"The rules of engagement for running a company that is people-based like Starbucks, and so many other companies: you just can not [sic] continue to leave your people behind and only focus on shareholder value," CEO Howard Schultz told CNN's Poppy Harlow (Wallace, 2014).

• Identify 3 practices, policies, or organizational design assumptions from the Kauffman report and directly correlate them to any current initiative of Starbucks.
• Explain how each practice, policy, or organizational design element has enhanced the development of an entrepreneurial/leadership/innovation-oriented mindset for Starbucks and its employees.
• Feel free to offer suggestions for different approaches that Starbucks may want to consider in the future.

BDI is looking to acquire a distressed pitchfork company. BDI is able to pay cash to fund the acquisition. The company president has asked you to evaluate the potential acquisition, and ultimately make a recommendation about wheather BDI should purchase the pitchfork company and if so, for what price. From your analysis and evaluation of the pitchfork company's financial statements, you put together the following table of sales forecasts (numbers in millions):

Pre-Merger Beta: 1.75

Pre-Merger % Debt: 35%

Pre-Merger Debt: $27.5 million

Pre-Merger Debt Rd: 9.5%

Tax Rate: 35%

You also gathered the following market information:

Risk Free Rate 2.4%

Market Risk Premium 5.0%

Your study of the pitchfork market shows that with the merger and introduction of a new cardinal red and navy blue pitchfork sales will grow stongly for the next 2 years, but that overall the market is mature, and expected to grow at only a 2% constant rate after 2020. BDI would need to invest $500,000 in operating captial in 2019 to build the required inventory to start sales.

Deliverables:

1.) Complete an APV valuation analysis for the examined pitchfork company. 2.) Assume that the examined pitchfork company has 1.5 million shares outstanding. What is the maximum price BDI should pay per share? Would you recommend they offer this price (Pitchfork company stock price is $18.75 a share)? Why or why not? 3.) Given BDI's strong balance sheet, they could likely recapitalize the pitchfork company with 70% debt at the end of 2 years (this amounts to $75.5 million of debt at the end of 2020 at the same interest rate). What is the value of the pitchfork company's equity with this capital structure?

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Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $288,000, $220,000, and $132,000, respectively. An articles of partnership agreement is drawn up stipulating the following:

• Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year.
• Profits and losses are allocated according to the following plan:

1. Each partner receives an annual salary allowance of $55 per billable hours worked.
2. Interest is credited to the partners’ capital accounts at the rate of 12 percent of the beginning capital balance for the year.
3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The agreement also states that there will be no bonus if there is a net loss or if salary and interest result in a negative remainder of net income to be distributed.
4. Any remaining partnership profit or loss is to be divided evenly among all partners.

On January 1, 2020, the partners admit Nichols to the partnership. Nichols contributes cash directly to the business in an amount equal to a 25 percent interest in the book value of the partnership property subsequent to this contribution. The partnership profit and loss sharing agreement is not altered upon Nichols' entrance into the firm; the general provisions continue to be applicable.

The billable hours for the partners during the first three years of operation follow:

The partnership reports net income (loss) for 2019 through 2021 as follows:

Each partner withdraws the maximum allowable amount each year.

1. Prepare schedules that allocate each year's net income to the partners.

2. Prepare in appropriate form a statement of partners’ capital for the year ending December 31, 2021.

Progressive Inc. (Progressive) is an investment company that recently raised $3,000,000 from a public financing. The Board of Directors has instructed the CFO to invest up to $2,000,000 in investments that it intends to actively trade and therefore will account for these investments at fair value through profit or loss.

On the advice of the company’s investment advisor, the following shares were purchased in October 2019:

During December 2019, Progressive received cash dividends of $40,000 from its investment in Monarch Bank of Canada.

In 2020, the following transactions took place:

January 25 50,000 shares of Leslee Resources Ltd. were purchased for $125,000.

May 17 6,000 shares of Monarch Bank of Canada were sold at $45 per share

June 17 75,000 shares of Lucky Limited were purchased at $15 per share

September 25 100,000 shares of Leslee Resources Ltd. were sold for net proceeds (i.e. after commissions) for $165,000. (For the purposes of determining the cost of shares sold, use the weighted average cost).

As part of its banking arrangement, the company pays no commissions on the purchase of shares but is charged a 2% commission on the sale of all investments.

Market Price of investments – presented on a per share basis

Required:

a) Prepare all journal entries relating to these investments for 2019.

b) Prepare all journal entries relating to these investments for 2020.

c) Briefly discuss why these investments are valued at current market value while other assets such as property, plant and equipment are not adjusted to fair market value.

Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $298,000, $225,000, and $137,000, respectively. An articles of partnership agreement is drawn up stipulating the following:

• Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year.
• Profits and losses are allocated according to the following plan:

1. Each partner receives an annual salary allowance of $55 per billable hours worked.
2. Interest is credited to the partners’ capital accounts at the rate of 12 percent of the beginning capital balance for the year.
3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The agreement also states that there will be no bonus if there is a net loss or if salary and interest result in a negative remainder of net income to be distributed.
4. Any remaining partnership profit or loss is to be divided evenly among all partners.

On January 1, 2020, the partners admit Nichols to the partnership. Nichols contributes cash directly to the business in an amount equal to a 25 percent interest in the book value of the partnership property subsequent to this contribution. The partnership profit and loss sharing agreement is not altered upon Nichols' entrance into the firm; the general provisions continue to be applicable.

The billable hours for the partners during the first three years of operation follow:

The partnership reports net income (loss) for 2019 through 2021 as follows:

Each partner withdraws the maximum allowable amount each year.

1. Prepare schedules that allocate each year's net income to the partners.

2. Prepare in appropriate form a statement of partners’ capital for the year ending December 31, 2021.

Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $248,000, $200,000, and $112,000, respectively. An articles of partnership agreement is drawn up stipulating the following:

• Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year.
• Profits and losses are allocated according to the following plan:

1. Each partner receives an annual salary allowance of $55 per billable hours worked.
2. Interest is credited to the partners’ capital accounts at the rate of 12 percent of the beginning capital balance for the year.
3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The agreement also states that there will be no bonus if there is a net loss or if salary and interest result in a negative remainder of net income to be distributed.
4. Any remaining partnership profit or loss is to be divided evenly among all partners.

On January 1, 2020, the partners admit Nichols to the partnership. Nichols contributes cash directly to the business in an amount equal to a 25 percent interest in the book value of the partnership property subsequent to this contribution. The partnership profit and loss sharing agreement is not altered upon Nichols' entrance into the firm; the general provisions continue to be applicable.

The billable hours for the partners during the first three years of operation follow:

The partnership reports net income (loss) for 2019 through 2021 as follows:

Each partner withdraws the maximum allowable amount each year.

1. Prepare schedules that allocate each year's net income to the partners.

2. Prepare in appropriate form a statement of partners’ capital for the year ending December 31, 2021.

GetMyFood, Inc. has developed an application for cell phones aimed toward consumers who live in more rural areas where there are few delivery options for take-out food.   The app connects local taxi drivers with the larger restaurant food delivery services in nearby areas to extend the range of home meal delivery service.

The company expects to generate revenues of $2000 (figures in thousands) in the first year (2020) with a general costs of services sold of $1200 (figures in thousands.) The company expects to see a sharp increase in the revenues earned after the first year as the new service gains recognition but believes that the life-cycle of the product will be relatively short as market research has shown that the business model will be most successful in areas that are more rural but still relatively close to larger population centers. Given the general demographic trend in population growth, the company believes that their target market will diminish over time as more standard delivery services become available.  

The company estimates the following growth rate for revenue, costs, and SG&A over the next five years:

The have also forecasted the following items for working capital:

Taxes are assumed to be 34% per year. The initial outlay for software development is estimated to be $1000.

You have been hired as a financial consultant to determine the estimated free cash flows to the firm for GetMyFood, Inc.

My teacher barely speaks English so your guess is as good as mine what he means. Also, this is all of the data that he gave the class and I have nothing else to share. Please don't tell me the information is misleading and or filled with typos, etc. I copied and paste what is being asked of us and that is why I am here, to get help. Please use the information that is provided to either help solve it or show me how and where the math won't work. Thank you.

Firm 3302 (name of firm)

2020. Dividends =3.23. risk free rate= 5.3%. market return = 4%. beta = 1.12

2020 Dividends =3.65. risk free rate= 6.3% market return =3.5% beta =1.22

2022. Dividends = 4.01 risk free rate= 5.2%   market return = 4.2%. beta =1.02

2023 Dividends = 3.58 risk free rate= 4.2% market return =3% market return =1.32

2024 Dividends =2.01 risk free rate=3.9% market return =2% market return =1.25

  This is our firm which is called 3302-firm expected dividend distribution table, we have many professional backups. Hence, based on us professional backups forecast, we 100% know that our dividend growth rate will be increasing in same rate after the last day of 2024. As we all know, between 2024 and infinite, we also learn that the ROE is 4% and reinvestment rate is 10%. The risk-free rate constantly equal to 4% and the market return constantly equals to 5%. Beta = 1.1. These number won’t change in the future. As we all know, between 2020 and 2024, we also learn that the ROE is 10.2% and reinvestment rate is 35%. All the numbers are listed on the table above. Question: Please find out 3302-firm’s intrinsic value today.

Ponpon produces cans of jelly. The company would like to purchase a canning machine. The machine costs $25,000 and the company needs a loan to make the purchase. Before agreeing to the loan, their bank requires Ponpon to provide both current (2020) and budgeted (3 months in 2021) financial statements.

Use the following information from Ponpon to provide the bankers with the 2021 budgeted financial states.

Balance Sheet

Cash                                        $50,000   

Accounts Receivable               $31,000   

Inventory                                $12,000

Fixed Assets                            $37,000

Total Assets                            $130,000

Accounts Payable                   $22,500

Accrued Credit Fees               $9,200

Common Stock                        $46,800

Retained Earnings                   $$51,500

Total Liabilities & Equity         $130,000

2021 Sales Forecast

January            $74,000

February          $82,000

March              $58,000

April                $54,000

May                 $80,000

June                 $67,000

July                  $70,500

Additional Info:

a. Ponpon only accepts credit cards when selling their jelly. Ponpon collects 35% of the sales on account in the month of the sale and 65% in the month after the sale.

b. Unfortunately, the credit card companies pass along a 6.2% sales fee to Ponpon for the convenience and safety of their transactions on account. The sales fee is due one month after the sale.

c. The cost of sales is 42% of (current month) sales.

d. Ponpon maintains an inventory at all times at the sales requirements (COS) for the months’ budgeted sales. This provides assurance that they won’t run out of jelly.

e. Ponpon uses a credit card for all their purchases. The company pays off their credit card balance in full the following month.

f. Ponpon pays 5% of sales each month to Jako Co. for the CEO’s security service.

g. In addition to the carriable security cost, Ponpon incurs fixed expenses of $22,000 per month, $1500 of which is for depreciation of fixed assets.

1. Prepare a budgeted Income Statement for the three-month period ending March 31, 2021 (Pro Forma Income Statement).

Pro Forma Income Statement:                                   

For the period: January 1 - March 31, 2021                           

                                                            January            February          March              Total                

Sales                                                                                       

Cost of goods sold                                                                                          

Gross Margin                                                                                      

Less Expenses:                                                                                    

   Variable Costs (mgmt fee)                                                                                       

   Credit Card Fees                                                                                          

   Fixed Expenses                                                                                             

Total Expenses                                                                                               

Net Income