Richard Scott, CEO of XYZ Enterprises, is considering a merger with Empire Inc., which is led by CEO Mickey Thompson. The merger of their two firms will enable the creation of a very large diversified conglomerate, with businesses ranging from office supplies to sporting goods, industrial paints, consumer electronics, video games, and marine engines. Consultants from Boston Consulting Group have advised Scott and Thompson that the merger could create a great deal of value, because the new combined entity can use several lucrative yet mature "cash cows" within Empire Inc. to fund the growth of several promising, but not yet highly profitable, young businesses. Scott and Thompson have decided to seek a second opinion from your consulting firm, International Associates.

Please respond to the following questions posed to you by these two CEOs:

• Could you please explain the BCG matrix to us? What is the logic of this model? What are the model’s limitations and weaknesses?
• Should we be employing the matrix to evaluate this merger? Could we create value in the manner that BCG has described?

Matt and Meg Comer are married and file a joint tax return. They do not have any children. Matt works as a history professor at a local university and earns a salary of $68,000. Meg works part time at the same university. She earns $35,500 a year. The couple does not itemize deductions. Other than salary, the Comers’ only other source of income is from the disposition of various capital assets (mostly stocks). (Use the tax rate schedules,Dividends and Capital Gains Tax Rates.) (Round your final answers to the nearest whole dollar amount.)

a. What is the Comers’ tax liability for 2020 if they report the following capital gains and losses for the year?

Short-term capital gains $ 11,500

Short-term capital losses (4,500)

Long-term capital gains 17,500

Long-term capital losses (8,500)

b. What is the Comers’ tax liability for 2020 if they report the following capital gains and losses for the year?

suggest steps the company might take to reduce its losses and establish profitability,

the cenario:

Roots Corporation reported quarterly loss of $5.6 million in first quarter of 2018. Comparing to last year, the net loss increased from $5.1 to $5.6 million. The clothing retailer applies expansion strategy in US and is opening its first “brand activation centre” in Boston that will allow shoppers to familiarize themselves with the Canadian brand. It also plans to open 10 to 14 stores in the US by the end of 2019. Sales from corporate retail stores and e-commerce channels accounted for $44.2 million, up nine per cent from $40.5 million in last year’s first quarter. Jim Gabel, president and CEO of Roots, explained, “while sales in the quarter were good, we believe they would have been even stronger had we not faced a major ice storm across approximately 80 per cent of our store network in mid-April.” Roots remains confident about achieving its full-year target, between $35 million and $40 million of adjusted net income and between $410 million and $450 million of sales for fiscal 2019.

Reference:

Roots reports quarterly loss despite improvement in sales. (June 13, 2018). Retrieved from:https://www.thestar.com/business/2018/06/13/roots-reports-quarterly-loss-despite-improvement-in-sales.html

Pearson Industries uses platinum in its manufacturing process.  The company will need 1,000 troy ounces of platinum in January of 2020 for a production run in that month.  The company is concerned that the price of platinum will rise during the next several months.  On October 14, 2019, Pearson acquired a futures contract to buy 1,000 troy ounces of platinum On January 2, 2020 at a price of $480 per troy ounce.   Spot prices and current futures prices per troy ounce of platinum are as follows:

                                                            Oct. 14            Dec. 31            Jan 2               

Futures price per oz (current)              $480                $525                $525                             

Spot price per oz                                 $480                 $524               $525    

Fair Value of Contract            $  0    

On January 2, 2020, the company settled the options and purchased 1,000 troy ounces of platinum for $525 per ounce.

11)  This is:   A Fair Value Hedge      A Cash Flow Hedge      Not a Hedge            Pick one

12) On the December 31, 2019 Statement of Financial Position, what amount, if any, would be listed for the Derivative- Platinum Futures Contract?    

13) If your answer to 12 was not zero, would the amount be an asset or liability? If zero put neither.

14) On the December 31, 2019 Statement of Financial Position, what amount, if any, would be listed for the Inventory of Platinum?    

15) If your answer to 14 was not zero, would the amount be an asset or liability? If zero put neither.

16)  On the Income Statement for year ended December 31, 2019, what amount, if any, would appear as a gain or loss from the Derivative- Platinum?  

17) If your answer to 16 is nonzero, is it a gain or loss? If zero put neither.  

18)  On the Statement of Comprehensive income for year ended December 31, 2019, what amount, if any, would appear as a gain or loss as Other Comprehensive Income?  

19) If your answer to 18 is nonzero, is it a gain or loss? If zero put neither.                                       

20) Assume the platinum purchased on January 2, 2020 was used to make inventory that was sold in 2020. On the Income Statement for year ended December 31, 2020, what amount, if any, would be included in cost of goods sold related to the platinum?  ___________________

For ten years, Illinois Tool Works (ITW) has followed an acquisition strategy where it focused on growing from 800 to 1,000 businesses, each of which sought to follow an 80/20 rule where 80% of revenues business came from 20% of its products or customers. In support of this strategy, ITW sent hundreds of managers for training to sharpen their negotiating and deal making skills. As a result, ITW bought 201 companies between 2004 and 2008. Indeed, new acquired companies added $1 billion a year to annual revenues totaling nearly $18 billion.

Now, however, company leaders believe they’ve focused too much on acquisition. Former CEO David Speer said, “I can buy a lot of companies and fix them, but are they something I want to own four or five years from now?” So ITW is switching to a divestiture strategy aimed at making the company stronger through subtraction rather than addition. Divesting, or selling companies or their parts, is often done to get rid of business units that no longer fit strategic plans. The goal is to raise cash, streamline operations, and focus on the remaining core businesses. Research ITW’s divesting strategy, summarize it, and explain its goals and tactics. Find out the latest developments from the last few years. Do you think the divesting strategy will work?

Carolyn Shaw is 27. - She works as an accountant for an oil company. - Her salary next year will be $80,000. - She expects to receive a 5 percent raise each year until she retires at age of 65. - Carolyn is considering a return to school to pursue an MBA degree. - She expects the cost of books, tuition, and fees to be $70,000 the first year and $72,000 the second. - These costs are paid at the beginning of the year (as you surely know). - She will not work while in school. - Graduates of the school Carolyn is considering receive starting salaries that average $130,000. - Raises average 7 percent per year. - Carolyn considers the opportunity costs to be 12 percent. a)Determine the present value of Carolyn’s lifetime earnings if she does not return to school. b)Determine the present value of Carolyn’s lifetime earnings with an MBA degree. Remember, she won’t start her job for two years. c) What is the NPV of an MBA degree given Carolyn Shaw's assumptions?

Translation and Remeasurement of Account Balances

U.S. Industries has a subsidiary in Switzerland. The subsidiary’s financial statements are maintained in Swiss francs (CHF). Exchange rates ($/CHF) for selected dates are as follows:

The following items appear in the subsidiary’s trial balance at December 31, 2020:

1. Cash in bank, CHF4,000,000.

2. Inventory, CHF3,000,000. The inventory was acquired on November 30, 2020.

3. Machinery and equipment, CHF11,000,000. A review of the records indicates that the company bought equipment costing CHF5,000,000 in January 2018 (20 percent of this was sold in January 2020) and additional equipment costing CHF7,000,000 in January 2019. Ignore accumulated depreciation.

4. Depreciation expense on machinery and equipment, CHF1,100,000 (depreciated over ten years, straight-line basis).

Required

Calculate the dollar amount for each of the above items, assuming the functional currency of the Swiss subsidiary is

(a) the U.S. dollar and

(b) the Swiss franc.

Enter answers using all zeros (do not abbreviate to millions or thousands).

Organizational Effectiveness and Development Scenario (Human Resources)

A small, family-run organization has always pursued a differentiation strategy that emphasizes quality and customer service. The CEO decides to retire and sell the business to a mid-sized competitor who has always employed a cost leadership strategy. As part of the sale agreement, the CEO insists that all current employees be retained. Within four months of the acquisition, the VP of HR sees that almost 40% of the acquired employees have left the organization, taking critical knowledge with them. If this continues, it will affect customer service.

1. What type of OED( Organizational Effectiveness and Development) intervention should the VP of HR consider first? ( support the answer with appropriate reasoning as per the above scenario with 100 words)

Koala Ltd provide financial advice to Trump-Biden Inc. for an agreed fee of US$1 million on 10 July 2019. The monies are paid into the USA bank account of Koala Ltd on 10 July 2019. Koala Ltd decide to leave the monies in the USA bank account and will receive interest at a rate of 10% on 30 June each year. The appropriate exchange rates are noted below:

• 10 July 2019: A$1.00 = US$0.78
• 30 June 2020: A$1.00 = US$.75

Provide the journal entries (including narrations) that would need to be made in the books of Koala Ltd to account for the above transactions for the year ended 30 June 2020.

Question 1 [Balance Scorecard]

A). The board of directors of ClariMak, a manufacturing enterprise has tasked its management to develop a new mission statement that details the enterprise’s line of business, market size and niche. The new mission statement reads: “We want to continually grow through our commitment to quality and delivering quality products to our customers”. In addition, the management of ClariMak developed the following set of vision statements to complement the mission statement:

• Provide superior returns to our shareholders
• Continually improve our business processes
• Delight our customers
• Learn from our mistakes and work smarter in the future

Required:
i) Explain how the Balanced Scorecard can assist ClariMak Ltd to deliver on its new mission

statement [16 marks]

B) Ashesi University is Ghana’s number one university in the 2020 Times Higher Education Impact Ranking. The university presently measures its performance by comparing its actual costs against its budgeted costs for the year. Given the university’s international status, it is currently facing stiff competition from both public and privately-owned universities in Ghana. At one of its executive meetings, a member in the finance department has suggested that Ashesi needs to consider additional performance measures such as those indicated by the Balanced Scorecard.

Required:

1. Briefly elaborate on your understanding of the Balanced Scorecard and how the management of Ashesi university can utilize this approach to performance measurement [10 marks]

2. Discuss two (2) non-financial indicators (from different perspectives of the balanced scorecard) that Ashesi University could use for its performance evaluation. [4 marks]

   [Question 1 = 30 marks]