a minus sign. Round your answers to 4 decimal places.

y_t =___ + _____t +_____ Q1 +_____ Q2 +______ Q3

The following table of values gives a company's annual profits in millions of dollars. Rescale the data so that the year 2005 corresponds to  x=1 .

Use the power regression model to predict the company's profits in 2012.

a) $70.2 million

b) $68.6 million

c) $71.5 million

d) $67.7 million

e) $66.6 million

f) None of the above

A French firm enters into a two-year interest rate swap in euros on April 1, 2005. The swap is based on a principal of €80 million, and the firm will receive 7% fixed and pay six-month Euribor. Swap payments are semiannual. The 7% fixed rate is quoted as an annual rate using the European method, so the implied semiannual coupon is 3.44% [since (1.0344)2 = 1.07]. Two years later, the swap is finally settled, and the following Euribor rates have been observed: Apr. 1, 2005 Oct. 1, 2005 Apr. 1, 2006 Oct. 1, 2006 Apr. 1, 2007 5.5% 6.5% 7.5% 8% 6.5%

(a) What have the swap payments or receipts for the firm been on each swap payment date?

(b)The same French firm also entered another two-year interest rate swap in euros on April 1, 2005. The swap is based on a principal of €80 million, and the firm contracted to receive 7% fixed and pay six-month Euribor. On this swap, the payments are annual. Hence, the two successive six-month Euribor are compounded. Assuming that the Euribor rates given in the previous problem (5a) have been observed, what have the two annual swap payments been?

HCA Healthcare is considering an acquisition of Mission Health. Mission Health is a publicly traded company, and its current beta is 1.30. Mission Health has been barely profitable and had paid an average of only 20 percent in taxes during the last several years. In addition, it uses little debt, having a debt ratio of just 25 percent. If the acquisition were made, HCA would operate Mission Health as a separate, wholly owned subsidiary. Mission Health would pay taxes on a consolidated basis, and the tax rate would therefore increase to 35 percent. HCA also would increase the debt capitalization in the Mission Health subsidiary to 40 percent of assets, which would increase its beta to 1.50. HCA estimates that Mission Health if acquired, would produce the following net cash flows to HCA's shareholders (in millions of dollars):

These cash flows include all acquisition effects. HCA's cost of equity is 14 percent, its beta is 1.0, and its cost of debt is 10 percent. The risk-free rate is 8 percent.

a. What discount rate should be used to discount the estimated cash flow? (Hint: Use HCA's cost of equity to determine the market risk premium.)

b. What is the dollar value of Mission Health to HCA's shareholders?

Ivanhoe Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its stockholders and the Securities and Exchange Commission (SEC) at the end of the first quarter of the 2017–2018 fiscal year. Ivanhoe’s financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year. Sales revenue $56,000,000 Cost of goods sold 35,200,000 Variable selling expenses 870,000 Fixed selling expenses 2,720,000 Included in the fixed selling expenses was the single lump-sum payment of $1,810,000 for television advertisements for the entire year. Ivanhoe Corporation must issue its quarterly financial statements in accordance with generally accepted accounting principles regarding interim financial reporting. Should Ivanhoe report its operating results for the quarter as if the quarter were a separate reporting period in and of itself, or as if the quarter were an integral part of the annual reporting period. . The company report its quarterly results as if each interim period is an integral part of the annual period. State how the sales revenue, cost of goods sold, and fixed selling expenses would be reflected in Ivanhoe Corporation’s quarterly report prepared for the first quarter of the 2017–2018 fiscal year. IVANHOE CORPORATION INCOME STATEMENT 2017–2018 $

Directions:

Choose a publicly traded company and perform an expanded analysis on the financial statements. Use the most current 10K statements available on SEC or annual statements in Yahoo Finance. Complete the following for your chosen firm in an Excel spreadsheet: The Company is TJ MAXX below is a link to the sec.com 10K statement.

https://www.sec.gov/Archives/edgar/data/109198/000119312517099642/d269088d10k.htm

https://www.sec.gov

https://finance.yahoo.com/quote/TJX/financials?p=TJX

If the first link does not work there is a second one and search for the company TJ MAXX Along with a link to yahoo finance for statement to answer for the income statement and answering the follow questions below.

1.Horizontal and vertical analysis of the income statements for the past three years (all yearly balances set as a percentage of total revenues for that year).

2.Horizontal and vertical analysis of the balance sheets for the past three years (all yearly balances set as a percentage of total assets for that year).

3. Ratio analysis (eight ratios of your choosing) for the past three years PLUS a measurement for the creditworthiness of your firm as measured by Altman’s Z-score. Note that if you used your chosen firm for our ratio-related discussion posts, then you MUST also present industry-average ratios or current year competitor ratios for your ratio analysis. Comparing your firm’s ratios to a close competitor or an industry-average ratio makes your analysis much more meaningful.

Much of this course has concentrated on learning the financial statements, primarily because there was not an accounting prerequisite. Because of this concentration, you may find this assignment challenging. However, if you understand the financial statements, then the horizontal and vertical analysis should be rather intuitive. For example, if you see sales rise by 20%, then shouldn’t you also see net income rise by 20% or more if the managers are effective at controlling costs? If you see sales rise by 20% and assets rise by 40%, you have to ask why this is happening. It would appear that assets have risen too far given the sales that are generated from those assets—why did this occur? You may have to research that type of question and discuss it in your analysis.