Reference no: EM131790600
1. The balance sheet of the Thompson Crown Company (TCC) follows:
Thompson Crown Company Balance Sheet, December 31, 2015 ($ millions)
Current Assets
$10
Net Fixed Assets
15
Total
$25
Accounts payable
$5
Notes payable
0
Bonds payable
10
Common equity
10
Total
$25
TCC had sales for the year ended 12/31/15 of $50 million. The firm follows a policy of paying all net earnings out to its common stockholders in cash dividends. Thus, TCC generates no funds from its earnings that can be used to expand its operations. (Assume that depreciation expense is just equal to the cost of replacing worn-out assets.)
- If TCC anticipates sales of $80 million during the coming year, develop a pro forma balance sheet for the firm for 12/31/16. Assume that current assets vary as a percent of sales, net fixed assets remain unchanged, and accounts payable vary as a percent of sales. Use notes payable as a balancing entry.
- How much "new" financing will TCC need next year?
- What limitations does the percent-of-sales forecast method suffer from? Discuss briefly.
2. (Identifying spontaneous, temporary, and permanent sources of financing) classify each of the following sources of new financing as spontaneous, temporary, or permanent (explain):
- A manufacturing firm enters into a loan agreement with its bank that calls for annual principal and interest payments spread over the next four years.
- A retail firm orders new items of inventory that are charged to the firm's trade credit.
- A Crown firm issues common stock to the public and uses the proceeds to upgrade its tractor fleet.
BOOK REFERENCE: Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., & Salvi, A. (2014). Corporate finance: Theory and practice, (4th ed). Chichester, West Sussex UK: John Wiley & Sons APA 6TH EDITION
|
Component in the capital structure
: Determine the weights of each component in the capital structure: Use the amount of retained earnings (5,150,000) provided. The % composition
|
|
List all of the binomial conditions that are not met
: Why is the binomial model inappropriate for finding the probability that exactly 8 out of the 30 people in the sample will open joint bank accounts.
|
|
How many workers would the firm hire
: Suppose that a firm's production function is given by q = 20E0.50.The marginal product of labor is 10/E0.50. The market wage for whites is $15.
|
|
Calculate the equipment net book value at december
: first year of the equipments life and calculate the equipment net book value at December 31st after the third year of the equipments life
|
|
Balance sheet of the thompson crown company
: 1. The balance sheet of the Thompson Crown Company (TCC) follows: Thompson Crown Company Balance Sheet, December 31, 2015 ($ millions)
|
|
What equity in investee income should hager report
: At the end of 2010, Hager continued to hold merchandise with a transfer price of $40,000. What Equity in Investee Income should Hager report for 2010
|
|
What is the projects required rate of return
: firms managers have assigned an adjustment factor of 1.5% to the project, what is the projects required rate of return if the market rate is 10.8%
|
|
What is the probability that 14 of them can read english
: When asked for the probability, state the answer in the form b(n, p, x). There is no need to give the numerical value of the probability.
|
|
What are migration costs from moving to puerto rico to us
: The present value of working in Puerto Rico is PVPR = (1 + r)WPR/r, and the present value of working in the U.S. is PVUS= (1 + r)WUS/r.
|