Project #25541 - Accounting

Directions: Include a copy of the question with each of your answers.For the problem-solving questions,As a guideline, answer each essay question within 10 or more typed lines. If you use one or more sources of information in preparing any answer, provide an APA-style reference, and cite a reference wherever it is used.


 

1.Examine the functions and operations of investment banks in theU.S. economy by answering each of the following questions:


(a) Describe two financial services provided by investment banks.

 

(b) Identify two types of securities that investment bank syndicates sell high, globally. (c) Does it pay to search for thebest available investment bank or should a firm stay loyal to agiven investment bank? Explain? (d) Could the U.S. governmentreduce its regulatory constraints on investment banks in a way that that would help firms and the economy? Explain.

 

 2.Explain how it could help a firm to: (a) buy back some of itscommon stock; (b) increase its use of internal financing relativeto external financing; (c) replace some equity financing with debtfinancing; (d) take a public firm private; and (e) pay down some ofthe firm's debt?


 

3.Calculate the break-even point (Q), for a firm whose: (a) totalfixed cost (TFC) = $100,000, product price per unit of output (P) = $8.00, and average variable cost (AVC) = $4.00. (b) TFC = $600,000, P = $20,000, and AVC = $10,000.


 

4.How much will a 15% increase in sales increase a firm's netoperating income (NOI) and increase its net income (NI), if:


 

(a)its degree of operating leverage (DOL) = 3.0, and its degree of financial leverage (DFL) = 4.0?


(b) its DOL = 2.0 and DFL = 2.5?


 

5.(a) How do business managers determine that acquiring a givenworking capital asset would help their company financially?

(b)Identify a working capital asset that is particularly time consuming to manage, and explain why. (c) Would a current ratio < 1 for a company help its managers identify a financial management problem?Explain.


 

6.Explain what financial problems, if any, may be created by each ofthe following company practices: (a) The company doesn’t offercredit to its customers or accept credit card payments for itsretail sales. (b) The company has a high percentage of bad debts onits accounts receivable.(c) The company is late in paying some ofits suppliers. (d) Many customers are complaining about substantialproduct quality defects. (e) The company has a substantial backlog of orders.


7.Describe a business practice that would help a company manage each of the following financial risks: (a) interest rate risk; (b) liquidity risk; and (c) credit risk.


8.(a) Describe three potential causes of errors in preparingprojected (i.e., pro forma) financial statements for a company forthe next three years. (b) Describe two unethical practices of somefinancial managers in preparing financial statements that couldhurt them and their company.


9.(a) Explain why financial planning is an important part of businessplanning. (b) Describe one way that financial ratio analysis ofprojected financial statements could be efficiently used bymanagers for financial planning.


10. Use the following data from a firm's pro forma (i.e., projected orforecasted) financial statements to calculate the followingprofitability ratios for the firm, assuming that all stocks arecommon stocks: (a) net profit margin; (b) return on total assets;(c) return on equity; (d) price-earnings ratio.


Sales$ 500 million

Net income30 million

Total Assets1000 million

Stockholders' Equity750 million

Number of Common Stock Shares10 million

Price per share of common stock $75.00

Subject Mathematics
Due By (Pacific Time) 03/26/2014
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