Reference no: EM133678353

Assignment

Start with the partial model in the file attached. Marvel Pence, CEO of Marvel's Renovations, a custom building and repair company, is preparing documentation for a line of credit request from his commercial banker. Among the required documents is a detailed sales forecast for parts of 2020 and 2021:

Estimates obtained from the credit and collection department are as follows: collections within the month of sale, 20%; collections during the month following the sale, 60%; collections the second month following the sale, 25%. Payments for labor and raw materials are typically made during the month following the one in which these costs were incurred. Total costs for labor and raw materials are estimated for each month as shown in the table. General and administrative salaries will amount to approximately $25,000 a month; lease payments under long-term lease contracts will be $7,000 a month; depreciation charges will be $8,000 a month; miscellaneous expenses will be $5,000 a month; income tax payments of $30,000 will be due in both September and December; and a progress payment of $95,000 on a new office suite must be paid in October. Cash on hand on July 1 will amount to $70,000, and a minimum cash balance of $30,000 will be maintained throughout the cash budget period.

I. Prepare a monthly cash budget for the last 6 months of 2020.

II. Prepare an estimate of the required financing (or excess funds)-that is, the amount of money Marvel's Renovations will need to borrow (or will have available to invest)-for each month during that period.

III. Would the cash budget be accurate if inflows came in all during the month, but outflows were bunched early in the month?

IV. If its customers began to pay late, this would slow down collections and thus increase the required loan amount. Also, if sales dropped off, this would have an effect on the required loan. Do a sensitivity analysis that shows the effects of these two factors on the max loan requirement. Assume the purchases of labor and raw material also vary by the sales adjustment factor.

Research Paper- List of potential research topics

To complete the Article Research Paper, Select a topic from the list provided below or from the chapter readings.

1) FinancialMarkets
2) Capital AllocationProcess
3) Debt, Equity andDerivative
4) Securitization
5) Mortgage-backedsecurities
6) Federal ReservePolicy
7) InvestmentFund
8) Regulation of FinancialInstitution
9) U.S. StockMarket
10) Financial Statements &Reports
11) WorkingCapital
12) Sarbanes-Oxley and FinancialFraud
13) PerformanceEvaluation
14) Return on investedcapital
15) The Federal Income TaxSystem
16) Corporate CapitalGains
17) Financial Analysis & FinancialRatios
18) Common Size Analysis & TrendAnalysis
19) Comparative Ratios &Benchmarking
20) Time Value ofMoney
21) Perpetuities &Annuities
22) What loans reallycost
23) The Great Recession of2007
24) BondsMarket
25) Credit DefaultSwaps
26) SinkingFunds
27) Determinants of Market interestrates
28) BondRatings
29) The term structure of interestrates
30) Bankruptcy &Reorganization
31) Financing with JunkBonds
32) Investment Returns &Risk
33) What does investment riskmean?
34) Risk in a portfoliocontext
35) Diversification and Multi-StockPortfolios
36) Capital Asset PrincipalModel
37) Bernie MadoffStory

38) The Efficient MarketsHypothesis
39) The Fama-French Three-FactorModel
40) Corporate Valuation and StockPrices
41) Do stock values affect long term or short term cashflows?
42) Why are stock prices sovolatile?
43) Financialoptions
44) Employee StockOptions
45) The Black-Scholes Option Price Model(OPM)
46) Taxes and StockOptions
47) The Weight Average Cost ofCapital
48) Corporate Valuation and the Cost ofCapital
49) Global Variation in the cost ofcapital
50) Managerial Issues and the Cost of Capital
51) CapitalBudgeting
52) Capital Rationing
53) Risk Analysis in Capitalbudgeting
54) RiskAnalysis
55) ProjectValuation
56) The cash flow effect of asset purchases and Depreciation
57) Externalities
58) TaxDepreciation
59) FinancialPlanning
60) Implementing the Target CapitalStructure
61) Economies ofScale
62) Conflicts between stockholders &Creditors
63) Conflicts between managers &shareholders
64) Monitoring and Discipline by the Board ofDirectors
65) Charter provisions and by laws that effect the likelihood of hostiletakeovers
66) Using compensation to align managerial and shareholderinterests
67) Capital Structure and Internal Controlsystems
68) Environmental Factors outside a firm'scontrol
69) StockRepurchase
70) Tax EffectTheory
71) Dividend IrrelevanceTheory
72) Empirical Evidence on Distribution Policies
73) The impact of Distribution on Intrinsic Value
74) The pros and cons of dividends andrepurchases
75) Capitalstructure
76) Business risk and financialrisk
77) Capital structuretheory
78) Using the Black-Sholes Option Pricing Model to valueequity
79) Managing the maturity structure ofDebt
80) Supply ChainManagement
81) Credit Policy
82) The cost of tradecredit
83) Revolving creditagreement
84) Multinational versus domestic FinancialManagement
85) Exchange rates
86) Exchange rates & internationaltrade
87) The international monetary system and exchange ratepolicies
88) Purchasing powerparity
89) International Money and CapitalMarkets