Instructions
Read the integrative case “The Donor Services Department” beginning on page 608 of the textbook. Answer the following questions: (1) What is the main issue in this case? Defend why. (2) How can the Donor Service Department become more effective? (3) Describe intergroup conflict in the Donor Service Department. (4) How could empowerment change the situation at the Donor Service Department?
Company: Lowe's Companies, Inc.
Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.
Part I: Firm History and Overview (due Week 4)
Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.
Part II: End-Point Financial Analysis (due Week 4)
Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.
Next, you will identify the major changes in the firm’s financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm’s revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.
You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: “profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc.” You should also research the notes to your company’s 10K to determine the probable causes of these changes (“Leverage increased because the company issued $50M in bonds to pay for a plant expansion.“). Part II will be worth 70 points.
Part III: Working Capital Analysis (due Week 4)
Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm’s working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm’s working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm’s industry averages. Part III will be worth 40 points.
(Answer include paper and Excel file)
Company: Lowe's Companies, Inc.
Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.
Part I: Firm History and Overview (due Week 4)
Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.
Part II: End-Point Financial Analysis (due Week 4)
Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.
Next, you will identify the major changes in the firm\’s financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm\’s revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.
You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: \”profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc.\” You should also research the notes to your company\’s 10K to determine the probable causes of these changes (\”Leverage increased because the company issued $50M in bonds to pay for a plant expansion.\”). Part II will be worth 70 points.
Part III: Working Capital Analysis (due Week 4)
Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm\’s working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm\’s working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm\’s industry averages. Part III will be worth 40 points.
(Answer include paper and Excel file)
Company: Lowe's Companies, Inc.
Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.
Part I: Firm History and Overview (due Week 4)
Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.
Part II: End-Point Financial Analysis (due Week 4)
Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.
Next, you will identify the major changes in the firm\’s financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm\’s revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.
You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: \”profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc.\” You should also research the notes to your company\’s 10K to determine the probable causes of these changes (\”Leverage increased because the company issued $50M in bonds to pay for a plant expansion.\”). Part II will be worth 70 points.
Part III: Working Capital Analysis (due Week 4)
Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm\’s working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm\’s working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm\’s industry averages. Part III will be worth 40 points.
(Answer include paper and Excel file)
Company: Lowe's Companies, Inc.
Develop an overview/history of the firm that you have chosen, as well as conduct an end-point financial analysis and working capital analysis.
Part I: Firm History and Overview (due Week 4)
Develop an overview/history of the firm that you have chosen, as well as the industry your firm operates in. You should include information that describes the market structure and competition in the industry, along with the position of your firm within this industry – i.e., is the firm one of the leaders or is it a niche player? Is the firm one of the medium-size firms in the industry? Part I will be worth 30 points.
Part II: End-Point Financial Analysis (due Week 4)
Using historical financial statements (income statements and balance sheets) for the firm, analyze the financial performance and changes to the firm over a ten-year time period using an end-point analysis framework similar to that used in the analysis of Coca-Cola (Week 1 dropbox assignment). You should calculate the same ratios and financial measures as were provided for the Coca-Cola case.
Next, you will identify the major changes in the firm’s financial performance over this time period. Include an analysis of: 1) overall changes/growth in the firm’s revenues, assets, and liabilities; 2) common-size statements; 3) ratio analysis; and 4) analysis using the DuPont model.
You will be required to provide the conclusions regarding which way the major ratio categories are trending. An acceptable conclusion might be, for example: “profitability has increased over the last five years as evidenced by increasing net margin and gross margin ratios. This is the result of a decrease in cost of goods sold, higher margins because of increased market share, etc.” You should also research the notes to your company’s 10K to determine the probable causes of these changes (“Leverage increased because the company issued $50M in bonds to pay for a plant expansion.“). Part II will be worth 70 points.
Part III: Working Capital Analysis (due Week 4)
Using the same financial statements from your Financial Analysis (Part II), provide an analysis of the firm’s working capital policy and changes to this policy over a ten-year period. Your working capital analysis should include the following: 1) overall level and change in WC over the time period and the factors that caused these changes; 2) calculation of the Cash Conversion Cycle for the beginning and ending period and a discussion of causal factors and implication of these changes; 3) overall assessment of the firm’s working capital policy (i.e., is it conservative, moderate, or aggressive?). Compare your results to the firm’s industry averages. Part III will be worth 40 points.
(Answer include paper and Excel file)
|
Instructions |
|
|
Read the Application Case: Seeking Gender Equity at Starbucks (Dessler, Ch. 2). After reading the case, answer the questions below. The text of your case study submissions (not including your reference page) should be at least 1.5 pages long (maximum 3 pages). See Assignment Expectations for more information regarding the required elements for these case studies.
Remember to include at least two scholarly sources to support your position. See Assignment Expectations for more information regarding the required elements for these case studies. |
|
Read the Continuing Case: Carter Cleaning Company (Dessler, Ch. 1). After reading the case, answer the questions below. The text of your case study submissions (not including your reference page) should be at least 1.5 pages long (maximum 3 pages). See Assignment Expectations for more information regarding the required elements for these case studies.
Remember to include at least two scholarly sources to support your position. See Assignment Expectations for more information regarding the required elements for these case studies.
Instructions
Complete the IBM Data Case for Chapter 8 (pp. 277-278). This case requires you to conduct a Capital Budgeting analysis of the cash flows for a project the firm is evaluating. Use the information in Chapters 7 and 8 to do your analysis. Your final cash flow should be structured similarly to the example on Page 247 of your Corporate Finance text.
You have just been hired by Internal Business Machines Corporation (IBM) in their capital budgeting division. Your first assignment is to determine the free cash flows and NPV of a proposed new type of tablet computer similar in size to an iPad but with the operating power of a high-end desktop system.
Development of the new system will initially require an initial capital expenditure equal to 10% of IBM’s Property, Plant, and Equipment (PPE) at the end of the latest fiscal year for which data is available. The project will then require an additional investment equal to 10% of the initial investment after the first year of the project, a 5% increase after the second year, and a 1% increase after the third, fourth, and fifth years. The product is expected to have a life of five years. First-year revenues for the new product are expected to be 3% of IBM’s total revenue for the latest fiscal year for which data is available. The new product’s revenues are expected to grow at 15% for the second year then 10% for the third and 5% annually for the final two years of the expected life of the project. Your job is to determine the rest of the cash flows associated with this project. Your boss has indicated that the operating costs and net working capital requirements are similar to the rest of the company and that depreciation is straight-line for capital budgeting purposes. Since your boss hasn’t been much help (welcome to the “real world”!), here are some tips to guide your analysis:
Obtain IBM’s financial statements. (If you really worked for IBM you would already have this data, but at least you won’t get fired if your analysis is off target.) Download the annual income statements, balance sheets, and cash flow statements for the last four fiscal years from Yahoo! Finance (finance.yahoo.com). Enter IBM’s ticker symbol and then go to “financials.”
You are now ready to estimate the Free Cash Flow for the new product. Compute the Free Cash Flow for each year using Eq. 8.5:
Free Cash Flow= (Revenue-costs)*(1-T) + Depreciation*T – Capex – Change in NWC
Set up the timeline and computation of free cash flow in separate, contiguous columns for each year of the project life. Be sure to make outflows negative and inflows positive.
Assume that the project’s profitability will be similar to IBM’s existing projects in the latest fiscal year and estimate (revenues−costs) each year by using the latest EBITDA/Sales profit margin. Calculate EBITDA as EBIT+Depreciation xpense from the cash flow statement.
Determine the annual depreciation by assuming IBM depreciates these assets by the straight-line method over a five-year life. Determine IBM’s tax rate by using the current U.S. federal corporate income tax rate. Calculate the net working capital required each year by assuming that the level of NWC will be a constant percentage of the project’s sales. Use IBM’s NWC/Sales for the latest fiscal year to estimate the required percentage. (Use only accounts receivable, accounts payable, and inventory to measure working capital. Other components of current assets and liabilities are harder to interpret and not necessarily reflective of the project’s required NWC—for example, IBM’s cash holdings.) To determine the free cash flow, deduct the additional capital investment and the change in net working capital each year. Use Excel to determine the NPV of the project with a 12% cost of capital. Also calculate the IRR of the project using Excel’s IRR function. Perform a sensitivity analysis by varying the project forecasts as follows: Suppose first year sales will equal 2%–4% of IBM’s revenues. Suppose the cost of capital is 10%–15%. Suppose revenue growth is constant after the first year at a rate of 0%–10%.
Homework Assignments and Papers 