MBA 521 - FINANCIAL MANAGEMENT
RESEARCH PAPER TOPIC GUIDELINES
This project consists of three major activities:
1. Conduct secondary research (i.e. library, internet, etc)
2. Write research paper computing the financial ratios yourself.
Terrance March August 28, 2009 FIN410 Unit 1 DB The three forms of business organizations are corporation, sole proprietorship and partnership. A partnership consists of two or more owners in business for a profit. One of the advantages in a partnership i
13-4 A company has capital of $200 million. It has an EROIC of 9%, forecasted constant growth
of 5%, and a WACC of 10%. What is its value of operations? What is its intrinsic MVA? (Hint:
Use Equation 13-5.)
Vop = $200,000,000 + ($200,000,000 (0.10 0.05) *
13-2 EMC Corporation has never paid a dividend. Its current free cash flow of $400,000 is
expected to grow at a constant rate of 5%. The weighted average cost of capital is WACC = 12%.
Calculate EMCs value of operation.
Value of operations = Vo = PV of ex
4-7 An Investment Pays You $100 At The End Of The Next 3 Years . The Investment Will Then
Pay You $200 At The End Of The Year $300 At The End Of Year 5 And $500 At The End Of
Year 6. If The Rate Of Interest On The Investment Is 8% What Is The PV? FV?
4-1 If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be
in your account after 5 years?
Future Value = Present Value x (1 + interest) times number of time period
FV = PV x (1 + i)^n
FV= 10,000 x (1+.10)^5
3.1 Greene Sisters has a DSO of 20 days. The companys average daily sales are $20,000. What
is the level of its accounts receivable? Assume there are 365 days in a year.
DSO = Accounts Receivables/Invoiced Sales in Period x Days in period
2.5 Kendall Corners Inc recently reported net income of $ 3.1 million, and depreciation of
$500,000. What was its net cash flow? Assume it had no amortization expense.
In order to calculate net cash flow we need to add the non cash expenses back to net pr
Since financial statements prepared by GAAP standards must be reported in US dollars,
companies are faced with having to translate the currency on financial statements of international
subsidiaries before consolidation with the US parent company (E
14-2 Petersen Co. has a capital budget of $1,200,000. The company wants to maintain a target
capital structure that is 60 percent debt and 40 percent equity. The company forecasts that its net
income this year will be $600,000. If the company follows a re
Chapter 3 - Financial Statements, Cash flow and Taxes
3-1 An investor recently purchased a corporate bond which yields 9%. The investor is in the
36% combined federal and state tax bracket. What is the bands after-tax yield?
9? 571% .
There are four types of financial statements that are used for publicly traded
corporations. They are known as the income statement, statement of
owner/stockholders equity, balance sheet and the statement of cash flow. (Easton,
Halsey, McAnally, Hartgrave
As we learned during the first week of the class, we need financial statements to report on a business
financial situation. To prepare these statements companies keep records of day to day transactions on
individual accounts and report (post) them into ac
Discussion week 3
There are different measures that help financial analysts and potential investors have
an even clearer picture of a companys profitability from its financial statements ( Easton,
Halsey, McAnally,Hartgraves & Morse, 2010). Among these me
a) What are the revenue recognition requirements in this case?
GAAP and IFRS generally establish that revenue can be recognized when the earning
process is complete. GAAP specifically states that revenue must be realized, realizable or earned
Discussion week 5
Costs of an asset can be capitalized by a company when the asset is owned or controlled by the
company, meaning they have title to the asset as provided in purchase contract and the company
expects to obtain future benefits from it (futu
Companies often purchase stocks from another company for different reasons. These
reasons usually follow a strategy for example an intention to expand or penetrate another market,
form an alliance with the other company or a short term investment of exces
As we have learned from the discussions and course materials, it is very important for a
companys financial statement to present the best possible scenario to stakeholders and analysts.
With that in mind we can understand why a company would be interested
Retained earnings that a company accumulates over time through its operations are one
of the main sources of shareholders equity
(http:/www.investopedia.com/terms/s/stockholdersequity.asp#axzz1nplsl1cW ). As a
shareholder I would be very pleased to know t
Paying cash dividends to shareholders could be considered both good and bad depending
on the stage of development the company is at the moment of the decision and the type of
company in question. From the perspective of a senior business executive of a gr
When cash spent has an immediate effect in the companys financial situation it is
registered as expenses in the income statement. There are instances however when the effect of
cash spent is not expected in the immediate future. In those cases the
Financial analysts, potential investors and parties interested in a companys financial
situation pay special attention to its net working capital. A company with a positive net working
capital (more current assets than current liabilities) can be i
For an event to be accurately categorized as an extraordinary item it has to meet a certain
criteria. It has to be of unusual nature and of infrequent occurrence, meaning that it possesses a
high degree of abnormality and its reoccurrence is not expe
The preliminary balance after the $260 debit will be of $1085 but the real balance at the end of
January is $630. This means that a credit for $455 to the account should be made in order to
reflect the real amount of supplies on hand (http:/www.acco
Companies financial statements keep records of all transactions that affect the different
accounts. Some of these transactions effects often carry on to a different period as to the one
being illustrated in the statement. The cash payment related to
Forecasting financial performance is a very important process, especially because it has
an effect on many business decisions like investing and effective management of a company
(Easton, Halsey, McAnally, Hartgraves, & Morse, 2010). The authors also stat
Catherine March Unit 3 DB June 25, 2009 FIN 410 Risk and Capital Risk is the possibility of loss or injury. In the investment world risk is the chance of financial loss. In life we take chances on so many things. When it comes to investing there is a larg
When an investing company has gained ownership over more than 50% of the
outstanding voting stock of the investee company, it is said that the investing company has
control and is a parent company to the investee. In these cases GAAP requires consoli