Essentials Of Mis 8th Edition Kenneth Laudon - Solutions

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3-17 FREE CASH FLOW Financial information for Powell Panther Corporation is shown here.a. What was net operating working capital for 2014 and 2015?b. What was the 2015 free cash flow?c. How would you explain the large increase in 2015 dividends? Powell Panther Corporation: Income Statements for
3-16 FINANCIAL STATEMENTS The Davidson Corporation's balance sheet and income statement are provided here.Construct the statement of stockholders' equity for December 31, a.2015. No common stock was issued during 2015.b. How much money has been reinvested in the firm over the years?c. At the
3-15 INCOME STATEMENT Hermann Industries is forecasting the following income statement:The CEO would like to see higher sales and a forecasted net income of $2,500,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and
3-14 FREE CASH FLOW Bailey Corporation's financial statements (dollars and shares are in millions) are provided here.a. What was net operating working capital for 2014 and 2015?b. What was Bailey's 2015 free cash flow?c. Construct Bailey's 2015 statement of stockholders' equity.d. What was Bailey's
3-13 STATEMENT OF CASH FLOWS You have just been hired as a financial analyst for Basel Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job will be to recreate the firm's cash flow statement for the year just
3-12 STATEMENT OF CASH FLOWS W.C. Cycling had $55,000 in cash at year-end 2014 and $25,000 in cash at year-end 2015. The firm invested in property, plant, and equipment totaling $250,000. Cash flow from financing activities totaled + $170,000.a. What was the cash flow from operating activities?b.
3-11 EVA For 2015, Everyday Electronics reported $22.5 million of sales and$18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 9%, and its federal-plus-state income tax rate was 35%. What was the firm's
3-10 STATEMENT OF STOCKHOLDERS' EQUITY Computer World Inc. paid out$22.5 million in total common dividends and reported $278.9 million of retained earnings at year-end. The prior year's retained earnings were$212.3 million. What was the net income? Assume that all dividends declared were actually
3-9 BALANCE SHEET Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Explain and state the assumptions that underlie your answer.a. It issues $2 million of new common stock.b. It buys new plant and equipment at a cost of $3 million.c. It
3-8 PERSONAL TAXES Joe and Jane Keller are a married couple who file a joint income tax return, where the tax rates are based on the tax tables presented in the chapter. Assume that their taxable income this year was $165,000.a. What is their federal tax liability?b. What is their marginal tax
3-7 EVA Britton Industries has operating income for the year of $3,000,000 and a 40% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA?
3-6 MVA Over the years, McLaughlin Corporation's stockholders have provided $35,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm's earnings. The firm now has 2,000,000 shares of common stock outstanding, and the shares sell at a price of
3-5 MVA Henderson Industries has $500 million of common equity on its balance sheet; its stock price is $60 per share; and its market value added (MVA) is $130 million. How many common shares are currently outstanding?
3-4 STATEMENT OF STOCKHOLDERS' EQUITY In its most recent financial statements, Newhouse Inc. reported $50 million of net income and$810 million of retained earnings. The previous retained earnings were$780 million. How much in dividends were paid to shareholders during the year? Assume that all
3-3 INCOME STATEMENT Pearson Brothers recently reported an EBITDA of$7.5 million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%, What was its charge for depreciation and amortization?
3-2 INCOME STATEMENT Little Books Inc. recently reported $3 million of net income. Its EBIT was $6 million, and its tax rate was 40%. What was its interest expense? [Hint: Write out the headings for an income statement, and fill in the known values. Then divide $3 million of net income by(1 -T) =
3-1 BALANCE SHEET The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of$2.5 million and net plant and equipment equals $2 million. It has notes payable of $150,000, long-term debt of $750,000, and total common equity of $1.5
3-15 In the statement of cash flow, which source should Interest received and Interest paid be classified under? Operating activities or investing activities?
3-14 What comprises the net value of a company?
3-13 Which rule is used to arrange the asset accounts on a balance sheet?
3-12 How does the deductibility of interest and dividends by the paying corporation affect the choice of financing (i.e ., the use of debt versus equity)?
3-11 What does double taxation of corporate income mean? Could income ever be subject to triple taxation? Explain your answer.
3-10 Explain the following statement: Our tax rates are progressive.
3.9 How are management's actions incorporated in EVA and MVA? How are EVA and MVA interconnected?
3-8 Would it be possible for a company to report negative free cash flow and still be highly valued by investors; that is, could a negative free cash flow ever be viewed optimistically by investors? Explain your answer.
3-7 What is free cash flow? If you were an investor, why might you be more interested in free cash flow than net income?
3-6 Refer to the box titled, "The Balance Sheet of an "Average' American Household" when answering parts a and b.a.Based on this evidence, has the financial position of the average household improved during this period of time? Explain your answer.b. What do you think the average household balance
3-5 Financial statements are based on generally accepted accounting principles(GAAP) and are audited by CPA firms. Do investors need to worry about the validity of those statements? Explain your answer.
3-4 Explain the following statement: Although the balance sheet can be thought of as a snapshot of a firm's financial position at a point in time, the income statement reports on operations over a period of time.
3-3 If a "typical" firm reports $20 million of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without having any qualms about what they were doing? Explain your answer.
3-2 Who are some of the basic users of financial statements, and how do they use them?
3-1 What four financial statements are contained in most annual reports?
ST-2 NET INCOME AND CASH FLOW Last year Rattner Robotics had 55 million in operating income (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million, and its corporate tax rate was 40%.At year-end, it had $14 million in current assets, $3 million in accounts payable, $1
ST-1 KEY TERMS Define each of the following terms:a. Annual report; balance sheet; income statement; statement of cash flows; statement of stockholders' equityb. Stockholders' equity; retained carnings; working capital; net working capital; net operating working capital (NOWC); total debt
2-11 FINANCIAL MARKETS AND INSTITUTIONS Hayley, Irine, and Jimmy recently graduated with a degree in finance and were trying to find jobs. They applied for jobs offered by the HIJ Financial Services Corporation but are interested in working in different institutions: a commercial bank, an
2-10 Explain whether the following statements are true or false.a. Derivative transactions are designed to increase risk and are used almost exclusively by speculators who are looking to capture high returns.ь.Hedge funds typically have large minimum investments and are marketed to institutions
2-9 Briefly explain what is meant by the term efficiency continuum.
2-8 What is behavioral finance? Explain briefly the difference between behav-ioral finance and the efficient markets hypothesis.
2-7 Differentiate between dealer markets and stock markets that have a phys-ical location.
2-6 What types of changes have financial markets experienced during the last two decades? Have they been perceived as positive or negative changes?Explain
2-5 What would happen to the U.S. standard of living if people lost faith in the safety of the financial institutions? Explain.
2-4 Indicate whether the following instruments are examples of money market or capital market securities.a. U.S. Treasury billsb. U.S. Treasury notesc. Negotiable certificates of depositd. Credit card debte. State government bonds
2-3 Describe the role played by a financial intermediary in the process of indi-rect transfers.
2-2 What is the role of the underwriter in a primary market transaction?
2-1 What are the differences between indirect transfers through investment banks, and those through a financial intermediary?
ST-1 KEY TERMS Define each of the following terms:a. Spot markets; futures marketsb. Money markets; capital marketsc. Primary markets; secondary marketsd. Private markets; public marketse. Derivativesf. Investment banks (iBanks); commercial banks; financial services corporations g. Mutual funds;
1-14 Bedrock Company has $70 million in debt and $30 million in equity. The debt matures in 1 year and has a 10% interest rate, so the company is promising to pay back $77 million to its debtholders 1 year from now.The company is considering two possible investments, each of which will require an
1-13 Suppose you are a director of an energy company that has three divi-sions-natural gas, oil, and retail (gas stations). These divisions operate independently from one another, but all division managers report to the firm's CEO. If you were on the compensation committee, as discussed in Question
1-12 Suppose you were a member of Company X's board of directors and chair-person of the company's compensation committee. What factors should your committee consider when setting the CEO's compensation? Should the compensation consist of a dollar salary, stock options that depend on the firm's
1-11 Edmund Enterprises recently made a large investment to upgrade its tech-nology. Although these improvements won't have much effect on perfor-mance in the short run, they are expected to reduce future costs signif-icantly. What effect will this investment have on Edmund Enterprises"earnings per
1-10 Investors generally can make one vote for each share of stock they hold.TIAA-CREF is the largest institutional shareholder in the United States;therefore, it holds many shares and has more votes than any other organ-ization. Traditionally, this fund has acted as a passive investor, just going
1-9 The president of Southern Semiconductor Corporation (SSC) made this statement in the company's annual report: "SSC's primary goal is to increase the value of our common stockholders' equity." Later in the report, the following announcements were made:a. The company contributed $1.5 million to
1-8 What are conflicts between stockholders and managers? How can these conflicts be alleviated?
1-7 Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm's stock price from a current level of $20 to $25 in 6 months and then to $30 in 5 years, but another action keeps the stock at $20 for several years but then
1-6 List the forms of business organization and discuss their advantages and disadvantages.
1-5 If a company's board of directors wants management to maximize share-holder wealth, should the CEO's compensation be set as a fixed dollar amount, or should the compensation depend on how well the firm performs? If it is to be based on performance, how should performance be measured? Would it
1-4 Which type of stock-under, over, or equal to its intrinsic value is preferred by investors? For a CEO who is preparing to retire and plan to exercise all his stock options, is the answer still the same? Explain.
1-3 Suppose three honest individuals gave you their estimates of Stock X's intrinsic value. One person is your current roommate, the second person is a professional security analyst with an excellent reputation on Wall Street, and the third person is Company X's CFO. If the three estimates
1-2 When does stock equilibrium occur? List possible reasons for why stocks are not in equilibrium.
1-1 Which value is estimated by security analysis? Which value is perceived by the marginal investor? What is the goal of management?
ST-1 KEY TERMS Define each of the following terms:a. Sarbanes-Oxley Actb. Proprietorship; partnership; corporationc. S corporation; limited liability company (LLC); limited liability partnership (LLP)d. Intrinsic value; market pricee. Marginal investor; equilibriumf. Corporate raider; hostile
Review working capital ideas and implementation procedures.
Consider how traditional and modern attitudes have changed the management of working capital.
Determine how liquidity is managed.
Appreciate the measurement of working capital efficiency.
Understand risk management issues in working capital including enterprise risk management.
Develop a strategy for the selection of a working capital information system.
Analyze enterprise resource planning (ERP) as a more comprehensive approach to developing working capital information.
Review features, benefits, and disadvantages of Internetbased bank technology.
Understand how working capital information products are used to communicate between information providers and its business clients.
Review such financing alternatives for inventory as assetbased lending.
Evaluate new techniques such as EOQ, JIT, and SCM.
Learn about problems in purchasing and work in process.
Understand how ratios and other metrics assist in inventory management.
Consider appropriate policies and organization for inventory management.
Review issues relating to the pricing of bank services.
Consider how to evaluate and score bank proposals.
Appreciate the purpose and use of the request for proposal(RFP).
Understand the concept of concentration banking.
Recognize current trends in banking relationship management.
Evaluate how to invest excess short-term funds.
Learn about lines of credit and asset-based financing.
Understand how to construct cash forecasts and cash budgets.
Consider matching of cash collections and disbursements in an integrated process.
Consider various techniques of managing the risk of theft and fraud that affects cash.
Determine how to reduce float and processing costs associated with cash.
Appreciate the bank products useful in managing paper and electronic forms of cash.
Understand the significant components of cash.
Caterpillar is the world’s leading maker of earth-moving machinery and supplier of agricultural equipment. The software for its Dealer Business System(DBS), which it licenses to its dealers to help them run their businesses, is becoming outdated. Senior management wants its dealers to use a
The Warm and Toasty Heating Oil Company in Glasgow, Scotland used to deliver heating oil by sending trucks that printed out a ticket with the number of gallons of oil delivered that was placed on customers’ doorsteps.Customers received their oil delivery bills in the mail two weeks later. The
What are some of the ways a firm overcome user resistance to new project implementations?
How should information systems projects be selected and managed?• Explain the difference between tangible and intangible benefits.• List six tangible benefits and six intangible benefits.• List and describe the major components of an information systems plan.• Define a project and describe
What are the alternative methods for building information systems?• Define the traditional systems life cycle and describe its advantages and disadvantages for systems building.• Define information system prototyping and describe its benefits and limitations.List and describe the steps in the
11-18 How do each of the following types of systems acquire and represent knowledge:Expert system, case-based reasoning, neural network?
How did Web 2.0 tools help TCS to manage knowledge and collaboration among its employees?
Describe the collaboration tools used at TCS.What benefits did TCS reap from these tools?
Describe the growth of knowledge management systems at TCS. How have these systems helped TCS in its business?
This project will give you experience using shopping bots to search online for products, find product information, and find the best prices and vendors.Select a digital camera you might want to purchase, such as the Canon PowerShot S120 or the Olympus TG-4. Visit MySimon ( www.mysimon.com ),
This project gives you an opportunity to learn how to use Excel’s PivotTable functionality to analyze a database or data list. Use the data file for Online Management Training Inc. described earlier in the chapter. This is a list of the sales transactions at OMT for one day. You can find this
Why is the balanced scorecard method a leading methodology for understanding the most important information needed a firm’s executives? How is related to business performance management?.

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Essentials Of Mis 8th Edition Kenneth Laudon - Solutions

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