Why is it not necessarily bad for the cash flow from assets to be negative for a particular period?
If a company is constantly experiencing negative cash flows, you may want to look into the
reason behind the problem. But, there are a number of legitimate
FIN 631 Managerial Finance
Case Study #2
What is the weighted average cost of capital?
When a firm needs to raise capital to buy assets, the capital can be raised from a number of
sources. For example, investors can purchase equity sh
FIN 631 Managerial Finance
Case Study #1
What can the historical income statements (case Exhibit 1) and balance sheets (case Exhibit 2)
tell you about the financial health and current condition of Krispy Kreme Doughnuts, Inc.?
1. A business created as a distinct legal entity and treated as a legal "person" is called a:
unlimited liability company.
2. Shareholder A sold 500 shares of ABC stock on the New
1. Penguin Pucks, Inc., has current assets of $5,000, net fixed assets of $23,300, current
liabilities of $4,450, and long-term debt of $11,000.
What is the value of the shareholders equity account for this firm?
How much is net wor
1. Which one of the following is a type of equity security that has a fixed dividend and a
priority status over other equity securities?
2. Marie owns shares of Deltona Productions preferred stock
Managers should not focus on the current stock value because doing so will lead to
an overemphasis on short-term profits at the expense of long-term profits. Do
most managers of publicly traded companies adhere to this philosophy? Explain.
Heres the funny
1. Assume the total cost of a college education will be $300,000 when your child enters college
in 18 years. You presently have $65,000 to invest.
What annual rate of interest must you earn on your investment to cover the cost of your childs
1. A firm has total debt of $1,350 and a debt-equity ratio of 0.20. What is the value of the total
$1,350 / Total equity = 0.20; Total equity = $6,750.00
Total assets = $1,350 + $6,750.0
1. Highway Express has paid annual dividends of $1.05, $1.20, $1.25, $1.15, and $0.95
over the past five years, respectively. What is the average dividend growth rate?
($1.20 - $1.05)/$1.0
1. The Metal Shop produces 1.8 million metal fasteners a year for industrial use. At
this level of production, its total fixed costs are $320,000 and its total costs are
$522,000. The firm can increase its production by 5 percent, without increasing
A firm is reviewing a project with labor cost of $6.40 per unit, raw materials cost of
$22.65 a unit, and fixed costs of $12,000 a month. Sales are projected at 8,400 units
over the 3-month life of the project. What are the total variable costs of the
1. Consider the following simplified financial statements for the Fire Corporation (assuming no
You are analyzing a project and have gathered the following data:
Based on the net present value of _, you should _ the project.
What is the payback period fo
How to know what you dont know
During the interview, Bonnie Seitzinger a CPA, talks about how important it is to know
the basics for your business. It may seem like you already know this stuff, or in other words you
think you know it. Whether we are new c
3. Which one of the following correctly defines the upward chain of command in a typical
corporate organizational structure?
The vice president of finance reports to the chairman of the board.
The chief executive officer reports to president.
1 Is the yield to maturity on a bond the same thing as the required return? Is YTM the
same thing as the coupon rate? Suppose today a 10 percent coupon bond sells at par. Two
years from now, the required return on the same bond is 8 percent.
What is the c
1. If the economy booms, RTF, Inc. stock is expected to return 10 percent. If the
economy goes into a recessionary period, then RTF is expected to only return 2
percent. The probability of a boom is 66 percent while the probability of a recession
is 34 pe
There are many different reasons businesses are not successful, but we will only cover a
few. One of the main companies that stands out in my mind is Enron. They lied to their
investors, stating their company was worth more than it actua
According to the United States census in 2010, Rapid City had around 1,226.5 people per
square mile. The town has grown by than and numbers are higher.
Since 2000 the town alone has grown by 17.65% compared to the South Dakota average
I agree with the statement that "managers should not focus on the current stock value", but not because I think it will lead to an overemphasis on short-term profits at the expense of long-term profits. In fact, I don't think that the current stock value
Here is a list of 10 companies that have launched IPO's in the last 12 months.
1. Responsys (MKTG) 16.5% dividend
2. Carbonite (CARB)
3. Dunkin Brands Group (DNKN) 2.0% dividend
4. Box Ships (TEU) 13.5% dividend
5. Gevo (GEVO)
6. GNC Holdings (GNC) 1.3% d
Week 4 Homework Problems
Chadron State College
FIN 631 Managerial Finance
Cost of new machine
Old machine book value
Old machine market value
Years of operation
Saved operating costs
Net working capital
Discuss the positive and negative aspects of using JIT inventory.
- Helps prevent over-production.
- Reduces capital that a company may otherwise have tied up in stock.
- Reduces much of the need for warehouse space, allowing a company to use t
Case Study 4 Q1 Pt.1
Merger / Acquisition Possibilities
Merriam-Webster defines a merger as any of various methods of combining two or more
organizations ("Merger," 2012). A merger is usually accomplished t
Dustin Taylor FIN 631 Managerial Finance Case Study #3 Team C What is currency-risk exposure and how is it measured? Currency-risk exposure is a form of risk that originates from changes in the relative valuation of currencies. The changes in these values