Strategies Of Goals Soccer Centres

Strategies of Goals Soccer Centres
a. Goals Soccer Centres the main activities are established operator of 5–a–side soccer centres in
United Kingdom. The company operates 43 centres and established a good web sites pipeline to
continue its mature deployment concept. The company has focus on a strategy more than operational
on the business. In 2013, the company has three strategies to create substantial sustainable value for
shareholders. (Goals annual report 2012, p.4) I. A strong focus on reduce the debt II. To create a
strong brand consistently providing a great customer experience III. Improve returns on a centre by
centre basis through the pursuit of operational excellence b. On this market of listing, the company
must comply with the following criteria. As point out by TalyorWessing, the Company must be a
listed company to be able to offer its shares to the public and the published accounts must accord to
International Accounting Standards. To be obtain the securities to trading must be freely transfer,
enable investors to pay conform obtain electronic settlement and receive their securities through a
paperless settlement system known as CREST in the UK. Since the AIM of London exchange is
suitable for the smaller company, but Goals is not a smaller company. It has operating 43 centres, so
that Goals is not listed on in the most suitable market. c. Placing is the listed company to select a
specific company or person and then to sell shares with them. The advantages of issued new shares
are need
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Calculation of Preferred Dividends
How to Calculate Preferred Dividends
Preferred stock (or preference shares) is a special class of stock that pays a fixed dividend set at the
time of issuance. Also, preferred dividends must be paid before common stock dividends. To
calculate the dividends for preferred stocks, you need to multiply the par value of the shares by the
dividend percentage.
Example 1:
If the dividend percentage is 8 percent and the preferred stock was issued at $20 per share, then the
annual dividend is: 8% * $20 = $1.60 per share.
Example 2:
If you owned 10,000 6.5 percent preferred shares which were issued at a par value of $50 per share,
then:
The dividend per share of preferred stock = $50 * 6.5% = $3.25
Total Preferred Dividends = 10,000 shares * $50 ... Show more content on Helpwriting.net ...
It is an indication of the cash return that shareholders receive from holding shares in the listed
company.
Formula:
Dividend Per Share (DPS) = Dividends paid to equity shareholders / Number of issued equity shares
Example 1:
Bronze Ltd announced a total of $200,000 in dividends over the last year, and it has 4 million shares
outstanding, then the DPS would be: 200,000 / 4,000,000 = $0.05 per share.
Example 2:
Calculate the DPS for Modern Product Ltd., given the following information:
Dividends proposed $30,000
Ordinary shares of $0.50 each: $600,000
Solution:
Number of shares issued = 600,000 / 0.50 = 1,200,000
DPS = 30,000 / 1,200,000 = $0.025

PROFITABILITY RATIO ANALYSIS & EXAMPLE
List of profitability ratios and formulas:
1) Gross Profit ratio = (Gross profit / Net sales) * 100 %
2) Net Profit ratio = (Net profit / Net sales) * 100 %
3) Operating profit margin = Operating income / Net sales
4) Return on Capital Employed = (Profit before interest / Capital employed) * 100 %
5) Return on Equity (ROE) = Net income / Average shareholders equity
6) Return on Assets (ROA) = Net income / Total assets
7) Cash flow return on investment (CFROI) = Cash flow / Market recapitalisation
8) Risk adjusted return on capital (RAROC) = Expected return / Economic capital
9) Return on net assets = Net income / Net assets
Example:
Calculate the profitability ratios, given the following figures:
Stock at the

Ace Repair Essay
Ace Repair:
Q1:
A. List:
WACC= (%of debt) (after–tax cost of debt) + (% of preferred stock)(Cost of preferred stock) + (%
of common equity) (Cost of common equity) =WdRd * (1–T) + WpsRps + WceRs
Wd – the weights used for debt,
Wps – the weights used for preferred equity,
Wce – the weights used for common equity, rd – before–tax cost of debt, rps – cost of preferred
stock, rs – cost of common equity,
T – marginal tax rate
B.
Book weight of debt=long–term debt/ total capital=30.94%
Book weight of preferred stock= Preferred stock / total capital=7.73%
Book weight of common equity= common equity/ total capital=61.33%
C.
The weight of debt= 80.77%
The weight of preferred stock=16.32%
The weight of common stock=2.9% ... Show more content on Helpwriting.net ...
It can be used to pay the dividends, no matter the preferred dividend and common dividends. So the
company need enough retaining earnings to pay these dividends to let the shareholders invest in the
company. So there will be a retaining earnings.
B.
Rs = Rrf + (RPm) * Bi
Rrf = 7%
RPm = 12.57% – 7% = 5.57%
Bi, beta coefficient =1.3
Rs = 14.24%
If earnings' growth rates are often used as estimated of dividend growth rates. However, these
forecasts
C.
The nominal risk–free rate, which includes an inflation premium equal to the average expected
inflation rate over the life of the security. The T–bill rate to measure the short–term risk–free rate
The T–bonds rate to measure the long–term risk–free rate. In this case,we should choose T–bonds

rate. Because the T–bill is safe because it is issued by the governments, and it has a short period to
maturity. That is good investment returns are usually stated as annual returns, and the T–bill rate is a
one–year risk free rate.
D.
The historical beta comes from historical data. This kind of beta would slope coefficient in a
regression, and associated with company's stock returns and market returns. This approach is
conceptually straightforward, and complications quickly arise in practice.
The adjusted beta is a kind of modification that make the historical beta more closer to the "true"
beta.
The fundamental beta that incorporates know information just like any changes in the company's

Smart Bet An Approach For Investing?
'Smart Beta' an Approach to Investing?
The term 'Smart Beta' is a catchy title for an increasingly significant approach relating to exchange
traded products (ETPs). Particularly its potential ability to outperform standard benchmark indexes
has resulted in its market appeal and growth. However with its expansion warrants the necessity to
educate investors, in order to understand the suitability, benefits and limitations of this approach.
Limitations with previous approaches?
Before we analyse the foundations of smart beta approach, an understanding of why it has emerged
is essential. As with all progressions and new approaches within the financial industry, the smart
beta approach has gained popularity as an alternative due to flaws ... Show more content on
Helpwriting.net ...
It would then rebalance when needed i.e. buying and selling of stocks, to help revise weightings to
reflect changes in the index over time. This result in an adverse selection as more weighting will
continue to be allocated to large companies such as CBA that have a higher price is higher.
On the other end of the spectrum choosing an active approach presents its own issues. Finding
consistent performing active fund managers who can deliver returns greater than the market is very
rare. According to Standard & Poor's SPIVAAustralia scorecard in 2012, approximately 69 percent
of active retail Australian equity funds failed to beat the S&P/ASX Accumulation index and 72 per
cent of active international equity funds failed to beat the benchmark. This coupled with high
premiums charged for active management and lack of transparency in managing processes
diminishes the appeal of active management approach further.
Understanding Smart Beta
The 'smart beta' approach should be more accurately described as 'strategic beta' as it aims on
improving the flaws of passive index based approaches. It has become an umbrella term for
alternative weighting and factor based investing. In essence you take an active approach to choosing
the rules to base your fund. But once set, the rules passively

Wal Mart : An Investment Advisor Of A Brokerage Firm
Wal–Mart was founded by Sam Walton and is one of the world's largest retail stores operating in all
50 states as well as internationally in several countries. The retailer giant employs 2.1 million people
who serve roughly 200 million customers per week. Sabrina Gupta is an investment advisor of a
brokerage firm and is studying stocks and valuation of Wal–Mart Stores, Inc. Gupta is attempting to
assess the valuation of Wal–Mart stocks to determine if she should urge her new and existing clients
to add the stocks to their portfolios. Several valuation techniques were applied including perpetual
dividend growth model, dividends and a terminal value, the three–stage approach, price/earnings
approach, and capital asset pricing model.
A. Perpetual Dividend Growth Model The current value of Wal–Mart stock is the discounted value
of all future expected dividends at the required expected rate of return. The constant growth
dividend discount model must be used in order to facilitate the estimation process. According to the
constant growth dividend discount model, the current price (Po) of the stock is calculated by
dividing next year's expected dividend (D1) from the resultant obtained by subtracting the expected
perpetual dividend growth rate (g) from the required rate of return (Ke): Po = D1/(Ke – g)
The annual Wal–Mart dividend for year 2011 was $1.21 and the constant perpetual growth dividend
was estimated at 5.0%. By using the given current stock price $53.45, the investor's

Pfizer 's Primary Business Activities
The followings are take ways from Pfizer's primary business activities, stock market research and
evaluation of the firm's overall financial health of historical performance and current trend
Earnings,
Pfizer hasn't filed the second quarter result with the SEC yet, but based on the latest second quarter
earnings releases, the company was able to generate earnings of $0.62 a share and shows an increase
of 13% in operational growth. Overall revenues grew by 11% in the recent quarter and 15% during
the last six months and show improvement in a number of key operational areas and registered a
healthy growth in its key products in contrast with the achievement in the 2015. The company
ability in generating significant sales out of its assets would expect to show improvement as well.
Dividend,
Pfizer was able to pay a 3.31% trailing annual dividend yield, which is the highest yield for Dow
Jones industrial average components and even more than double the Pharmaceuticals industry
average. The dividend has been steadily growing year by year and expected to grow and becoming
attractive to investors.
Debt
Pfizer has able to maintain the level of debt and hasn't shown an increase. Pfizer has close to $.62
cents of debt for every dollar of equity and this low level of indebtedness confirmed the company's
ability to pay higher dividends to its investors.
Operating efficiency
The strong financial performance exhibited in the last two–quarters, indicating a good sign of solid
long– term

Ratio Analysis of Domino's Pizza Essay
| 2009 – 2010 | | Masters in Business Administration |By– Tesar Singh Chauhan
[DOMINO's PIZZA UK & IRL FINANCIAL PERFORMANCE ANALYSIS] | Submitted as a
part of module assessment for Accounting and Control |
CONTENTS: Page Number 1. INTRODUCTION 2
1.1 DOMINO's at LONDON STOCK EXCHANGE
And Trading Information 2
2. FINANCIAL RATIO ANALYSIS ON DOMINO's
PIZZA UK & IRL PLC's PERFORMANCE 3
3.1 PROFITABILITY RATIOS 3–4 3.2 LIQUIDITY RATIOS 5–6 3.3 EFFICIENCY RATIOS 7–8
3.4 GEARING RATIOS 9–10 3.5 EMPLOYEE RATIOS 11 3.6 INVESTORS RATIOS 12–14
3. CONCLUSION 15
4. BIBLIOGRAPHY
APPENDIX A – Balance ... Show more content on Helpwriting.net ...
* This increase is mainly because of the 26.74% increment in PBIT but the assets went up only by
21.66%. * According to McLaney and Atrill (2008), since the increase in PBIT is greater than the
increase in total assets, it means that the company is using its assets effectively. * In case of other
competitors, Pizza Hut's ROTA8.3%, Domino's is getting almost more than triple return on its assets
which shows that it is faring well.(http://www.yum.com/investors/income_statement.asp)
Profit Margin: –This ratio relates the operating profit to the sales value (Walker, 2009). It tells us the
amount of net profit per pound of turnover a business has earned.
Ratio | Formula | 2010(£000) | 2009(£000) | Profit Margin | Profit before interest and tax x100 |
38035 x 100 | 30008 x100 | | Sales | 188634 | 155044 | | | =20.16% | =19.35% |
Interpretation: * DOM improves the key matric of the total profit it earns per pound of its total sales.
They earned 19.3 pence per pound spent by customers in FY2009 but in FY2010 they

Ration Analysis Between Two Companies
UNIVERSITY OF STRATHCLYDE GRADUATE SCHOOL OF BUSINESS Master of Business
Administration International MANAGING FINANCIAL RESOURCES FINANCIAL &
MANAGERIAL ACCOUNTING ASSIGNMENT October 2008 – September 2009 Prepared by;
Submitted On; INDEX No Contents 1 2 3 4 Table of Contents Table of Figures List of Tables
Table of Appendices Pg no 3 4 5 6 2 Table of Contents Title 1 2 3 4 5 6 7 8 9 Abstract Profitability
Ratios Efficiency Ratios Liquidity ratios Financial Gearing Ratios Investment Ratios Result of the
Analysis Limitations of Financial Reports References Pg no 7 10 15 20 22 25 27 27 29 3 Fig No
TITLE Pg No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Return on capital employed ratio Return ... Show
more content on Helpwriting.net ...
In this

Return For Financial Year 2015
Return for Financial Year 2015 Western Areas' share price closed on the first day of the 2015
financial year (01/07/14) at $4.77 and closed on the last day of the financial year (30/06/15) at
$3.23, thus the capital return for Western Areas shareholders is as follows for FY15; Capital Return=
(Final Share Price–Initial Share Price)/(Initial Share Price)*100 =($3.23–$4.77)/$4.77*100=–
32.29% As seen in the calculation above, shareholders of Western Areas received a capital loss of
32.29% for the 2015 financial year. Looking into the annual dividends, an interim dividend of 3c per
share was paid on 10/04/2015 which was 100% fully franked with a 30% tax rate. Also for the
previous financial year a 4c final dividend was paid on 10/10/2014 ... Show more content on
Helpwriting.net ...
The All Ordinaries Index (All Ords) is utilised as an alternative for the market as it accounts for the
top 500 companies in the ASX by way of market capitalisation that makes up for 98% of the ASX's
worth. The All Ords closed on the first day of the 2015 financial year (01/07/14) at 5366.50 and
closed on the last day of the financial year (30/06/15) at 5451.20, thus the market return for the All
Ordinaries Index is as follows for FY15: Market Return=(Final Index Value–Initial Index
Value)/(Initial Index Value)*100 =(5451.20–5366.50)/5366.50*100=1.58% Broadly comparing
Western Areas total annual return of –30.19% to the annual market return of 1.58% there is quite
clearly a stark difference. However as Western Areas' return directly hinges upon the Nickel price,
which has dropped 37.8% in spot price over the past year, these raw return figures must be adjusted
for risk. The All Ords representing the market has a beta of 1; so to have an accurate comparison the
beta for Western Areas must be calculated. Weekly adjusted close data for the Western Area stock
price and the All Ords index was collected and plugged into excel for the past 10 financial years
from 01/07/2005 to 30/06/2015. The returns for this data were then calculated and a covariance
regression

Walmart Finacial Analysis
Assignment 1 Additional Background Information of Wal–Mart in 2005: * Sales Revenue: In 2005,
Wal–Mart had $312.4 billion in sales, more than 6,200 facilities around the world–including 3,800
stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates"
worldwide. * Other Innovations: Later in October Wal–Mart announced it would implement several
environmental measures to increase energy efficiency. The primary goals included spending $500
million a year to increase fuel efficiency in Wal–Mart's truck fleet by 25% over three years and
double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at
stores by 30%. * Board Affairs: Tom Coughlin (Vice ... Show more content on Helpwriting.net ...
Analysis of Balance Sheet: Liquidity ratio= current assets/current liabilities=38491/42888=0.8974
Wal–Mart's ability to meet its short–term obligation is relatively weak. The higher the current ratio,
the more capable the company is of paying its obligations. A ratio under 1 suggests that the company
would be unable to pay off its obligations if they came due at that point. However, marl–mart huge
size requires much more debts to finance it operations. Wal–Mart's 0.89 is not the best financial
position, because the company with huge warehouse of inventory and other current asset has a
longer inventory turnover than Target. Solvency ration=total debt/total equity=23669/49396=0.479
Wal–Mart's ability to avoid financial risks and financial leverage is strong. A low debt/equity ratio
generally means a company has not been aggressive in financing its growth with debt. Wal–Mart's
firm financial position shows its powerful competency in the retail market, and a positive upward
trend of expanding marketing shares. Analysis of Cash Flow: Wal–Mart is one of the largest retailers
in the world; the majority of cash income comes from the continuing sales operations. And in 2005,
Wal–Mart spent 8 times money in international operations than year 2004. Wal–Mart's investments
outside North America have had mixed results: its operations in the United Kingdom, South
America and China are highly successful, while it was forced to pull out of Germany and South
Korea when

Wenyu Li MINI CASE Essay
Wenyu Li
BUS 581
03/01/2015
Chapter 7 MINI CASE
Your employer, a mid–sized human resources management company, is considering expansion into
related fields, including the acquisition of Temp Force Company, an employment agency that
supplies word processor operators and computer programmers to businesses with temporary heavy
workloads. Your employer is also considering the purchase of a Biggerstaff & Biggerstaff (B&B), a
privately held company owned by two brothers, each with 5 million shares of stock. B&B currently
has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&B's
financial statements report marketable securities of $100 million, debt of $200 million, and
preferred stock of $50 million. ... Show more content on Helpwriting.net ...
The valuation process, in this case, requires us to estimate the short–run non–constant growth rate
and predict future dividends. Then, we must estimate a constant long–term growth rate at which the
firm is expected to grow. Generally, we assume that after a certain point of time, all firms begin to
grow at a rather constant rate. Of course, the difficulty in this framework is estimating the short–
term growth rate, how long the short–term growth will hold, and the long–term growth rate.
What are the expected dividend yield and capital gains yield during the first year?
P0=46.66 Expected dividend yield= 2.6/46.66 = 5.6%
Capital gains yield= 7.4%
What are the expected dividend yield and capital gains yield during the fourth year (from Year 3 to
Year 4)?
P3= 56.5964
Expected dividend yield = 7.0%
Capital gains yield= 6.0%
i. What is free cash flow (FCF)?
A measure of financial performance calculated as operating cash flow minus capital expenditures.
Free cash flow (FCF) represents the cash that a company is able to generate after laying out the
money required to maintain or expand its asset base. Free cash flow is important because it allows a
company to pursue opportunities that enhance shareholder value. Without cash, it's tough to develop
new products, make acquisitions, pay dividends and reduce debt.
FCF is calculated as:EBIT(1–Tax Rate) + Depreciation & Amortization – Change in Net Working
Capital – Capital ExpenditureIt can also be

Nike's Cost of Debt and Equity
|
Table of Contents Cost of Capital 2 Value of Equity 2 Cost of Equity 2 CAPM Model 2 Dividend
Growth Model 3 Value of Debt 3 Cost of Debt 4 WACC (Weighted Average Cost of Capital) 4
Comparison to Joanna Cohen's Analysis 4 Financial Statement Analysis 5 Nike Inc. 5 Financial
Ratios 6 Leverage Ratios 6 Efficiency Ratios 6 Liquidity Ratios 7 Profitability Ratios 7 Valuation
Ratios 7 Conclusion 8 Appendix A – Ratio Calculation 9 Leverage Ratios 9 Efficiency Ratios 9
Liquidity Ratios 9 Profitability Ratios 10 Valuation Ratios 10
Cost of Capital
Value of Equity
Cohen's calculation considered the book values to calculate the proportion of equity for calculating
the value of WACC which should only be done if the target or ... Show more content on
Helpwriting.net ...
According to the sensitivity analysis table provided in Exhibit 2, the share price should be valued
between $50.92 and $55.68, whereas the current share price is $42.09 (an undervaluing of
approximately 17%–24%). It should be noted however, that when re–computing the present value of
the estimated future cash flows computed by Ms. Ford, the shares should be valued at $44.17; in this
case the share is undervalued by 4.7%. Joanna Cohen determined the cost of capital to be 8.4% and
the share price to be $69.44. According to her work the share value was undervalued by $27.35
(approximately 39%). Despite these discrepancies, according to the above analysis and Ms. Cohen's
calculations the share price is undervalued.
Financial Statement Analysis
The current share valuation and WACC are not the only considerations that should be taken into
account when

Evaluation of Walgreens Company
Walgreens CO. | EVALUATION OF WALGREENS CO. | Managerial finance project | | Contents
Walgreens CEO 1 The board of directors 2 How much trading volume is there on the stock? 4 Does
the firm has any has publicly traded debt? 4 Societal constraint 4 Liquidity ratios 4 Overall risk of
company 8 Marginal investors in the company 9 Estimate the default risk and cost of debt of your
company 9 Weights of debt and equity 10 Regression 10 WACC and CAPM 11 Evaluating the firm
´s current investment 12 Choice of the optimal financing mix 13 Analyses of the current financing
decisions 14 Dividend Policy Evaluation 15 Walgreens CEO Gregory D. Wasson is the president of
Walgreens, and CEO effective since ... Show more content on Helpwriting.net ...
L.P. Elected 2012 Stefano Pessina, Executive Chairman, Alliance Boots GmbH Elected 2012 Nancy
M. Schlichting, President and Chief Executive Officer, Henry Ford Health SystemElected 2006
David Y. Schwartz, Former Partner, Arthur Andersen LLP Elected 2000 Alejandro Silva, Chairman
and Chief Executive Officer, Evans Food Group, Inc. Elected 2008 In Walgreens board of directors
there are two inside directors which is acceptable ratio. Best practice recommends at least ¾ of
board members should be independent which is in case of Walgreens satisfied. From other indicators
of lack of independence there is only business relationship issue because Nancy M. Schlichting,
President and Chief Executive Officer, Henry Ford Health is customer of the Walgreens Co. Also
Stefano Pessina, Executive Chairman, Alliance Boots GmbH is customer of the company and his
company is in the joint ventures with Walgreens in Europe.Also he is one of the major direct share
holders of the company. Having one major share holder in board of directors is generally good
because he has big interest to represent interest of the shareholders in the board. We didn't find that
any of the board members were employed with the company in the past and interlocking
directorship is not found neither. There is three female board members which is very good number
taking the highest number of females in the board

BFIN 300 Quiz2 solutions
BFIN 300 Financial Management FA14 Quiz 2 Solutions
Conceptual/qualitative questions:
1. The capital gains yield plus the dividend yield on a security is called the total return.
2. Unsystematic risk can be effectively eliminated through portfolio diversification.
3. The excess return required from a risky asset over that required from a risk–free asset is called the
risk premium.
4. The market risk premium is computed by subtracting the risk–free rate of return from the market
rate of return. MRP = Return of the market – Risk–free rate.
5. The Zolo Co. just declared that it is increasing its annual dividend from $1.00 per share to $1.25
per share. If the stock price remains constant, then the dividend yield will increase. This is ... Show
The dividend amount was $.70 a share which equated to a dividend yield of 1.5%. What was the rate
of price appreciation on the stock? 11.25% – 1.50% = 9.75%
22. Your firm offers a 10–year, zero coupon bond. The yield to maturity is 8.8%. What is the current
market price of a $1,000 face value bond?
PV
430.24
FV
1,000
PMT
0
RATE or i/y
8.8%
NPER or n
10
*note: this bond used annual compounded as was given during the exam.
23. Angelina's made two announcements concerning its common stock today. First, the company
announced that its next annual dividend has been set at $2.16 a share. Secondly, the company
announced that all future dividends will increase by 4% annually. What is the maximum amount you
should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return? This
is a constant growth or Gordon growth model problem. 24. The bonds issued by Manson & Son bear
a 6% coupon, payable semiannually. The bond matures in 8 years and has a $1,000 face value.
Currently, the bond sells at par. What is the yield to maturity?
PV
1,000

FV
1,000
PMT
6%/2
RATE or i/y
3%x2 = 6%
NPER or n
8x2
*Note: a bond selling at par value will have a yield to maturity equal to its coupon rate.
25. Eight months ago, you purchased 400 shares of Winston, Inc. stock at a price of $54.90 a share.
The company pays quarterly dividends of $.50 a share. Today, you sold all of your shares for $49.30
a share. What is your total percentage

Essay about Financial Analysis of Ted Baker
REPORT To Mr. D.G. Farmer From an analyst working for Devon Fund Managers (DFM) Date 15 /
03 / 2013 Devon Fund Managers A regular report that analyses industry and performance of Ted
Baker plc. based on the Ted Baker Annual Report 2011–12. Executive Summary This report is going
to analyse and evaluate the Ted Baker plc. by providing the most important ratios of the company
and interpretations to them. Furthermore, it is going to recommend to hold shares of this company to
existing shareholders and also recommend potential investors to purchase the shares of Ted Baker
plc. since the return of the company is expected to be high in the nearest future. 1. Introduction This
... Show more content on Helpwriting.net ...
2.2 Vertical Analysis Table 2. [1] (Workings in Appendices 1) In vertical analysis, it is easier to see
elements as a percentage of Revenue. Between 2011–12, the portion that cost of sales takes in
revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of
revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is
one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year. 2.3
Ratio Analysis 2.3.1 Profitability ratios Profitability Ratios Type 2012 2011 2010 Return on Capital
Employed (ROCE) 28.02% 31.11% 28.40% Operating Profit Margin 11.26% 12.86% 12.09% Gross
Profit Margin 61.31% 61.68% 61.09% Table 3[1] [9] [10] (Workings in Appendices 1) Profitability
ratios are basically figures to measure if the company is doing well in the terms of profit[13]. ROCE
ratio has increased in 2011 but in 2012 it deteriorates by 3%. This fall indicates that company was
not successfully getting high returns as a percentage of its resources available, compared to 2011.
Operating profit margin figures in the table above show the return from net sales[13]. However
profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during
2011–12. Sales revenue increases with a higher rate than gross profit so there is a poor

Security Information Affecting Investment Decision: a Case...
|Assignment on | |Security Information Affecting Investment Decision | |A Study on Eastern Bank
Limited | | | |Course Title: Security Analysis and Portfolio Management;Course Code: FIN 6155 ...
Show more content on Helpwriting.net ...
Company Information of Eastern Bank Limited 1.1.1 Legal Form A public limited company
incorporated in Bangladesh with primary objective to

mid term paper
Mid–Term Examination, Winter 2010
Level: Masters Full Marks: 100
Program: MBAe Section B Pass Marks: 60
Course: Financial Management Time: 3 Hrs.
Term: III
Candidates are required to be original and fair in the presentation of their answers.
The figures in the parenthesis indicate the marks for respective question.
Attempt all the questions
Section A
Attempt all questions
Each question carries 6 marks [5 x 6 =30]
1. You have to pay $12,000 a year in school fees at the end of each of the next six years. If the
interest rate is 8%, how much do you need to set aside today to cover these bills? [3]
Answer:
Find out the PV of $ 12,000 as 6 years annuity. Answer – $ Rs 55476
You have ... Show more content on Helpwriting.net ...
[3]
Answer:
Dividend Payout Ratio being constant, EPS growth rate will be equal to dividend growth rate. Next
year's EPS = 8% more than Rs 5. Answer = Rs 5.4
Alternative way,
EPS 1 = EPS 0 + Retained earning per share x Rate of return
EPS 1 = Rs 5 + 3.2 x 0.12 = Rs 5.4

Section B
Attempt any three questions
Each question carries 15 marks [3 x 15 = 45]
6. The Tanner Company's cost of equity is 18%. Tanner's before tax cost of debt is 12%, and its tax
rate is 40%. Using the following balance sheet, calculate Tanner's after tax weighted average cost of
capital. (Assume that this accounting balance sheet also represents Tanner's target capital structure)
– All figures are in Ten thousands.
Assets
Amount
Liabilities
Amount
Cash
Rs 100
Accounts Payable
Rs 200
Accounts Receivables
200
Accrued taxes due
200
Inventories
300
Long term debt
400
Plant and Equipment, net
1800
Equity
1600
Total Assets
Rs 2400
Total Liabilities
Rs 2400
Answer:
While computing D/E ratio or D/V and E/V ratio, we always use only long term capital (debt, pref
stock, equity). So D = 400 and E = 1600 in this case and V = sum of both = 2000
Thus, we get Wd = 0.2 and We = 0.8. This will be used in all of the three problems, since its not
changing with question.
Kdat = 7.2 %, Ke = 18%. Hence we get WACC = 15.84%
Find

Finance Quiz
1. Barker Corp. has a beta of 1.10, the real risk–free rate is 2.00%, investors expect a 3.00% future
inflation rate, and the market risk premium is 4.70%. What is Barker's required rate of return?
Answer D | | | |2010 |21.00% | |2009 |–12.50% | |2008 |25.00% | | | | Answer B | |20.08% | | | |20.59% |
| | |21.11% | | | |21.64% | | | |22.18% | | 4. Which ... Show more content on Helpwriting.net ...
| | | |These two stocks should have the same expected return. | | | |These two stocks must have the
same expected capital gains yield. | | | |These two stocks must have the same expected year–end
dividend. | | | |These two stocks should have the same price. | | 9. Stocks A and B have the same price
and are in equilibrium, but Stock A has the higher required rate of return. Which of the following
statements is CORRECT? Answer A | |Stock B must have a higher dividend yield than Stock A. | | |
|Stock A must have a higher dividend yield than Stock B. | | | |If Stock A has a higher dividend yield
than Stock B, its expected capital gains yield must be lower than Stock B's. | | | |Stock A must have
both a higher dividend yield and a higher capital gains yield than Stock B. | | | |If Stock A has a lower
dividend yield than Stock B, its expected capital gains yield must be higher than Stock B's. | |10.
Two constant growth stocks are in equilibrium, have the same price, and have the same required rate
of return. Which of the following statements is CORRECT? Answer | |If one stock has a higher
dividend yield, it must also have a lower dividend growth rate. | | | |If one stock has a higher
dividend yield, it must also have a higher dividend growth rate. | | | |The two stocks must have the
same dividend growth rate. | | | |The two stocks must have the same dividend yield. | | | |The two
stocks must have the same dividend per share. | | 11. Which of the following statements

Starbucks Corporation 3rd Company Report
Back Ground:
Starbucks Corporation is the sector called Specialty eateries. It largest competitors are, PANERA
BREAD, DIEDRICH COFFEE, and FLANIGAN'S ENTERPRSE INC. With Starbucks having
more than 10 times the sales of its nearest competitor.
An overview perspective shows that Starbucks is just slightly below the industry average in most
categories. This is a negative aspect in some ratios such as current ratio but could be considered a
positive in other ratios such as the Debt ratio.
Analysis:
The purpose of this report is to compare the market value of the securities for the Starbucks
Corporation and compare this with the calculated financial figures from the financial statements,
taking into consideration, the different types ... Show more content on Helpwriting.net ...
The original bond price is $5,100,000 and par value of the bond is $5,425,530, then the bond is
selling at a discount. If the new bond price were selling at $5,600,000 then the bond would be
selling at a premium. The important part is the to determine whether the bond is under valued or
over valued
For instance if the bond was selling at $5,100,000 and the par value was $5,425,530 and the stated
yield was 8.11%, then the bond is over valued because the bond price with yield of 8.11% should be
$4,800,000. If the bond price was $5,100,000 and the par value was $5,425,530 and the stated yield
was 5.74%, then the bond is under valued because the bond price with a yield of 5.74% should be
$5,550,000
Preferred Stock
Again because the company offers no preferred stock some examples will be used:
Given from above:
|Annual dividend on preferred Stock | | $ 2,336,827.50 |
| Price of preferred stock | | $ 30,055,500.00 |
| Selling cost | | $ 100,000.00 |

Finc2011 Major Assignment Essay
Woolworths Limited Valuation Report
Executive summary
Woolworths Limited (WOW), which is one of the listed companies in Australian Security Exchange
(ASX) (ASX 200), is the largest supermarket in Australia (Kruger 2013), it specializes in the
groceries, food and retailing (WOOLWORTHS LIMITED (WOW) 2013). The aim of this report is
to estimate and determine the dividend growth rate, stock return and current share price of
Woolworths. Methods used for the estimation include dividend growth model, Capital Asset Pricing
Model (CAPM) and Gordon's Growth Model. The results of the estimation indicate that the
dividend payments will continuous increasing in the future, the return on the company's assets is
reasonable and its share price is ... Show more content on Helpwriting.net ...
In this stage, the risky required return (rm), the same as market return, should be calculated. Stock
market index is an approach to evaluate the value of stock market and S&P/ASX 200 is the
most significant stock market index which tracks the performance of two hundred big Australian
corporations (Australia Stock Market (S&P/ASX 200) 2013). Currently, S&P/ASX 200 is
a primary share market index in Australia which replaced the All Ordinaries in April 2000 and has
become the benchmark for investment for the Australian Securities Exchange (ASX) (ASX 200
2013). Therefore, S&P/ASX 200 is the best indicator of the market return and used to
determine the market return.
Source:
https://blackboard.econ.usyd.edu.au/bbcswebdav/pid–636137–dt–content–rid–
201558_2/courses/FINC2011_SEM1_2013/All%20Ords%20Accumulation%20Indices.xls
Based on the data from S&P/ASX 200 Accumulation index (daily), which is provided by
Mellare (2013), the yearly index could be calculated by averaging all of the daily indexes for that
year. Yearly market return (rm) can be determined by:
In which, old market index refers to the index for year t and new index is the index for year (t+1).
A table for the calculation of market return will be created in a similar way with the S&P/
ASX200 table (see Appendix – 1) for the periods of 10 years in order to comply with ASX.
Due to the prices in 2013 is not completed, the market

Starting Off With The Gordon Growth Model
Starting off with the Gordon Growth Model was developed by Professor Myron Gordon of the
University of Toronto. It explains that if any investor is aware of the dividends handed out in a year
by any company, and at what rate that dividend will grow, the investor is able to determine the
actual value of the stock, which describes what the investor should pay at most for the selected stock
issued by the company. (Ozyasar, 2015) The Gordon Growth models inputs are relatively easy to
determine. The dividends can be found using any platform or the general news (since they are
announced publicly). The investor generally has an idea of the required return he/she demands of a
certain stock they are investing in i.e 12%. The problematic issue arises in determining the rate at
which a dividend will grow. This is determined through being able to make assumptions on what
product will grow in the market or in general which company will grow, which usually makes final
results "inexact" Ozyasar describes. The limitation of the Gordon Growth Model arises when there
is no constant growth rate on a stock dividend, which in reality as Ozyasar describes is almost never
the case. Despite these limitations the GGM is still a powerful tool used by investors constantly to
make decisions on what required return or growth rate would they require for a stock to be favorable
and from that an investor determines how to move on with their portfolio. For example Michael
Blair discussed the use of the

Project Week 6
1. A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the
constant growth rate is g = 4.0%. What is the current stock price?
a. $23.11
b. $23.70
c. $24.31
d. $24.93
e. $25.57 2. If D1 = $1.25, g (which is constant) = 4.7%, and P0 = $26.00, what is the stock's
expected dividend yield for the coming year?
a. 4.12%
b. 4.34%
c. 4.57%
d. 4.81%
e. 5.05% 3. If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock's
expected total return for the coming year?
a. 8.37%
b. 8.59%
c. 8.81%
d. 9.03%
e. 9.27% 4. Canterberry 's preferred stock pays a dividend of $0.75 per quarter. If the price of the
stock is $39.00, what is its nominal ... Show more content on Helpwriting.net ...
d. If a company's beta increases, this will increase the cost of equity used to calculate the WACC,
but only if the company does not have enough retained earnings to take care of its equity financing
and hence must issue new stock.
e. Higher flotation costs reduce investors ' expected returns, and that leads to a reduction in a
company's WACC.
10. O 'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm
's cost of common from retained earnings based on the CAPM?
a. 11.30%
b. 11.64%
c. 11.99%

d. 12.35%
e. 12.72%
11. Teall Development Company hired you as a consultant to help them estimate its cost of capital.
You have been provided with the following data: D1 = $1.45; P0 = $22.50; and g = 6.50%
(constant). Based on the DCF approach, what is the cost of common from retained earnings?
a. 11.10%
b. 11.68%
c. 12.30%
d. 12.94%
e. 13.59%
12. Anderson Systems is considering a project that has the following cash flow and WACC data.
What is the project 's NPV? Note that if a project 's expected NPV is negative, it should be rejected.
WACC: 9.00% Year 0 1 2 3 Cash flows –$1,000 $500 $500 $500 a. $265.65
b. $278.93
c. $292.88
d. $307.52
e. $322.90
13. Tuttle Enterprises is considering a project that has the following cash flow and WACC data.
What is the project 's

Vanilla Stocks and Bonds
Phase 5 IP Vanilla Stocks and Bonds
Part 1 Bonds
It has been established that it is crucial to be able to properly value a bond for finance. Two
companies have been chosen to represent this action for this document Apple Inc. as well as IBM
which are both in the technology sector and have long term debt, have bonds and also stocks
available for sale. We are going to determine the length until maturity, the yield to maturity and then
also the price of the bond today. While keeping this information in mind we can determine what
time value of money illustrates about each bond. A credit rating has been assigned to each company
and we can determine which company may be the better investment for the bank as well as the
investor. In the ... Show more content on Helpwriting.net ...
Apple currently has 16,958 million dollars of long term debt according to the U.S. Security and
Exchange Commission (2013).
Next we have International Business Machines (IBM) which is one of the largest computer
manufacturers in the world developing mainframes personal and business computers and helped to
ignite the computer revolution. Again using Morningstar (2013) it was discovered that IBM had a 3
stars and a rating of AA–. According to the U.S. Security and Exchange Commission (2013) IBM
has a long term debt of $26,292 million. Morningstar revealed that their debt ratio is 65.8% which is
extremely high. The bond that was chosen to evaluate was thhe Intl Busn Machs 4.0% which also
has a maturity date of 30 years. The accrual start date is June 20, 2012 and has the first payment date
of December 20 2012 which a conclusion can be made that it has semiannual coupon frequency.
Let us look at some more information in a chart as it may be easier to understand.
So if we start to compare the separate bonds that are presented by these two powerhouse companies
we can see that they both have a maturity date of 30 years for a face value of $1,000 and the coupon
type is fixed. The coupon rate is less than the current interest rate which means a buyer may want to
pay less for that bond. However there are some differences such as the issue size of the two bonds.
Apple

Telus Essay
Telus: The Cost of Capital
Business 3019
Synopsis

Two managers attending an executive education course attempt to develop a cost of capital estimate
for a leading telecommunications company, Telus The two managers are somewhat confused about
the costs of various sources of capital, the calculation of the overall cost of capital and the
appropriate use of the hurdle rate

What Does Cost of Capital Mean?

Cost of capital is what it will cost the firm, on the margin, today, to secure its financial resources for
further growth.
Cost of capital must reflect current capital market conditions (current required returns) Cost of
capital must also reflect the optimal relative proportions of debt and equity the firm will ... Show
What is the Cost of Debt?
Continued ...

In November 2001, the costs of required rates of return on debt in the capital market are as follows:
Government long–term bonds Telus long–term bonds Bank prime rate Telus short–term notes 5.82%
8.81% 4.50% 5.86%

Since Telus uses both long–term bonds and short–term notes, the current required rates are the
starting point, but they must be adjusted for two factors:
1. 2.

The costs of issuing the financing, and The fact that interest payments are deductible for tax
purposes.
What is the Cost of Debt?
Continued ...

Therefore, the comprehensive costs of the debt components are as follows:
Including Market Rate Tax Financing Costs Rate 9.31% 50.00% 5.86% 50.00%
Telus – long–term bonds Telus – short–term bonds
Market Rate Nominal Rate 8.81% 5.86%
After Tax (1– tax) 4.7% 2.9%



The tax rate is estimated from case Exhibit 2 as Income Taxes ($496 million) divided by Earnings
Before Taxes, Non–controlling Interest and Goodwill Amortization ($990 million). Note that, in
2001, interest on the company's total debt is approximately 3.8%: $317 million of interest / $8,361
million of debt. However, this calculation is misleading since the 2000 debt is much larger than the
1999 debt of $2,270 (not in the case). You should ask yourself...should you use current yields or
historical yields when calculating the cost of debt? Current yield figures should be used because
Telus is considering

Essay about Winfield Refuse Management Case Study Analysis
1. What are the annual cash outlays associated with the bond issue? The common stock issue/
The bond principal repayment will be $6.25 million annually. The cash dividends will be $7.5
million annually on additional stock.
2. How do you respond to each director's assessment of the financing decision?
The following assessments were given during the last board meeting:
Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She
was particularly concerned about the increasing long–term debt and annual cash layout of $ 6.25
million for 15 years. We believe that her concerns are justified, because the Company had already
significant amount of debt that could result in higher risks and stock price ... Show more content on
Helpwriting.net ...
Issuing bonds in the case would be a better option, as even with the annual principal repayments
EPS would be higher and the Company would still enjoy the tax shield.
James Gitanga was not sure about the unusual capital structure of the Company, avoiding the long–
term debt. We believe that the long–term capital structure across the industry was pre–determined by
the high capital expenditures and steady cash inflows. Thus, issuing long–term debt was more
preferable. Besides, by issuing debt they would enjoy the tax shield since interest on long–term debt
is tax–deductible.
3. How should the acquisition of MPIS be financed, taking into account the issues of control,
flexibility, income and risk?
Cash flows from Stock Offering (in Million Dollars)
Proceeds from Stock offering $ 125.025
Annual Dividend Payments $ (7.50)
Every year forever
PV of payouts $ (125.000)
NPV $ 0.025
Notes:
In case they finance with debt, Winfield (the company) would be able to enjoy the tax shield as a
result of tax deductible interest expense, hence their effective cost of debt will be 4.225%. However,
when financed with stock, the new stockholders will be entitled to perpetuity of $7.5M in dividends.
Working out the net present values of the two scenarios as shown in the tables above, Debt financing

becomes a favorable option to stock since it yields a higher NPV.
Stock price

Finance 550
Practice Exam Questions and Answers
1. The Widget Co. purchased new machinery three years ago for $4 million. The machinery can be
sold to the Roman Co. today for $2 million. The Widget Co.'s current balance sheet shows net fixed
assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000. If all the
current assets were liquidated today, the company would receive $1.9 million in cash. The book
value of the Widget Co.'s assets today is _____ and the market value of those assets is _____.
A. $4,600,000; $3,900,000
B. $4,600,000; $3,125,000
C. $5,000,000; $3,125,000
D. $5,000,000; $3,900,000
E. $6,500,000; $3,900,000
Book value = ($725,000 + $1,375,000) + $2,500,000 = $4,600,000
Market value = $1,900,000 ... Show more content on Helpwriting.net ...
good reputation of the company
C. equipment owned by the firm
D. money due from a customer
E. an item held by the firm for future sale
Refer to section 2.1
AACSB: N/A
Bloom's: Comprehension
Difficulty: Intermediate
Learning Objective: 2–2 and 2–4
Ross – Chapter 02 #15
Section: 2.2 and 2.4
Topic: Depreciation
10. Which one of the following statements concerning net working capital is correct?
A. The lower the value of net working capital the greater the ability of a firm to meet its current
obligations.
B. An increase in net working capital must also increase current assets.
C. Net working capital increases when inventory is sold for cash at a profit.

D. Firms with equal amounts of net working capital are also equally liquid.
E. Net working capital is a part of the operating cash flow.
AACSB: N/A
Bloom's: Comprehension
Difficulty: Intermediate
Learning Objective: 2–2 and 2–4
Section: 2.2 and 2.4
Topic: Income statement
11. The higher the degree of financial leverage employed by a firm, the:
A. higher the probability that the firm will encounter financial distress.
B. lower the amount of debt incurred.
C. less debt a firm has per dollar of total assets.
D. higher the number of outstanding shares of stock.
E. lower the balance in accounts payable.
AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Learning Objective: 2–4
Section: 2.4
Topic: Cash flow from

Pepsico Is The Most Valuable Brand
PepsiCo operates in the beverages/soft drinks industry in the consumer goods sector (Yahoo!
Finance, 2016). According to Forbes, PepsiCo is rated 29th as the most valuable brand (Forbes,
2016). While Coca–Cola has mostly stayed within the boundaries of the beverage/soft drink
industry, only venturing out from soft drinks to include sport drinks, energy waters, and most
recently tea and coffee, PepsiCo has done that in addition to adding snack foods to its distribution.
PepsiCo has significant holdings in the snack food industry including brands such as Tostitos, Lays,
Ruffles, Cheetos, Sabra, and Quaker just to name a few (PepsiCo, 2016a). Much like Coca–Cola,
PepsiCo's business is seasonal as cold drinks have increased sales in the summer, whereas warm
drinks have higher sales in the winter (PepsiCo, 2016a). PepsiCo's diversification in the snack foods
industry does provide some balance.
Assessment of PepsiCo Financial Statements
Financing Activities, Dividend Payout and Retention Ratio As indicated with Coca–Cola, the key
indicators can be reviewed in Table 7. Although Coca–Cola's dividend payout ratio was increasing at
a rate unsustainable relative to the increase in free cash flow, PepsiCo paints a different picture. In
fact, the increase in free cash flow is sufficient to cover the increase in dividend payments.
Additionally, PepsiCo, like Coca–Cola has a history of dividend payments. The annual dividend rate
of PepsiCo for FYE 2016 is 3.012, an

Cost of Capital End of Book Solutions
CHAPTER
3
COST OF CAPITAL
SOLUTIONS
1. B is correct. The cost of equity is deﬁned as the rate of return required by stockholders.
2. B is correct. Debt is generally less costly than preferred or common stock. The cost of debt is
further reduced if interest expense is tax deductible.
3. C is correct. First calculate the growth rate using the sustainable growth calculation, and then
calculate the cost of equity using the rearranged dividend discount model: g ¼ ð1 À Dividend
payout ratioÞðReturn on equityÞ ¼ ð1 À 0:30Þð15%Þ ¼ 10:5% re ¼ ðD1 =P0 Þ þ g ¼
ð$2:30=$45Þ þ 10:50% ¼ 15:61%
4. C is correct. FV ¼ $1,000; PMT ¼ $40; N ¼ 10; PV ¼ $900
Solve for i. The six–month yield, i, is 5.3149%.
YTM ¼ 5:3149% 3 2 ¼ 10:62985% rd ð1 À ... Show more content on Helpwriting.net ...
B is correct.
Asset betas: βequity/[1 þ (1 À t)(D/E)]
Relevant ¼ 1:702=½1 þ ð0:77Þð0ÞŠ ¼ 1:702
ABJ ¼ 2:8=½1 þ ð0:77Þð0:003ÞŠ ¼ 2:7918
Opus ¼ 3:4=1 þ ½ð0:77Þð0:013ÞŠ ¼ 3:3663
20. C is correct. Weights are determined based on relative market values:
Pure–Play
Market Value of
Equity in Billions
Proportion of Total
Relevant
$3.800
0.5490

ABJ
2.150
0.3106
Opus
0.972
0.1404
Total
$6.922
1.0000
Weighted average beta ¼ ð0:5490Þð1:702Þ þ ð0:3106Þð2:7918Þ þ ð0:1404Þð3:3572Þ ¼ 2:27
21. B is correct.
Asset beta ¼ 2:27
Levered beta ¼ 2:27f1 þ ½ð1 À 0:23Þð0:01ÞŠg ¼ 2:2875
Cost of equity capital ¼ 0:0525 þ ð2:2875Þð0:07Þ ¼ 0:2126 or 21:26%
22. C is correct.
For debt: FV ¼ 2,400,000; PV ¼ 2,156,000; n ¼ 10; PMT ¼ 150,000
Solve for i. i ¼ 0.07748. YTM ¼ 15.5%
Before–tax cost of debt ¼ 15.5%
Market value of equity ¼ 1 million shares outstanding plus 1 million newly issued shares ¼ 2
million shares at $8 ¼ $16 million
part–ii–03
13 January 2012; 10:25:56
102
Solutions
Total market capitalization ¼ $2.156 million þ $16 million ¼ $18.156 million
Levered beta ¼ 2.27{1 þ [(1 À 0.23)(2.156/16)]} ¼ 2.27 (1.1038) ¼ 2.5055
Cost of equity ¼ 0.0525 þ 2.5055(0.07) ¼ 0.2279 or 22.79%
Debt weight ¼ $2.156/$18.156 ¼ 0.1187
Equity weight ¼ $16/$18.156 ¼ 0.8813
TagOn's MCC ¼ ½ð0:1187Þð0:155Þð1 À 0:23ÞŠ þ ½ð0:8813Þð0:2279ÞŠ
¼ 0:01417 þ 0:20083

¼ 0:2150 or 21:50%
23. A is correct. The

Nike Wacc Case Study
Financial Management
Agenda
1. What is the WACC and why is it important to estimate a firm's cost of capital? Do you agree with
Joanna Cohen's WACC calculation? Why or why not?
2. If you do not agree with Cohen's analysis, calculate your own WACC for Nike and justify your
assumptions. 3. Calculate the costs of equity using CAPM, the dividend discount model, and the
earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What
should Kimi Ford recommend regarding an investment in Nike?
2
Case Overview
Nike, Inc. NorthPoint Group Investment Decision
 Current share price of USD 42.09  Declining market share for the period 1997–2000  Strategy
for revitalizing the company under consideration  Plan ... Show more content on Helpwriting.net
...
 Joanna is right to consider debt denominated in foreign currency, however her approach is flawed
since she is once again looking at outstanding debt, which arrangements that occurred some time in
the past might significantly differ from the current market reality.  Since existing Nike bonds are
trading at discount, we already know that the market yield exceeds the coupon rate.
5
* Strong arguments exist for using the geometric mean under certain circumstances. This point will
be further elaborated
Agenda
1. What is the WACC and why is it important to estimate a firm's cost of capital? Do you agree with
Joanna Cohen's WACC calculation? Why or why not? 2. If you do not agree with Cohen's analysis,
calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity
using CAPM, the dividend discount model, and the earnings capitalization ratio. What are the

advantages and disadvantages of each method?
4. What should Kimi Ford recommend regarding an investment in Nike?
6
Calculating Cost of Equity
 Rf = 5.39% based on the current 10 year yield for the sake of consistency with the forecasted 10
year FCFF.  Calculating risk premium based on arithmetic average vs geometric mean: 
Arithmetic average assumes no serial correlation and thus could be overstating the premium. 
Arithmetic average ignores estimation error and available data is limited.  Arithmetic average
works best for

Strategic Game Glo-Bus
Financial Ratios Used In GLO–BUS
Profitability Ratios (as reported on pages 2 and 6 of the GLO–BUS
Statistical Review)
Earnings per share (EPS) is defined as net income divided by the number of shares of stock issued to
stockholders. Higher EPS values indicate the company is earning more net income per share of
stock outstanding. Because EPS is one of the five performance measures on which your company is
graded (see p. 2 of the GSR) and because your company has a higher EPS target each year, you
should monitor EPS regularly and take actions to boost EPS. One way to boost EPS is to pursue
actions that will raise net income (the numerator in the formula for calculating EPS). A second
means of boosting EPS is to repurchase shares of ... Show more content on Helpwriting.net ...
Companies having the highest ratios of production costs to net revenues are likely to be caught in a
profit squeeze, with margins too small to cover delivery, marketing, and administrative costs and
interest costs and still have a comfortable margin for profit. Production costs at such companies are
usually too high relative to the price they are charging (their strategic options for boosting
profitability are to cut costs, raise prices, or try to make up for thin margins by somehow selling
additional units). The percentage of delivery costs for cameras to net sales revenues. This ratio is
calculated by dividing total delivery costs by net revenues (where net revenues represent the dollars
received from camera sales, after exchange rate adjustments and any promotional discounts). A low
percentage of delivery costs to net revenues is preferable to a higher percentage, indicating that a
smaller proportion of revenues is required to cover delivery costs (which leaves more room for
covering other costs and earning a bigger profit on each unit sold). The percentage of total
marketing costs for cameras to net sales revenues. This ratio is calculated by dividing total
marketing costs by net revenues (where net revenues represent the dollars received from camera
sales, after exchange rate adjustments and any promotional discounts). A low

Financial Management Chapter 8 K
ey
Chapter 8
Stocks and Their Valuation
LEARNING OBJECTIVES
After reading this chapter, students should be able to:
Identify some of the more important rights that come with stock ownership and define the following
terms: proxy, proxy fight, takeover, and preemptive right.
Briefly explain why classified stock might be used by a corporation and what founders' shares are.
Differentiate between closely held and publicly owned corporations and list the three distinct types
of stock market transactions.
Determine the value of a share of common stock when: (1) dividends are expected to grow at some
constant rate, (2) dividends are expected to remain constant, and (3) dividends are expected to ...
Show more content on Helpwriting.net ...
b. The preemptive right is clearly important to the stockholders of closely held firms whose owners
are interested in maintaining their relative control positions.
SOLUTIONS TO END–OF–CHAPTER PROBLEMS
8–1 D0 = $1.50; g1–3 = 5%; gn = 10%; D1 through D5 = ?
D1 = D0(1 + g1) = $1.50(1.05) = $1.5750. D2 = D0(1 + g1)(1 + g2) = $1.50(1.05)2 = $1.6538. D3 =
D0(1 + g1)(1 + g2)(1 + g3) = $1.50(1.05)3 = $1.7364. D4 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn) =
$1.50(1.05)3(1.10) = $1.9101. D5 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn)2 = $1.50(1.05)3(1.10)2 =
$2.1011.
8–2 D1 = $0.50; g = 7%; ks = 15%; [pic] = ?
[pic]
8–3 P0 = $20; D0 = $1.00; g = 10%; [pic] = ?; ks = ?

[pic] = P0(1 + g) = $20(1.10) = $22.
ks = [pic] + g = [pic] + 0.10 = [pic] + 0.10 = 15.50%. ks = 15.50%.
8–4 Dp = $5.00; Vp = $60; kp = ?
kp = [pic] = [pic] = 8.33%.
8–5 a. The terminal, or horizon, date is the date when the growth rate becomes constant. This occurs
at the end of Year 2.
b. 0 1 2 3 | | | | 1.25 1.50 1.80 1.89
37.80 = [pic]
The horizon, or terminal, value is

Chapter 8 Finance
CHAPTER 8
STOCKS AND THEIR VALUATION (Difficulty: E = Easy, M = Medium, and T = Tough)
Multiple Choice: Conceptual
Easy:
Required return Answer: e Diff: E
[i]. An increase in a firm's expected growth rate would normally cause the firm's required rate of
return to
a. Increase. b. Decrease. c. Fluctuate. d. Remain constant. e. Possibly increase, possibly decrease, or
possibly remain unchanged.
Required return Answer: d Diff: E
[ii]. If the expected rate of return on a stock exceeds the required rate,
a. The stock is experiencing supernormal growth. b. The stock should be sold. c. The company is
probably not trying to maximize price per share. d. ... Show more content on Helpwriting.net ...
Stock X's dividend is expected to grow at a constant rate of 6 percent a year, while Stock Y's
dividend is expected to grow at a constant rate of 4 percent. Assume that the market is in
equilibrium and expected returns equal required returns. Which of the following statements is most
correct?
a. Stock X has a higher dividend yield than Stock Y. b. Stock Y has a higher dividend yield than
Stock X. c. One year from now, Stock X's price is expected to be higher than Stock Y's price. d.
Statements a and c are correct. e. Statements b and c are correct.
Constant growth stock Answer: e Diff: E N
[ix]. Stock X is expected to pay a dividend of $3.00 at the end of the year (that is, D1 = $3.00). The
dividend is expected to grow at a constant rate of 6 percent a year. The stock currently trades at a
price of $50 a share. Assume that the stock is in equilibrium, that is, the stock's price equals its
intrinsic value. Which of the following statements is most correct?

a. The required return on the stock is 12 percent. b. The stock's expected price 10 years from now is
$89.54. c. The stock's dividend yield is 6 percent. d. Statements a and b are correct. e. All of the
statements above are correct.
Constant growth model Answer: e Diff: E
[x]. Stock X has a required return of 12 percent, a dividend yield of 5 percent, and its dividend will
grow at a constant rate

ProblemSet10 solutions v1
Econ 136: Financial Economics Problem Set #10 Due Date: April 30, 2014 1. In the spreadsheet
Markowitz–01.xlsx some of the entries in the long/short and longonly portfolio data sections are
missing (the missing data locations are highlighted in yellow). Use the Solver to calculate the
following to replace this data: (a) The mean excess return, standard deviation, and portfolio weights
for the minimum variance portfolio. (b) The mean excess return, standard deviation, and portfolio
weights for the optimum (maximum Sharpe ratio) portfolio. (c) The mean excess return, standard
deviation, and portfolio weights for the portfolio with an expected excess return of 0.073. Note:
Your results will differ slightly from those in the book because their ... Show more content on
Helpwriting.net ...
Since this asset is the market it has a β of 1.0. With this: The value according to the Gordon growth
model is D0 (1 + g) V0 = . (20) (E(rIndex ) − g) We are given the growth rate, but need to calculate
the dividend amount and the cost of capital. The problem gives us the dividend as a dividend yield.
To convert this into a dividend amount: D0 = (dividend yield) × (value of the index) = 0.0615 ×
$865 = $53.20 . (21) For the cost of equity we use the CAPM: E(rIndex ) = rf + β [E(rm ) − rf ] =
1.6% + 1.0 × 4.83% = 6.43% , (22) market risk premium and the value of the index follows as
$53.20 (1.0335) D0 (1 + g) = = $1785.14 . V0 = (E(rIndex ) − g) (0.0643 − 0.0335) (23) 5.
EverGrow corporation has a beta of 1.10 just paid a dividend of $1.35. The risk–free rate is 1.50%
and the expected market return is 7.50%. Your growth analysts have concluded that the growth rate
earnings per share and dividends will be 7% per year for the next three years and 3% per year
thereafter. Calculate the value of EverGrow using the 2–stage dividend discount model. The 2–stage
dividend discount model for this problem can be written 3 V0 = t=1 Dt V3 . t + (1 + r) (1 + r)3 (24)
3 Since we are not given the cost of equity capital r, but are given the needed data for a CAPM
calculation, we proceed using the CAPM: r = rf + β [E(rm ) − rf ] = 1.50% + 1.1 (7.50% − 1.50%) =
8.1% . (25) The estimated future dividends are D1 = $1.35 ×

Fi 515 Week6 Exam Essay
Top of Form
Grading Summary
These are the automatically computed results of your exam. Grades for essay questions, and
comments from your instructor, are in the "Details" section below.
Date Taken:
10/13/2013
Time Spent:
2 h , 49 min , 52 secs
Points Received:
52 / 100 (52%)
Question Type:
# Of Questions:
# Correct:
Multiple Choice
9
5
Essay
1
N/A
Grade Details – All Questions
1.
Question :
(TCO D) A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and
the constant growth rate is g = 4.0%. What is the current stock price?
Student Answer:
$23.11
$23.70

$24.31
$24.93
$25.57 Instructor Explanation:
Chapter 7
D0 ... Show more content on Helpwriting.net ...
Student Answer:
12.60%
13.10%
13.63%
14.17%
14.74% Instructor Explanation:
Chapter 9
Bond yield 8.75%
Risk premium 3.85% rs = rd + Risk premium 12.60%
Points Received:
10 of 10 Comments:
7.
Question :
(TCO F) Cornell Enterprises is considering a project that has the following cash flow and WACC
data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case
it will be rejected. WACC: 10.00%
Year 0 1 2 3 –––––––––––––––––––––––––––––––––––––––––––––––
Cash flows –$1,050 $450 $460 $470
Student Answer:
$ 92.37
$ 96.99
$101.84
$106.93
$112.28 Instructor Explanation:
Chapter 10
WACC: 10.00%

Year 0 1 2 3
Cash flows –$1,050 $450 $460 $470 NPV = $92.37
Points Received:
10 of 10 Comments:
8.
Question :
(TCO F) Simkins Renovations Inc. is considering a project that has the following cash flow data.
What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative),
in which case it will be rejected.

Option and Dividend Yield
Chapter 15
Quiz
15.1) A portfolio is currently worth $10 million and has a beta of 1.0. An index is currently standing
at 800. Explain how a put option with a strike price of 700 can be used to provide portfolio
insurance.
Index goes down to 700
10*(800/700)= 8.75 million
Buying put options= 10,000,000/800= 12,500
If you buy the options at 800, the value will be 12,500 times the index with a strike price of 700
therefore providing protection against a drop in the value of the portfolio below $8.75 million. Each
contract is on 100 times the index, a total of 125 contracts would be required.
15.2) "Once we know how to value options on a stock paying a dividend yield, we know how to
value options on stock indices and currencies." ... Show more content on Helpwriting.net ...
The risk free rates of interest in Canada and the United States are 4% and 5% per annum,
respectively,. Calculate the value of a European call option to buy one Canadian dollar for US $.85
in nine months. Use put–call parity to calculate the price of a European put option to sell one
Canadian dollar for US d$.85 in nine months. What is the price of a call option to buy US $ .85 with
one Canadian dollar in nine months?
S_0= .85
K=.85
r=.05 r_f= .04 σ=.08 T= .75 d_1= ln(.85/.85)+(.05–.04+.0064/2)*75 / .04√.75= 0.285788
d_2=d_1–.04√.75= 0.251147
N(d1)= 0.61248
N(d2)= 0.59915 Value of the call c
c=.85e^–.04*.75 * 0.61248 – .85e^–.05*.75 * 0.5789 = .031267
The value of the call is 3.12 cents
Put call parity p+S_0e^ –rf*T = c+Ke^–r*T
p=.031267 + .85e^–.05*.75 – .85e^–.04*.75 = .08826
The put option on the Canadian Dollar and its price is $.08826

Walmart Dividend Payout Ratio Analysis
Trident University
Beverley Lionel
Module 4 SLP Capital Structure and Dividends
FIN 501: Strategic Corporate Finance
Dr. Edward Kaplan
4 June 2017
Introduction
Dividend payout defines the amount of dividend which is paid to shareholder in relation to the total
net income of the business organization. We will take a look upon the dividend payout ratio of
Walmart. According to accounting course.com "Investors are particularly interested in the dividend
payout ratio because they want to know if companies are paying out a reasonable portion of net
income to investors. For instance, most startup companies and tech companies rarely give dividends
at all". This paper analyzes Walmart Dividend payout, dividend yield, and dividend per share for the
past three years; it will also discuss their performance in reference to other industries
Purpose of the report
The purpose of making the report is to analyze the dividend policies of Walmart and other
competitor entities in the industry. We took Amazon as the competitor to Walmart. Walmart.com
stated that "Walmart first offered common stock to the public in 1970 and began trading on the New
York Stock Exchange (NYSE: WMT) on August 25, 1972. We have provided an annual cash
dividend, paid quarterly, to shareholders since first declaring a dividend in 1974".
The dividend payout, dividend yield, and dividend per share for past 3 years of Walmart were as
follows: Dividend payout Dividend yield Dividend per share
2017

Notes On Bonds Valuation And Bond Rates
Bonds Valuation
Bond
Company/
Rating
Face Value (FV)
Coupon Rate
Annual Payment (PMT)
Time–to Maturity (NPER)
Yield–to–Maturity (RATE)
Market Value (Quote)
Discount, Premium, Par
A–Rated
General Electric Capital/AA
$1,000
4.00%
$ 40.00
15
3.897%
$1,011.70
Premium
B–Rated
Hercules Inc./BB
$1,000
6.50%
$ 65.00
15
5.944%
$1,055.00
Premium
C–Rated
Albersons Inc./CCC
$1,000
8.00%

$ 80.00
17
8.053%
$ 995.00
Discount
Explain the relationship observed between ratings and yield to maturity. So By looking at Coupon
Rate & YTM, one can predict of Bond is traded at Par, Discount or Premium
Explain why the coupon rate and the yield to maturity determine why the bonds would trade at a
discount, premium, or par. It's necessary to determine the yield to maturity and coupon rate because
the the discount rate for a coupon bond is its yield to maturity, which equates the present value of
the future cash flows of bond relative to its price. Generally, a bond trade at a discount because its
coupon rate comparatively lesser than as compared to it yield to maturity. It trade at a premium
because its coupon rate increases its yield to maturity. A bond trade at par because coupon rate
equals its yield to maturity (J. Van Horne &, John M Wachowicz, 2008).
Based on the material you learn in this Phase, what would you expect to happen to the yield to
maturity and market value of the bonds if the time to maturity was increased or decreased by 5
years? If Time to maturity increases by 5 Yrs,

The Fedex Stock 's Price
FedEx has produced superior financial returns to its shareholder in last couple of year. It has a
worldwide business with a broad portfolio of transportation, e–commerce and business services. It
consistently ranked among world's most trusted and admired employers. The revenue has been
consistently increasing and expected to reach at 45 billion in next year. EPS is also about 5.5 and the
expected P/E ratio is 14.3 which show its growth potential. With the stock's beta of 1.27 and latest
dividend payout ratio of 9%, it can be expected that it will give a superior result in near future and
thus it is one of the best alternatives for investment.
The FedEx stock's price range in last year was 101.95 – 155.31. Currently its stock's price is
$152.68.
The latest dividend was declared on Jun'17, 2014 and it was $0.20 per share. Its annual dividend
yield is 0.40%. On Jun'9, 2014, The Board of Director of FedEx declared the quarterly cash
dividend of $0.20 per share which was $0.5 higher than the previous quarter's dividend. Dividend
was payable on Jul'13, 2014.
Corporate Governance is a set of rule and processes by which a company is directed and controlled.
FedEx is committed to highest quality of corporate governance. It has independent board of
directors having spirit of corporate governance reform. Compliance standards are met in accordance
of Sarbanes–Oxley Act of 2002 and the New York Stock Exchange's corporate governance listing
standards. Code of Business conduct and

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