Econ 726 final exam 5 of 15 10 describe two types of

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ECON 726 Final Exam 5 of 15
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10. Describe two types of defenses target companies in a hostile takeover are allowed to employ. What criteria should be used for determining if a defense is appropriate or not? Why? Financial Statement Footnotes Dilbert Lay, CFA is an analyst following NextGen Telecomm. In reviewing NextGen's 2004 annual report, Dilbert discovers the following footnotes (1)-(2). Dilbert feels a more accurate picture of NextGen’s Balance Sheet, Income Statement and Cash Flow Statement can be arrived at by reversing these transactions. Footnote (1) On December 31, 2003, NextGen raised the expected returns on its pension investments by one percent up to 9.5% and lowered its inflation estimates by ½ %. Footnote (2) NextGen sold Vodavox, a European telecomm, telecomm equipment valued at $100 million which NextGen also financed. NextGen immediately sold off this receivable from Vodavox for $100 million to a third party financial institution with full recourse. Indicate, for each of the two footnotes, the effect of Dilbert’s adjustments on the financial ratios for NextGen shown in the template on the following page for: i. the year 2004. ii. the year 2005. Note: Assume all financial information remains unchanged from 2004 through 2005, except that referenced in the footnotes above. Answer this Question using the Template provided on the next page. ECON 726 Final Exam 6 of 15
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Template for this Question Ratio Effect on 2004 Ratio (Circle One) Effect on 2005 Ratio (Circle One) Footnote (1) Operating Cash Flow / Sales Increase Decrease No Effect Increase Decrease No Effect Net Income / Sales Increase Decrease No Effect Increase Decrease No Effect Sales / Net Fixed Assets Increase Decrease No Effect Increase Decrease No Effect Footnote (2) Operating Cash Flow / Sales Increase Decrease No Effect Increase Decrease No Effect Net Income / Sales Increase Decrease No Effect Increase Decrease No Effect Sales / Net Fixed Assets Increase Decrease No Effect Increase Decrease No Effect Provide a brief justification for your answers to each part of the question. 11. Explanation for Answers to Footnote (1): 12. Explanation for Answers to Footnote (2): ECON 726 Final Exam 7 of 15
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FX calculations You are given the following information about the Turkey and the U.S.: Spot Rate in 1995 Turkish lira per US$ e 1995 = 59,650/US$ Price Level Index in 2000 (Base Year 1995 = 100) P Turkey 2000 = 1521.6 P US 2000 = 112.7
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