Business, 01.09.2020 22:01 evazquez

Accounting data are used to analyze cash flows, and this analysis is critical for decision making. Consider the following case: J&H Corp. recently hired Jeffrey. His immediate mandate was to analyze the company. He has to submit a report on the company’s operational efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from the company’s financial reports as well as some industry averages.
• Last year, J&H Corp. reported a book value of $700 million in current assets, of which 25% is cash, 27% is short-term investments, and the rest is accounts receivable and inventory.
• The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period.
• The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million in long-term assets last year.
Income Statement For the Year Ended on December 31 (Millions of dollars)
J&H Corp. Industry Average
Net sales $1,900 $2,375
Operating costs, except depreciation and amortization 1,520 1,900
Depreciation and amortization 76 95
Total operating costs 1,596 1,995
Operating income (or EBIT) $304 $380
Less: Interest 30 57
Earnings before taxes (EBT) $274 $323
Less: Taxes (40%) 110 129
Net income $164 $194
Based on the information given to Jeffrey, he submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Which of the following statements in his report are true?
a) The company is using -$84.0 million in net operating working capital acquired by investor-supplied funds.
b) The firm uses $1,036.0 million of total net operating capital to run the business.
c) J&H Corp.’s NOPAT is $182.4 million, which is lower than the industry average of $228.0 million.
d) The company has $511.0 million in operating assets and $595.0 million in operating liabilities.
e) J&H Corp. has $98.4 million of net operating capital.

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 02:30

Sweeten company had no jobs in progress at the beginning of march and no beginning inventories. the company has two manufacturing departments--molding and fabrication. it started, completed, and sold only two jobs during marchâ€”job p and job q. the following additional information is available for the company as a whole and for jobs p and q (all data and questions relate to the month of march): molding fabrication total estimated total machine-hours used 2,500 1,500 4,000 estimated total fixed manufacturing overhead $ 10,000 $ 15,000 $ 25,000 estimated variable manufacturing overhead per machine-hour $ 1.40 $ 2.20 job p job q direct materials $ 13,000 $ 8,000 direct labor cost $ 21,000 $ 7,500 actual machine-hours used: molding 1,700 800 fabrication 600 900 total 2,300 1,700 sweeten company had no underapplied or overapplied manufacturing overhead costs during the month. required: for questions 1-8, assume that sweeten company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. for questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. 1. what was the companyâ€™s plantwide predetermined overhead rate? (round your answer to 2 decimal places.) next

Answers: 2

Answer

Business, 22.06.2019 09:40

Wilson center is a private not-for-profit voluntary health and welfare entity. during 2017, it received unrestricted pledges of $638,000, 65 percent of which were payable in 2017, with the remainder payable in 2018 (for use in 2018). officials estimate that 14 percent of all pledges will be uncollectible. a. how much should wilson center report as contribution revenue for 2017? b. in addition, a local social worker, earning $20 per hour working for the state government, contributed 600 hours of time to wilson center at no charge. without these donated services, the organization would have hired an additional staff person. how should wilson center record the contributed service?

Answers: 2

Answer

Business, 22.06.2019 12:30

Rossdale co. stock currently sells for $68.91 per share and has a beta of 0.88. the market risk premium is 7.10 percent and the risk-free rate is 2.91 percent annually. the company just paid a dividend of $3.57 per share, which it has pledged to increase at an annual rate of 3.25 percent indefinitely. what is your best estimate of the company's cost of equity?

Answers: 1

Answer

Business, 22.06.2019 19:30

Anew firm is developing its business plan. it will require $615,000 of assets, and it projects $450,000 of sales and $355,000 of operating costs for the first year. management is reasonably sure of these numbers because of contracts with its customers and suppliers. it can borrow at a rate of 7.5%, but the bank requires it to have a tie of at least 4.0, and if the tie falls below this level the bank will call in the loan and the firm will go bankrupt. what is the maximum debt ratio the firm can use? (hint: find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.)a. 41.94%b. 44.15%c. 46.47%d. 48.92%e. 51.49%

Answers: 3

Answer

You know the right answer?

Accounting data are used to analyze cash flows, and this analysis is critical for decision making. C...

Questions