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The Pharma Biotech Corporation spent several years working on developing a DHA product that can be used to provide a fatty-acid supplement to a variety of food products. DHA stands for docosahexaenoic acid, an omega-3 fatty acid found naturally in cold water fish. The benefits of fatty fish oil have been cited in studies of the brain, the eyes, and the immune system. Unfortunately, it is difficult to consume enough fish to get the benefits of DHA, and most individuals might be concerned about the taste consequences associated with adding fatty fish oil to eggs, ice cream, or chocolate candy. To counter these constraints, Pharma Biotech and several competitors have been able to grow algae and other plants that are rich in DHA. The resulting chemical compounds then are used to enhance a variety of food products.
Part APharma Biotech is interested in developing an initial "big picture" of the size of financing that might be needed to support its rapid growth objectives for 2011 and 2012.A. Calculate the following financial ratios for Pharma Biotech for 2010: (a) Net profit margin, (b) Sales-to-total-assets ratio,(c) Equity multiplier, and (d) Total-debt-to-total-assets. Apply the return on assets and return on equity models. Discuss your observations.B. Estimate Pharma's sustainable sales growth rate based on its 2010 financial statements. What financial policy change might Pharma Biotech make to improve its sustainable growth rate? Show your calculations.C. Estimate the additional funds needed (AFN) for 2011, using the formula or equation method presented in the chapter.D. Also, estimate the AFN using the equation method for Pharma Biotech for 2012. What will be the cumulative AFN for the twoyear period?Part BPharma Biotech is seeking your assistance in preparing its projected financial statements using the percent-of-sales method. Initial projected financial statements can be prepared by hand using a financial calculator or by constructing spreadsheet-based solutions.A. Prepare a projected income statement for 2011 for Pharma Biotech before obtaining any additional financing. B. Prepare a projected balance sheet for 2011 for Pharma Biotech before obtaining any additional financing. C. Based on your projected balance sheet for Pharma Biotech for 2011, what is your estimate of the additional funds needed? Why does the AFN from your initial percent-of-sales projected financial statements differ from the AFN estimated using the formula method in Item C above?D. Prepare a projected statement of cash flows for Pharma Biotech for 2011. Part CThe following tasks or challenges are best handled by setting up spreadsheet-based methods projecting financial statements.A. Prepare projected income statements, balance sheets, and statements of cash flows for Pharma Biotech for 2012 that build upon the projections for 2011 prepared in Part B above. What is the cumulative (2011 and 2012) amount of additional funds needed?B. Calculate the total-debt-to-total assets ratio and the equity multiplier ratio assuming the cumulative AFN is financed with debt funds. How would these ratios compare with the same ratios calculated for 2010 in Item Aabove?
The Shrieves Corporation has $10,000 that it plans to invest in marketable securities. It is selecting among AT&T Bonds, which yield 7.5 percent, state of Florida muni bonds, which yield 5 percent,
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Determine the payment in a swap of floating-for fixed-rate interest payment. The notional is $20 million. The fixed-rate payer pays 11%. The floating-rate payer pays LIBOR, which is 9.5%. The settlement will be made after 90 days.
Write a paper about "Leaders Who Demonstrate My Strengths".
sid auto a national auto parts chain is considering purchasing a smaller chain south georgia parts sgp. sidrsquos
Obtain the copies of Annual Financial Reports for financial year ending on Dec. 31st of 2011, 2012 and 2013 for the three information technology (IT) firms listed on S&P 500 - Intel Corp. (deals in semiconductors), Google Inc. (deals in internet soft..
Is is typical for Jane to plan, monitor, an assess her financial position using cash flows over a given period, typically a month. Jane has a savings account, and her bank loans money at 6 percent per year while it offers short-term investment ..
The purpose of this assignment is to enhance learners' analytical skills in evaluating firms' Return on Equity using Expanded DuPont Analysis and performance.
Taussig Technologies Company has been increasing at a rate of 20 percent per year in recent years. This same supernormal growth rate is expected to last for another 2 years.
The financial statements of Eagle Sport Supply are given below. For simplicity, Costs include interest. Suppose that Eagle's assets are proportional it its sales.
Discuss the advantages and disadvantages of the following types of term loans: a. Those that require equal periodic payments b. Those that require equal periodic reductions in outstanding principal c. Balloon loans d. Bullet loans
A company is planning the replacement of an asset bought three years ago at a cost of $100,000. Under MACRS, the asset was in five year recovery period class.
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