...Ratios and financial planning at S&S Air, Inc. Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company's performance. Chris graduated from college five years ago with a finance degree. He has been employed in the finance department of a Fortune 500 company since then. S&S Air was founded 10 years ago by friends Mark Sexton and Todd Story. The company has manufactured and sold light airplanes 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 airplanes. The company has two models; the Birdie, which sells for $53,000, and the Eagle, which sells for $78,000. 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 can complete the manufacture of an airplane 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 airplane may take one and one-half to two years to manufacture once the order is placed. Mark and Todd have provided the following financial statements. Chris has gathered the industry ratios for the light airplane manufacturing industry. S&S Air, Inc.2009 Income Statement. | Sales | $20,077,000...
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...Homework Problems Problem #1 For December 31,2012, the balance sheet of Baxter Corporation is as follows: Current Assets Liabilities Cash $10,000 Accts. Payable $12,000 Accts Receivable 15,000 Notes Payable 20,000 Inventory 25,000 Bonds Payable 50,000 Prepaid Expenses 12,000 Fixed Assets Stockholders Equity Plant & Equip(gross) $250,000 Common Stock $75,000 Less Accum Deprec. 50,000 Paid in capital 25,000 Net Plant & Equip $200,000 Retained Earnings 80,000 Total Assets $262,000 $262,000 Sales for 2013 were $220,000 and the cost of goods sold was 60% of sales. Selling and administration expense was $22,000. Depreciation expense was 8% of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 10%, and interest expense on the bonds payable was 12 percent. These interest expenses are based on Dec. 31, 2012 balances. The tax rate is 20%. Two thousand dollars in preferred stock dividends were paid and $8,400 in dividends was paid to common stock holders. There were 10,000 shares of stock outstanding. During 2013, the cash balance and prepaid expenses balance were unchanged. Accounts receivable and inventory increased by 10%. A new machine was purchased on December 31, 2013, at a cost of $35,000. Accounts payable increased by 25%. Notes payable increased by $6,000 and bonds payable decreased by $10,000, both at the end of the year. The common...
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...Vida Carmela Miele Salvatore Samà 1 of 34 St. John’s University Undergraduate Student Managed Investment Fund United Parcel Service, Inc. (UPS) Type of Report: Recommendation & Analysis Recommendation: $58.40 Date: April 14, 2003 Limit order to buy 175 shares at $55.00 Market order to buy 175 shares Industry: Transportation - Air Delivery, Freight & Parcel Services Analysts: Michael Vida - mvida24@hotmail.com Carmela Miele – carmela37@aol.com Salvatore Samà – samasalvatore@yahoo.it Share Data Price - $58.40 Date – April 14, 2003 Target Price - $60.35 52 Week Price Range - $53.00 - $67.10 Market Capitalization - $ 64.644 Billion Shares Outstanding – 1.12 Billion Revenue - $31.272 Billion Proj. LT EPS Growth Rate: 14% ROE 2002: 26.10% Earnings Per Share and Projections FY Ending Full Year 12/01A 2.13 12/02A 2.84 12/03E 2.29 12/04E 2.67 12/05E 2.94 Fundamentals P/E (12/02): 20.2 P/E (12/03E): 26.46 Book Value/Share: $11.09 Price/Book Value: 5.167 Dividend Yield: 1.46% Consensus Est. Avg=2.33 (yahoo) Avg=2.67 (yahoo) N/A 2 of 34 Executive Summary We are recommending the purchase of 350 shares of UPS, currently trading on the NYSE at $57.30. United Parcel Services has one of the most extensive global ground and air networks for transportation. The largest transportation company, UPS, has been outperforming S&P by 30%. UPS is not solely a transportation company; they also act as consultants for the logistics of major companies in 130 countries. UPS...
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...The Battle for Value, 2004 FedEx Corp. vs. UPS, Inc. FedEx was form in economic class by Fred Smith in Yale University. In 1971, Smith invested 4 million dollars of his own capital and raises an addition of 91 million dollars to launch the firm. His key innovation was a hub and spoke distribution pattern. By 2003, FedEx owned 50,000 ground vehicles, 625 aircraft, 216500 employees and shipped more than 5.4 million packages daily. The company had $15.4 billion in assets, $830 million net income, and generated $22.5 billion revenues. UPS was founded in 1907 by Jim Casey. He started a bicycle messenger called American Messenger Company and changed its name to United Parcel Service of America in 1929. The success key of UPS was efficiency. UPS was the largest package-delivery company in the world. Both ground and air parcel delivery was the primary business. Gradually, the company offered more specialized transportation and logistics service. By 2003, UPS owned 88,000 ground trucks, 583 planes and 360,000 employees. | FedEx | UPS | Ground Vehicles | 50,000 | 88,000 | Aircraft | 625 | 583 | Employees | 216,000 | 360,000 | Packages shipped/ day | 5.4 million | 13 million | Assets | $15.4 billion | $28.9 billion | Net Income | $830 million | $2.9 billion | Revenue | $22.5 billion | $33.4 billion | Problem: Market observers of the air-package delivery industry considered how FedEx and UPS would develop. Was the performance of the companies in recent years predictive...
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...and Evaluation of Alternatives 37 Recommendation 38 Decision Implementation 39 References 40 Introduction Delta Airlines was founded by C.E. Woolman, an agriculture extension agent (Anthony, Kacmar, & Perrewe, 2010). C.E Woolman was not a banker, venture capitalist or war pilot, as many of the competing airlines were. He didn’t have the aggressive military style that many of the other airline founders had. What C.E. Woolman instilled within the employees at all levels of the organization is that people matter and should be treated fairly and equitably. This philosophy led Delta Airlines to be the leader in customer service from the company’s inception through the many mergers over the years. Through the difficult financial times when other airlines were laying off employees and filing for bankruptcy, Delta continued to pay their people well and keep them employed. There was an exception during the Ronald Allen CEO era of 1987 thru 1997. Human relations took a significant down turn during his tenure as CEO, especially during 1993 and 1994, but Delta decided to part ways with Allen and began repairing those fragile relationships with its employees. Delta Airlines still focuses on the human relations factor and has been able to repair the relationship with its employees, they believe it is their key to success. External Environment General The airline industry is a fast growing sector demonstrating a very strong growth rate. It is associated with a number...
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...------------------------------------------------- Chapter 9 ------------------------------------------------- Financial Planning and Forecasting Financial Statements ------------------------------------------------- ANSWERS TO BEGINNING-OF-CHAPTER QUESTIONS We like to use discussion questions along with relatively simple and easy to follow calculations for our lectures. Unfortunately, forecasting is by its very nature relatively complex, and it simply cannot be done in a realistic manner without using a spreadsheet. Accordingly, our primary “question” for Chapter 9 is really a problem, but one that can be discussed. Therefore, we base our lecture primarily on the BOC model and we use the class period to discuss forecasting and Excel modeling. We cover the chapter in about 2 hours, and then our students work a case on the subject later in the course. 9-1 The major components of the strategic plan include the firm’s purpose, the scope of its operations, its specific (quantified) objectives, its operating strategies, its operating plan, and its financial plan. Engineers, economists, marketing experts, human resources people, and so on all participate in strategic planning, and development of the plan is a primary function of the senior executives. Regional and world economic conditions, technological changes, competitors’ likely moves, supplies of resources, and the like must all be taken into account, along with the firm’s own R&D activities...
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...Organizational History and Current State of Affairs This portion of the paper will include key information about Delta Air Lines, Inc. (Delta): (a) history; (b) culture; (c) important leaders over the years; (d) current products and service offerings: (e) target markets; and (f) methods of product and service delivery. History This section describes the history of Delta. The company was founded in Macon, Georgia, in 1924, as the world’s first crop-dusting service, Huff-Daland Dusters. The company moved to Monroe, Louisiana, in 1925. In 1928, field manager C. E. Woolman and two partners purchased the service and renamed it Delta Air Service after the Mississippi Delta region it served. Delta was the first international mail and passenger route on the west coast of South America. Delta operated its first passenger flights over route stretching from Dallas, Texas to Jackson, Mississippi, via Shreveport and Monroe, Louisiana. Also, Delta was awarded a US Postal Service contract in 1934 to fly from Fort Worth to Charleston via Atlanta (Hoover’s, 2011). In 1941, Delta relocated to Atlanta. Woolman became the president in 1945 and he managed the company until his death in 1966 (Delta, 2011). Delta offered its first night service in 1935, using the Stinson Model A; the first Delta aircraft with two pilots. Douglas DC-2 and DC-3 service was introduced and the introduction of flight attendants, called “stewardesses,” added to flight crews. Delta contributed to the war effort...
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... | | |Such analysis allows the firm to determine at what level of operations it will break even (earn zero profit) | | |and to explore the relationship between volume, costs, and profits. | | | | |5-2. |What factors would cause a difference in the use of financial leverage for a utility company and an automobile | | |company? | | | | | |A utility is in a stable, predictable industry and therefore can afford to use more financial leverage than an | | |automobile company, which is generally subject to the influences of the business cycle. An automobile | | |manufacturer may not be able to service a large amount of debt when there is a downturn in the economy. | | | | |5-3. |Explain how the break-even point and operating leverage are affected by the choice...
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...STANDARD EDITION Ross Westerfield Jordan FUNDAMENTALS OF CORPORATE FINANCE tenth edition StuDEntS... Want to get better grades? (Who doesn’t?) Prefer to do your homework online? (After all, you are online anyway…) Need a better way to study before the big test? (A little peace of mind is a good thing…) With McGraw-Hill's Connect Plus Finance, ® StudentS get: • Easy online access to homework, tests, and quizzes assigned by your instructor. • Immediate feedback on how you’re doing. (No more wishing you could call your instructor at 1 a.m.) • Quick access to lectures, practice materials, eBook, and more. (All the material you need to be successful is right at your fingertips.) • A Self-Quiz and Study tool that assesses your knowledge and recommends specific readings, supplemental study materials, and additional practice work.* *Available with select McGraw-Hill titles. Less managing. More teaching. Greater learning. InStRuctoRS... Would you like your students to show up for class more prepared? (Let’s face it, class is much more fun if everyone is engaged and prepared…) Want an easy way to assign homework online and track student progress? (Less time grading means more time teaching…) Want an instant view of student or class performance? (No more wondering if students understand…) Need to collect data and generate reports required for administration or accreditation? (Say goodbye to manually tracking student learning outcomes…) Want to record...
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...Wor9 - 1 04 - 0 71 R EV: JU LY 2 6 , 2 00 4 RO BERT S. KAPLAN D A VI D KIR O N Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late . — Richard Thornburgh, former U.S. attorney general1 On July 21, 2002, WorldCom Group, a telecommunications company with more than $30 billion in revenues, $104 billion in assets, and 60,000 employees, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Between 1999 and 2002, WorldCom had overstated its pretax income by at least $7 billion; a deliberate miscalculation that was, at the time, the largest in history. The company subsequently wrote down about $82 billion (more than 75%) of its reported assets.2 WorldCom’s stock, once valued at $180 billion, became nearly worthless. Seventeen thousand employees lost their jobs; many left the company with worthless retirement accounts. The company’s bankruptcy also jeopardized service to WorldCom’s 20 million retail customers and on government contracts affecting 80 million Social Security beneficiaries, air traffic control for the Federal Aviation Association, network management for the Department of Defense and long-distance services for both houses of Congress and the...
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...CASE STUDY # 1 JETBLUE AIRWAYS PROF. AHSAN DURRANI Submitted by: IMRAN UL HAQUE (4282) Q.NO.4 WHAT IS YOUR ASSESSMENT OF JETBLUE`S FINANCIAL PERFORMACE DURING FISCAL YEARS 2003-2007? ANALYZE THE FOLLOWING RATIO`S. | 2007 | 2006 | 2005 | 2004 | 2003 | Gross Profit Margin | | | | | | Operating Profit Margin | 0.0595 | 0.0537 | 0.0282 | 0.0877 | 0.1673 | Net Profit Margin | 0.0063 | (0.00042) | (0.01176) | 0.0364 | 0.103 | Return on Total Assets | 0.0398 | 0.032 | 0.0394 | 0.0949 | 0.1984 | Return on Stockholder Equity | 0.017 | (0.0011) | (0.022) | 0.061 | 0.154 | Earnings Per Share | 0.10 | - | (0.13) | 0.30 | 0.71 | Current Ratio | 1:0.89 | 1:1.085 | 1:0.94 | 1:0.85 | 1:1.75 | Quick Ratio | 1:0.74 | 1:0.909 | 1:0.855 | 1:0.998 | 1:1.733 | Working Capital | (146) | 73 | (41) | (74) | 276121 | Debt to Asset Ratio | 0.544 | 0.586 | 0.598 | 0.5524 | 0.508 | Long-term Debt to Capital Ratio | 1:0.46 | 1:0.542 | 1:0.54 | 1:0.5 | 0.463 | Debt to Equity Ratio | 2.942 | 2.983 | 2.55 | 2.0491 | 1.655 | Times Interest Earned | 1.23 | 1.062 | 0.74 | 2.67 | 8.25 | Common stock A $100 investment in JetBlue common stock on December 31, 2002, was worth only $49 five years later. In contrast, a $100 investment in the S&P 500 index was worth $182 at the end of the same five-year period. Industry observers quipped that it was better to place money under a mattress than invest in an airline stock. According to the expert, “Airlines are...
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...-1? “ The Aim of the Course To develop and apply technologies for valuing firms and for strategic planning to generate value within the firm. • • Features of the approach: A disciplined approach to valuation: minimizes ad hockery – Built on theoretical and empirical findings from scientific research I ‘_ Marries fundamental analysis and financial statement analysis – Exploits accounting as a system for measuring value added – Exposes good (and “bad”) accounting from a valuation perspective L Financial Statement Analysis and Security Valuation • • • Integrates financial statement analysis with corporate finance Focuses on technologies that can be used in practice – Based on real world examples Adopts activist point of view to investing – The market may be inefficient 0-1 What Will You Learn from the Course Part I Financial statements and valuation Ch. 1-7 • How intrinsic values are calculated • What determines a firm’s value • How businesses are analyzed to assess the value they create • How financial analysis is developed for strategy and planning • The role of financial statements in determining firms’ values • How to pull apart the financial statements to get at the relevant information • How ratio analysis is employed in valuation • How growth is analyzed and valued • How to calculate the P/E and P/B ratio and what they should be • The value of operations • How to make forecasts and develop valuations • How to assess the quality of the...
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...Licensed to: iChapters User Eugene F. Brigham UNIVERSITY OF FLORIDA Joel F. Houston UNIVERSITY OF FLORIDA Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Eugene F. Brigham UNIVERSITY OF FLORIDA Joel F. Houston UNIVERSITY OF FLORIDA Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Licensed to: iChapters User This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time...
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...Balochistan University of information techonology engineering and management sciences | Implementing Strategic Management | APPLE Inc. | Rabia Iftikhar 12285 | MBA 5th B | Jun 24, 2013 | | | | | | Ma'am Mehwish Shahid Think Different ACKNOWLEDGEMENTS Praise and thanks to “ALLAH” Almighty, the one testing us all at all times and making decisions about what we don’t know and can’t know. The report being submitted today is a result of collective effort. There are innumerous helping hands behind who have guided us on our way. Writing this report appeared to be a great experience to us. It added a lot to our knowledge. This report is one of our memorable experiences in student life. Though words are inadequate in offering thanks to our teacher but we owe our profound gratitude to Ma’am Mehwish Shahid for stimulating our creative abilities by assigning this project to us and for her able guidance and useful suggestions, which helped us in completing the project in time. Whatever we have learnt from her and this project report has put indelible impression on our minds and it is our conviction that this learning experience will always be a source of help in our practical life and professional career. Finally, yet importantly, we would like to express our heartfelt thanks to our beloved parents, for cooperation, help, kindness...
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... particularly in China and emerging economies such as Brazil and several countries in Africa. Although the company’s 2012 annual report, along with the analysis conducted by Turnipseed and Gamble, provide an optimistic view of the company’s long-term fiscal health and ability to continue to compete; further research and analysis indicate several challenges and a variety of obstacles for Tata to overcome if it is to become “a global contender in the automobile industry.” The case study that follows offers insight into the macroeconomic environment in which Tata operates, specifically in India, the competitive forces applying pressure on, not just Tata, but the global auto industry as a whole and, finally, a brief analysis of the firm’s financial performance over the past five years. Subsequent to this, we shall uncover the key success factors for Tata and its core competencies and deficiencies; what the company does well, as well as areas of vulnerability. Additionally, we shall discover what future opportunities the company should capitalize on, along with the external conditions that threaten Tata’s ability to sustain its competitive advantages in India and other emerging and developing economies, while continuing to enter and capture share within other markets. The macroeconomic...
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