Company: Tesla

1. Identify a publicly-traded U.S.-based company (other than Target) in which you have some interest, and which has significant amounts of inventory. Such a company likely will be manufacturer (e.g., Tesla, Dover, Pfizer, Boeing, etc.) or (re)seller (e.g., McDonald’s, Costco, Home Depot, Kroger, CVS, etc.).

2. Obtain the latest audited annual financial statements for the company identified. Generally, that will mean either:  

a. Use the information in Appendix A of your text, Accessing the EDGAR Database through the Internet, to obtain and download or print as a pdf the company’s latest, complete Form 10-K, including its complete financial statements; or

b. Navigate the company’s website to find its investor relations page from which you can download or print as a pdf its latest annual report or Form 10-K.

3. The financial statements downloaded in item 2 will include a balance sheet, income statement, statement of cash flows, and statement of changes in stockholder’s equity for (at least) the last two fiscal years.  

a. Use the information in those statements to compute the financial ratios presented and described in Appendix C of your text for each of the most recent two years for which data are presented.  

b. Immediately following your computation of each ratio pair, provide your assessment of the aspect of the company’s performance measured by the ratio. Please do not get bogged down in this part of the assignment. Truly, just write what you think. I’m not looking for a “textbook” answer here; we have an entire term to come up with those.

4. Submit your responses along with the company’s primary financial statements (i.e., its balance sheet, income statement, statement of cash flows, and statement of changes in stockholder’s equity, only) as a single pdf file.

In March 2020, a bank saw a 6% drop in assets, a 30% drop in capital, but no change in liabilities.

    (a) How much was the bank's leverage ratio (defined as the equity multiplier) at the beginning of March 2020?
    (b) How much was the bank's leverage ratio (defined as the equity multiplier) at the end of March 2020?
    (c) In April 2020, the bank's assets decreased by 2%, while the bank's liabilities remained unchanged. What was the percentage change in the bank's capital in April 2020?

In December 2019, the U.S. national debt was $23 trillion. Of this, 29% was held by foreign investors and governments.

Which 2 foreign countries are the largest holders of U.S. Treasuries?   What would happen if their demand for Treasuries declined? What would happen if they engaged in a mass sell-off?   Consider the impact on interest rates and on the value of outstanding Treasuries as well as the economies of both the foreign countries and the U.S.

Does Puerto Rico hold U.S. Treasuries and, if so, how much?

If the Korean steel industry subsidizes the steel that it sells the United States, the
a. United States should protect its domestic steel industry from this unfair competition.
b. harm done to U.S. steel producers from this unfair competition exceeds the gain to U.S. consumers of cheap Korean steel.
c. harm done to the U.S. steel producers is less than the benefit that accrues the U.S.
d. United states should subsidize the products it sells to Korea.

Calculate the present worth of all costs for a newly acquired machine with an initial cost of $28,000, no trade-in value, a life of 14 years, and an annual operating cost of $17,000 for the first 5 years, increasing by 10% per year thereafter. Use an interest rate of 10% per year.

The present worth of all costs for a newly acquired machine is determined to be

11. After studying Iris Hamson’s credit analysis, George Davies is considering whether he can increase the holding period return on Yucatan Resort’s excess cash holdings (which are held in pesos) by investing those cash holdings in the Mexican bond market. Although Davies would be investing in a peso-denominated bond, the investment goal is to achieve the highest holding period return, measured in U.S. dollars, on the investment.

Davies finds the higher yield on the Mexican one-year bond, which is considered to be free of credit risk, to be attractive but he is concerned that depreciation of the peso will reduce the holding period return, measured in U.S. dollars. Hamson has prepared selected economic and financial data, given in Exhibit 3-1, to help Davies make the decision.

Selected Economic and Financial Data for U.S. and Mexico

Expected U.S. Inflation Rate                                                             2.0% per year

Expected Mexican Inflation Rate                                          6.0% per year

U.S. One-year Treasury Bond Yield                                                  2.5%

Mexican One-year Bond Yield                                                           6.5%

Nominal Exchange Rates

Spot                                                                                       9.5000 Pesos = U.S. $ 1.00

One-year Forward                                                                9.8707 Pesos = U.S. $ 1.00

Hamson recommends buying the Mexican one-year bond and hedging the foreign currency exposure using the one-year forward exchange rate. She concludes: “This transaction will result in a U.S. dollar holding period return that is equal to the holding period return of the U.S. one-year bond.”

1. Calculate the U.S. dollar holding period return that would result from the transaction recommended by Hamson. Show your calculations. State whether Hamson’s conclusion about the U.S. dollar holding period return resulting from the transaction is correct or incorrect. After conducting his own analysis of the U.S. and Mexican economies, Davies expects that both the U.S. inflation rate and the real exchange rate will remain constant over the coming year. Because of favorable political developments in Mexico, however, he expects that the Mexican inflation rate (in annual terms) will fall from 6.0 percent to 3.0 percent before the end of the year. As a result, Davies decides to invest Yucatan Resorts’ cash holdings in the Mexican one-year bond but not to hedge the currency exposure.
2. Calculate the expected exchange rate (pesos per dollar) one year from now. Show your calculations. Note: Your calculations should assume that Davies is correct in his expectations about the real exchange rate and the Mexican and U.S. inflation rates.
3. Calculate the expected U.S. dollar holding period return on the Mexican one-year bond. Show your calculations. Note: Your calculations should assume that Davies is correct in his expectations about the real exchange rate and the Mexican and U.S. inflation rates.

Using the U.S. Securities and Exchange Commission’s EDGAR database, select a public company that has consolidated subsidiaries. To minimize the chances of classmates selecting the same company, select one that begins with the same letter as your first or last name. In your discussion post, name the company and all of its subsidiaries. Then answer the following questions: What is the accounting valuation basis for consolidating assets and liabilities in the business combination? What percentage ownership does the parent have in one of the subsidiaries reported? Are there any outside interests that have been accounted for with this subsidiary? Is there any goodwill recorded? If yes, are there notes in the financial statement regarding a goodwill impairment loss? If so, how were they recorded? If not, how and when should any goodwill impairment loss be recorded? My first name starts with an S.

Use the Sprint company

A study of the career paths of hotel general managers sent questionnaires to an SRS of 300 hotels belonging to major U.S. hotel chains. There were 187 responses. The average time these 187 general managers had spent with their current company was 9.93 years. (Take it as known that the standard deviation of time with the company for all general managers is 3.5 years.) (a) Find the margin of error for an 85% confidence interval to estimate the mean time a general manager had spent with their current company: 9.3109 years (b) Find the margin of error for a 99% confidence interval to estimate the mean time a general manager had spent with their current company: years (c) In general, increasing the confidence level the margin of error (width) of the confidence interval. (Enter: ''DECREASES'', ''DOES NOT CHANGE'' or ''INCREASES'', without the quotes.)

Mini-Case: Use of Foreign Exchange Markets

Each month, the O'Hare Sports Export Company (a U.S. firm based in Newport, RI) receives an order for footballs from a British Sporting Goods distributor. The monthly payment for the footballs is denominated in British pounds, as requested by the British distributor. John Novack, owner of the O'Hare Sports Export Company, must convert the pounds received into dollars.

Questions to answer:

1. Define the spot market.

2. Explain how the O'Hare Sports Export Company could use the spot market to facilitate the exchange of currencies. Be specific.

3. Define the forward market.

4. Explain how the O'Hare Sports Export Company is exposed to exchange rate risk and how it could use the forward market to hedge this risk.

*Please answer in DETAIL, thank you!*

Mini-Case: Use of Foreign Exchange Markets

Each month, the O'Hare Sports Export Company (a U.S. firm based in Newport, RI) receives an order for footballs from a British Sporting Goods distributor. The monthly payment for the footballs is denominated in British pounds, as requested by the British distributor. John Novack, owner of the O'Hare Sports Export Company, must convert the pounds received into dollars.

Questions to answer:

1. Define the spot market.

2. Explain how the O'Hare Sports Export Company could use the spot market to facilitate the exchange of currencies. Be specific.

3. Define the forward market.

4. Explain how the O'Hare Sports Export Company is exposed to exchange rate risk and how it could use the forward market to hedge this risk.

*Please answer in DETAIL, thank you!*