Questions and Answers of Foundations Financial Management

When did you first learn about sustainability? What was your impression?
Do you agree with the idea that businesses have social responsibilities?
Have you ever worked for a company that promotes sustainability?
Have you ever worked for a company that had a corporate social responsibility policy? Did it make a difference?
How have you been personally affected by globalization?
How do multinational and transnational companies differ with regards to corporate culture than a small- or mid-sized business?
Have you encountered an ethical conflict in the workplace?
How can individual employees, who lack formal leadership positions, nonetheless make a contribution to their company’s sustainability agenda?
Has your employer undergone a company-wide change? What was the process like? Was it successful?
Are you convinced that the tension between corporate social responsibility to shareholders and stakeholders can be resolved?
What role does legal compliance play in the business case for sustainability?
Has your company been involved in litigation or regulatory compliance problems related to sustainability?How was the matter resolved?
How can law help inform sustainable product design, manufacturing, supply chain, and marketing?
What is the difference between legal compliance and sustainable performance? Why might mere compliance be insufficient to promote sustainability?
What are some ethical concerns associated with lobbying for favorable laws?
Give an example of a metric used to promote sustainable performance.
Has your organization utilized analytical tools to manage sustainable performance? If so, what tools were used?
If your company has used metrics and tools to monitor sustainable performance, were the results ever reported to shareholders or external stakeholders?
Charlie Delano grew up working at his grandparents’ chocolate shop. He worked at the register every weekend, while leaving the artistry of candy making to the time-honed skill of his grandmother
Consider the risks covered in Figure 6. 5: Business Continuity Planning. Do you believe businesses preparing for the most likely or most impactful risks?Data from Figure 6.5 IT failure Natural
Does your business utilize any elements of the enterprise risk management system? Explain.
What kinds of risks has your company encountered in the last few years? Answer in terms of the categories and types of risks.
Influenza, commonly called the flu, is a highly contagious viral infection of the respiratory passages causing fever, coughing, severe aching, excessive mucus buildup, and in extreme cases, death.
You work for Alphadora, a company that produces personal care products such as shampoo and hair conditioner. Your company has historically competed on cost within its market segment. Under new
Select a sustainable product and describe its packaging.What positive inferences have you made about the product from the packaging? Are these inferences justified or is this an example of the halo
Benito Montiego is an associate in the Division of Marketing for a container company. His team was given an assignment to develop a new line of home kitchen products made of plastic to serve as
Describe the supply chain of your company. What role does your company play in the supply chain?
What kinds of risks has your company’s supply chain faced in the past? What kinds of risks do you expect it will face in the next few years? How can these supply chain risks be managed?
Has your company extended sustainability policies to its supply chain?
Identify major differences between a service and manufacturing operation. Do these different types of operations pose different sustainability challenges, or do they have issues in common?
Find a company you are familiar with and explain how it uses operations. How is its operations function tied to its supply chain? Are the company’s adverse impacts Owing more to its own internal
Find an example of a process layout, work system design, and building design from a local business. How could your example be changed to promote sustainable OM?
In October of 2012, more than 60 million residents of the United States felt the impact of Hurricane Sandy, what meteorologists described as a perfect storm that slammed into New York, New Jersey,
Mr. Miyagi is very excited because sales for his nursery and plant company are expected to double from $600,000 to $1,200,000 next year. Mr. Miyagi notes that net assets (Assets — Liabilities) will
Louisiana Timber Company currently has 3 million shares of stock outstanding and will report earnings of $6.5 million in the current year. The company is considering the issuance of 2 million
Frantic Fast Foods had earnings after taxes of $410,000 in the year 20X1 with 301,000 shares outstanding. On January 1, 20X2, the firm issued 30,000 new shares. Because of the proceeds from these new
Prepare an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share. Sales. Shares outstanding.. Cost of goods sold Interest expense. Selling and
a. Swank Clothiers had sales of $375,000 and cost of goods sold of $246,000. What is the gross profit margin (ratio of gross profit to sales)?b. If the average firm in the clothing industry had a
Arrange the following items in proper balance sheet presentation: Accumulated depreciation.. Retained earnings......... Cash........ Bonds payable......... Accounts receivable. Plant and
Refer to the following financial statements for Crosby Corporation:a) Prepare a statement of cash flows for the Crosby Corporation using the general procedures indicated in Table 2–10.b) Describe
Classify the following balance sheet items as current or noncurrent: Retained earnings Accounts payable Prepaid expenses Plant and equipment Inventory Common stock Bonds payable Accrued wages payable
Elite Trailer has an operating profit or $250,000. Interest expense for the year was $32,000; preferred dividends paid were $32,700; and common dividends paid were $38,300. The tax was $63,500. The
Nova Electrics anticipates cash flow from operating activities of $13 million in 20X1. It will need to spend $8.5 million on capital investments to remain competitive within the industry. Common
Easter Egg and Poultry Company has $1,840,000 in assets and $625,000 of debt. It reports net income of $145,000.a. What is the firm’s return on assets?b. What is its return on stockholders’
Polly Esther Dress Shops Inc. can open a new store that will do an annual sales volume of $865,800. It will turn over its assets 1.8 times per year. The profit margin on sales will be 9 percent. What
Elizabeth Tailors Inc. has assets of $8,540,000 and turns over its assets 1.8 times per year. Return on assets is 16.5 percent. What is the firm’s profit margin (returns on sales)?
Jin’sAppliances has a return-on-assets (investment) ratio of 8 percent.a. If the debt-to-total-assets ratio is 40 percent, what is the return on equity?b. If the firm had no debt, what would the
Perez Corporation has the following financial data for the years 20X1 and 20X2:a. Compute inventory turnover based on Ratio 6, Sales/Inventory, for each year.b. Compute inventory turnover based on an
Baker Oats had an asset turnover of 1.9 times per year.a. If the return on total assets (investment) was 10.6 percent, what was Baker’s profit margin?b. The following year, on the same level of
A firm has sales of $3 million, and 10 percent of the sales are for cash. The year-end accounts receivable balance is $285,000. What is the average collection period?
Using the financial statements for the Jackson Corporation, calculate the 13 basic ratios found. JACKSON CORPORATION Balance Sheet December 31, 20X1 Assets Current assets: Cash. Marketable
Martinez Electronics has an accounts receivable turnover equal to 15 times. If accounts receivable are equal to $80,000, what is the value for average daily credit sales?
In January 2009, the Status Quo Company was formed. Total assets were $544,000, of which $306,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $30,600 per
Franck Eggelhoffer expects the sales for his clothing company to be $650,000 next year. Franck notes that net assets (Assets – Liabilities) will remain unchanged. His clothing firm will enjoy a 12
Dodge Ball Bearings had sales of 15,000 units at $35per unit last year. The marketing manager projects a 15percent increase in unit volume sales this year with a 20percent price decrease (due to a
Sprint Shoes Inc. had a beginning inventory of 9,250 units on January 1,20X1. Costs associated with the inventory:During 20X1, the firm produced 43,000 units with the following costs:Sales for the
The Bradley Corporation produces a product with the following costs as of July 1, 20X1:Beginning inventory at these costs on July 1 was 3,700 units. From July 1 to December 1, 20X1, Bradley produced
Sales for Gonzales Pro’s Sports Equipment are expected to be 4,800 units for the coming month. The company likes to maintain 10 percent of unit sales for each month in ending inventory. Beginning
Mario & LuigiPlumbing Company has beginning inventory of 22,500 units, will sell 67,000 units for the month, and desires to reduce ending inventory to 25 percent of beginning inventory. How many
Watt’s Lighting Stores made the following sales projection for the next six months. All sales are credit sales.Sales in January and February were $38,000 and $37,000, respectively.Experience has
Graham Potato Company has projected sales of $12,000 in September, $15,000 in October, $22,000 in November, and $18,000 in December. Of the company’s sales, 30 percent are paid for by cash and 70
Carryout Stores has eight locations. The firm wishes to expand by two more stores and needs a bank loan to do this. Mrs. Wilson, the banker, will finance construction if the firm can present an
Ryan Boots also has $65,000 per year in sinking fund obligations associated with its bond issue. The sinking fund represents an annual repayment of the principal amount of the bond. It is not
Shock Electronics sells portable heaters for $45per unit, and the variable cost to produce them is $27. Ms. Amps estimates that the fixed costs are $100,350.a. Compute the break-even point in
Therapeutic Systems sells its products for $13 per unit. It has the following costs:Separate the expenses between fixed and variable costs per unit. Using this information and the sales price per
The Hartnett Corporation manufactures baseball bats with Babe Ruth’s autograph stamped on them. Each bat sells for $35 and has a variable cost of $19. There are $31,200 in fixed costs involved in
The Sterling Tire Company's income statement for 20X1 is as follows:Given this income statement, compute the following:a. Degree of operating leverage.b.Degree of financial leverage.c. Degree of
Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $530,000, but 5 percent of this value is represented by
U.S. Steal has the following income statement data:a. Compute DOL based on the following formula:b. Confirm that your answer to part a is correct by recomputing DOL using Formula 5 – 3. There may
The capital structure for Cain Supplies is presented below. Compute the stock price for Cain if it sells at 19 times earnings per share and EBIT is $50,000. The tax rate is 20 percent. Cain Debt
Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower–lender relationships. Assume the Mitaka Company has a sales volume
Tyson Company has $12 million in assets. Currently half of these assets are financed with long-term debt at 10 percent and half with common stock having a par value of $8. Ms. Park, vicepresident of
Taylor’s Pipe and Steel Company expects sales next year to be $1,000,000 if the economy is strong, $700,000 if the economy is steady, and $385,000 if the economy is weak. Taylor believes there is a
Antivirus Inc. expects its sales next year to be $3,500,000. Inventory and accounts receivable will increase $580,000 to accommodate this sales level. The company has a steady profit margin of 10
Colter Steel has $5,250,000 in assets.Short-term rates are 9 percent. Long-term rates are 14 percent. Earnings before interest and taxes are $1,110,000. The tax rate is 40 percent.If long-term
Boatler Used Cadillac Co. requires $950,000 in financing over the next two years. The firm can borrow the funds for two years at 12 percent interest per year. Mr. Boatler decides to do forecasting
Knight Roundtable Co. has annual credit sales of $1,080,000 and an average collection period of 32 days in 2018. Assume a 360-day year. What is the company’s average accounts receivable balance?
Darla’s Cosmetics has annual credit sales of $1,440,000 and an average collection period of 45 days in 2018. Assume a 360-day year. What is the company’s average accounts receivable balance?
Mervyn’s Fine Fashions has an average collection period of 30days. The accounts receivable balance is $78,000. What is the value of its credit sales?
Nowlin Pipe & Steel has projected sales of 84,000 pipes this year, an ordering cost of $3 per order, and carrying costs of $1.40 per pipe.a. What is the economic ordering quantity?b. How many orders
Henderson Office Supply is considering a more liberal credit policy to increase sales, but expects that 9 percent of the new accounts will be uncollectible. Collection costs are 6 percent of new
Regis Clothiers can borrow from its bank at 16 percent to take a cash discount. The terms of the cash discount are 3/16, net 55. Should the firm borrow the funds?
A pawnshop will lend $3,500 for 45 days at a cost of $30 interest. What is the effective rate of interest?
Sol Pine borrows $6,500 for one year at 8 percent interest. What is the effective rate of interest if the loan is discounted?
Gulliver Travel Agencies thinks interest rates in Europe are low. The firm borrows euros at 9 percent for one year. During this time period the dollar falls 12 percent against the euro. What is the
Randall Corporation plans to borrow $276,000 for one year at 19 percent from the Waco State Bank. There is a 28 percent compensating balance requirement. Randall Corporation keeps minimum transaction
Lewis and Clark Camping Supplies Inc. is borrowing $59,000 from Western State Bank. The total interest is $20,400. The loan will be paid by making equal monthly payments for the next three years.
Your aunt offers you a choice of $21,600 in 30 years or $200today. If money is discounted at 17 percent, which should you choose?
If you invest $9,500 per period for the following number of periods, how much would you have?a. 13years at 10 percent.b. 50 years at 9 percent.
Al Rosen invests $30,000 in a mint condition 1952 Mickey Mantle Topps baseball card. He expects the card to increase in value 8 percent per year for the next 15years. How much will his card be worth
Kai Chang made a $2,000 deposit in her savings account on her 21st birthday, and she has made another $2,000 deposit on every birthday since then. Her account earns 7 percent compounded annually. How
Juan Garza invested $110,000 10 years ago at 8 percent, compounded quarterly. How much has he accumulated?
You need $25,456 at the end of 10 years, and your only investment outlet is an 8 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial
If you borrow $8,599 and are required to pay back the loan in five equal annual installments of $2,750, what is the interest rate associated with the loan?
Martin Office Supplies paid a $3 dividend last year. The dividend is expected to grow at a constant rate of 7 percent over the next four years. The required rate of return is 14 percent (this will
The preferred stock of Denver Savings and Loan pays an annual dividend of $8.10. It has a required rate of return of 9 percent. Compute the price of the preferred stock.
The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 9 percent to help financea new playground facility in Los Angeles. This year the cost of debt is 25 percent
Royal Jewelers Inc. has an after tax cost of debt of 7 percent. With a tax rate of 25 percent, what can you assume the yield on the debt is?
Russell Container Corporation has a $1,000 par value bond outstanding with 30 years to maturity. The bond carries an annual interest payment of $105 and is currently selling for $880 per bond.
Terrier Company is in a 45 percent tax bracket and has a bond outstanding that yields 11percent to maturity.a. What is Terrier’s after tax cost of debt?b. Assume that the yield on the bond goes

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