Questions
John is complaining about how inefficient and greedy governments are. “Why are they such beggars? They...

John is complaining about how inefficient and greedy governments are. “Why are they such beggars? They keep asking people for money all the time. Is it not that they are supposed to offer us facilities and take care of us. Instead individuals, households and business houses, all of us, have to keep feeding them all the time.” He is expressing his alarm in an agitated voice as he rambles on. “They come for you in all forms. They will be strict and make you pay a part of your hard-earned money as taxes. And as if that is not enough, they want to take your money and give you back some T-Bills.

Is John’s displeasure with the government justified?

In: Economics

Starware Software was founded last year to develop software for gaming applications. The founder initially invested...

Starware Software was founded last year to develop software for gaming applications. The founder initially invested $ 800,000 and received 8 million shares of stock. Starware now needs to raise a second round of​ capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $ 1.00 million and wants to own 20 % of the company after the investment is completed.

a. How many shares must the venture capitalist receive to end up with 20 % of the​ company? What is the implied price per share of this funding​ round?

b. What will the value of the whole firm be after this investment​ (the post-money​ valuation)?

a. How many shares must the venture capitalist receive to end up with 20 % of the​ company? What is the implied price per share of this funding​ round?

The venture capitalist will receive _____ million shares. ​ (Round to three decimal​ places.)

The implied price per share is ​$____per share.  ​(Round to the nearest​ cent.)

b. What will the value of the whole firm be after this investment​ (the post-money​ valuation)? The value of the firm will be ​$____million. ​ (Round to three decimal​ places.)

In: Finance

CASE 7: Ratios and Financial Planning at S&S Air Chris Gumede was recently hired by S&S Air to assist the company with its

Chris Gumede was recently hired by S&S Air to assist the company with its financial planning and to evaluate the company’s performance. Chris graduated from university five years ago with a finance degree.

S&S Air was founded 10 years ago by friends Mark and Thandi. The company has manufactured and sold light aeroplanes over this period and the company’s products have received high reviews for safety and reliability. The company has a niche market in that it sells primarily to individuals who own and fly their own aeroplanes. The company has two models, the Birdie which sells for R2 530 000 and the Eagle which sells for R5 780 000.

While the company manufactures aircraft, its operations are different from commercial aircraft companies. S&S Air builds aircraft to order. By using prefabricated parts, the company is able to complete the manufacture of an aeroplane in only five weeks. The company also receives a deposit on each order, as well as another partial payment before the order is complete. In contrast, a commercial aeroplane may take one and a half to two years to manufacture once the order is placed.

Mark and Thandi have provided the following financial statements. Chris has gathered the industry ratios for the light aeroplane manufacturing industry.

S&S Air

2018 Financial Statements

Income Statement 
SalesR128 700 000
Cost of goods sold90 700 000
Other expenses15 380 000
Depreciation4 200 000
PBIT18 420 000
Interest2 315 000
PBT16 105 000
Tax (40%)6 442 000
NPATR 9 663 000
Dividends2 898 900
Add to retained profits6 764 100
2018 Balance sheet
Ordinary shares1 000 000  Net non-current assetsR72 280 000
Retained profits41 570 000    
Shareholders equityR42 570 000  Inventory4 720 000
Long-term debtR25 950 000  Accounts receivable4 210 000
    Cash2 340 000
Accounts payable4 970 000  Current assetsR11 270 000
Short-term debt10 060 000    
Current liabilitiesR15 030 000    
 R83 550 000   R83 550 000

Light Aeroplane Industry Ratios

 Lower QuartileMedianUpper Quartile
Current ratio0,501,431,89
Quick ratio0,210,380,62
Cash ratio0,080,210,39
Total asset turnover0,680,851,38
Inventory days74,659,333,5
Receivables days58,237,225,9
Total debt ratio0,440,520,61
Debt-equity ratio0,791,081,56
Equity multiplier1,792,082,56
Times interest earned5,188,069,83
Cash coverage ratio5,848,4310,27
Profit margin4,05%6,98%9,87%
Return on assets (after tax)6,05%10,53%13,21%
Return on equity9,93%16,54%26,15%

Questions

  1. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean?
  2. S&S Air is planning for a growth rate of 20 per cent next year. Calculate EFN assuming the company operated at full capacity in 2018.
  3. Although most assets can be increased as a percentage of sales, net non-current assets often must be increased in specific amounts since it is usually impossible or impractical to buy part of a new plant or machine. So, assume S&S Air cannot increase net non-current assets as a percentage of sales. Instead, whenever the company needs to purchase new manufacturing equipment, it must purchase in the amount of
    R30 000 000. Calculate the new EFN with this assumption. What does this imply about capacity utilization for the company next year?

In: Accounting

You are working as exercise physiologist for a company and your job includes tests to measure...

You are working as exercise physiologist for a company and your job includes tests to measure fat oxidation rate (lipid metabolism) during exercise. One individual, who is on a normal diet, did not follow recommendations for fasting and consumed a high fat meal 1-2 hr prior to testing. The fat oxidation response of the individual during prolonged moderate intensity exercise was 30% higher than normal compared to subjects of same age, sex, exercise capacity, and daily diet.

What are possible causes for higher rate of fat oxidation during exercise? Explain the mechanisms involved. Focus on determinants of lipid utilization during exercise

In: Anatomy and Physiology

Waterways Problem 01 b1-b3 Waterways Corporation is a private corporation formed for the purpose of providing...

Waterways Problem 01 b1-b3 Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas. The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, perform rapid and responsible service, and serve the community and the employees who represent them in each community. The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products. Waterways was founded by Will Winkman who is the company president and chief executive officer (CEO). Working with him from the company’s inception is Will’s brother, Ben, whose sprinkler designs and ideas about the installation of proper systems have been a major basis of the company’s success. Ben is the vice president who oversees all aspects of design and production in the company. The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Helen Hines. The installation and training division is overseen by vice president Henry Writer, who supervises the managers of the six local installation operations. Each of these local managers hires his or her own local service people. These service employees are trained by the home office under Henry Writer’s direction because of the uniqueness of the company’s products. There is a small human resources department under the direction of Sally Fenton, a vice president who handles the employee paperwork, though hiring is actually performed by the separate departments. Teresa Totter is the vice president who heads the sales and marketing area; she oversees 10 well-trained salespeople. The accounting and finance division of the company is headed by Ann Headman, who is the chief financial officer (CFO) and a company vice president; she is a member of the Institute of Management Accountants and holds a certificate in management accounting. She has a small staff of accountants, including a controller and a treasurer, and a staff of accounting input operators who maintain the financial records. A partial list of Waterways’ accounts and their balances for the month of November follows. Accounts Receivable $276,000 Advertising Expenses 53,500 Cash 259,600 Depreciation—Factory Equipment 16,900 Depreciation—Office Equipment 2,400 Direct Labor 42,100 Factory Supplies Used 16,700 Factory Utilities 10,200 Finished Goods Inventory, November 30 68,700 Finished Goods Inventory, October 31 72,400 Indirect Labor 48,000 Office Supplies Expense 1,600 Other Administrative Expenses 71,300 Prepaid Expenses 41,000 Raw Materials Inventory, November 30 52,500 Raw Materials Inventory, October 31 38,100 Raw Materials Purchases 184,700 Rent—Factory Equipment 47,400 Repairs—Factory Equipment 4,600 Salaries 328,200 Sales Revenue 1,358,600 Sales Commissions 40,300 Work In Process Inventory October 31 53,100 Work In Process Inventory, November 30 42,200 A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule. WATERWAYS CORPORATION Cost of Goods Manufactured Schedule A) A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule. B)A list of accounts and their values are given above. From this information, prepare an income statement. C)A list of accounts and their values are given above. From this information, prepare a partial balance sheet for Waterways Corporation for the month of November.

In: Accounting

Coming full circle and in the spirit of educational completions, Steve Job's 2005 commencement speech provides...

Coming full circle and in the spirit of educational completions, Steve Job's 2005 commencement speech provides some interesting and meaningful life perspectives. Do you believe his views have relevance for individual or business success in our increasingly globalized economy?

Watch the video to answer the question please

Link to video: https://ed.ted.com/lessons/steve-jobs-at-stanford-university-commencement-2005

In: Accounting

A prospective MBA student earns $50,000 per year in her current job and expects that amount...

A prospective MBA student earns $50,000 per year in her current job and expects that amount to increase by 12% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. She has been told that her starting salary after business school is likely to be $85,000 and that amount will increase by 15% per year. Consider a time horizon of 10 years, use a discount rate of 11%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

In: Finance

1) A prospective MBA student earns $50,000 per year in her current job and expects that...

1) A prospective MBA student earns $50,000 per year in her current job and expects that amount to increase by 9% per year. She is considering leaving her job to attend business school for two years at a cost of $50,000 per year. She has been told that her starting salary after business school is likely to be $105,000 and that amount will increase by 10% per year. Consider a time horizon of 10 years, use a discount rate of 10%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

In: Finance

A prospective MBA student earns $60,000 per year in her current job and expects that amount...

A prospective MBA student earns $60,000 per year in her current job and expects that amount to increase by 11% per year. She is considering leaving her job to attend business school for two years at a cost of $45,000 per year. She has been told that her starting salary after business school is likely to be $75,000 and that amount will increase by 18% per year. Consider a time horizon of 10 years, use a discount rate of 12%, and ignore all considerations not explicitly mentioned here. Assume all cash flows occur at the start of each year (i.e., immediate, one year from now, two years from now,..., nine years from now). Also assume that the choice can be implemented immediately so that for the MBA alternative the current year is the first year of business school. What is the net present value of the more attractive choice?

In: Finance

Catalog sales companies mail seasonal catalogs to prior customers. The expected profit from each mailed catalog...

Catalog sales companies mail seasonal catalogs to prior customers. The expected profit from each mailed catalog can be expressed as the product​ below, where p is the probability that the customer places an​ order, D is the dollar amount of the​ order, and S is the percentage profit earned on the total value of an order.

Expected Profit = p X D X S

Typically 12​% of customers who receive a catalog place orders that average ​$180​, and 15​% of that amount is profit.

Complete parts​ (a) and​ (b) below.

​(a) What is the expected profit under these​ conditions? ​$ per mailed catalog

(b) The response rate and amounts are sample estimates. If it costs the company $2.00 to mail each catalog, how accurate does the estimate of p need to be in order to convince you that the expected profit from he next mailing is positive?

In: Statistics and Probability