Fnt task 1 and 2

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Published on March 5, 2014

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FNT Task-1 and task-2

FNT Task 1 Introduction: Company G operates a small chain of wholly owned home centers selling to consumers and contractors. Sales volume varies among the individual stores and ranges between $11 million and $20 million per year. The company is organized as a corporation and does not operate as a sub-chapter S corporation. Given: Consolidated financial statements for Company G are shown on the attached “Statement Analysis Template.” • Sales volume shown is net sales. • During Year 12 60% of net sales were on a credit basis. • Inventory is stated at cost on a first-in, first-out basis. • Depreciation expense totaled $1,875,000 for Year 12 and $1,644,000 for Year 11. • Depreciation expense is not shown as a separate item on the income statements but is included in store operating expense and general and administrative expense. • Depreciable assets are depreciated using the straight-line method over the estimated useful life of the assets. ??The market value for the company common stock at the end of Year 11 was $3.50/share and at the end of Year 12 it was $5.75/share. For this task, you will use financial statements and pertinent industry data to interpret Company G’s financial condition. The required ratios have been calculated for Year 11 and are shown on the attached “Statement Analysis Template.” Ratios gathered from financial statements that were submitted to banks and other financing institutions by a large number of home centers are also included on the template. The industry ratios included on the template were generated from statements submitted by stores with annual sales between $10 million and $24 million. As you develop your response, you should consider Company G trends by comparing Year 12 ratios to the same ratios for Year 11, consider what is depicted by the horizontal analysis, and benchmark Company G’s performance and condition by comparing Year 12 ratios with the same ratios for the home center industry. Task: A. Calculate each of the thirteen indicated ratios for Year 11 indicated in the attached “Statement Analysis Template.” Complete the attached spreadsheet with this information. B. Complete a horizontal analysis of the income statements using the attached spreadsheet with this information. Note: Round the percentages to the nearest hundredth of a percent, i.e. 6.84%. Answers like 6.80% or rounded up to 7% are not acceptable. C. Complete a horizontal analysis of the balance sheets using the attached spreadsheet

with this information. Get Answer From: https://studyacer.com/solution/fnt1-task-1-introduction-company-goperates-a-small-chain-of-wholly-owned-home-centers-selling-to-consumers-and-contractors-salesvolume-varies-among-the-individual-stores-and-ranges-between-11-million-and-20-million-per-21735 FNT Task-2 Demonstrate the appropriate use of specified software application in a given situation.It is imperative that you enter your first initial and last name in the fields designated on the template. Your work and results will be based on an individualized dataset that will auto load in the template when you enter your first initial and last name. Introduction: Entrepreneur D supplements income from a professional practice by investing in start up and other business opportunities that meet specific investment criteria. Entrepreneur D operates all of these extra business activities as a single limited liability company and utilizes discounted cash flow analysis as a primary tool for evaluating each potential investment. There is an opportunity to purchase the patent for a newly invented gardening tool that Entrepreneur D would manufacture and sell on a wholesale basis. Entrepreneur D has asked you to prepare an analysis of this investment opportunity and make a recommendation regarding the course of action to take. Given: Entrepreneur D plans to retire from professional practice and cease all business activities nine years from now. The plan for the garden tool is to produce and sell it for eight years and then sell the patent and production rights to a national company. Entrepreneur D has negotiated a tentative lease on a building that is well suited for this manufacturing process. The building must be remodeled to meet manufacturing needs, and then it must be restored to its original configuration at the end of the eight year lease. At that time Entrepreneur D will be able to sell some of the non specialized equipment (e.g., forklifts) for small salvage values. • Building remodeling and new equipment purchases will require a front end investment.

The remodeling and equipment costs will be capitalized and depreciated over the eight year period as one depreciation calculation using straight line depreciation. Realizable salvage value from disposing of the equipment at the end of eight years is estimated at approximately $60, 000. There is no salvage value for the remodeling improvements. The remodeling cost is given on the template in your individualized dataset. • Additional working capital will be required for business operations. The working capital required is given on t he template in your individualized dataset. • Estimated annual cash receipts from tool sales are forecasted for the eight years of expected operations. The expected cash receipts are given on the template in your individualized dataset. • Estimated cash expenses for materials, salaries, supplies, utilities, and other cash expenses are projected for each of the eight years of expected operations. The expected cash expenses are given on the template in your individualized dataset. • The lease on the building requires that it be restored to its original configuration at the end of the expected eight years of operation. The estimated restoration cost s number is given on the template in your individualized dataset. • The working capita l tied up in this project will become available for other types of investments at the end of the eight year period. Entrepreneur D has asked you to assume a 12% applicable weighted average cost of capital. Entrepreneur D has also asked you to assume a combined federal and state income tax rate. The tax rate is given on the template in your indvidualized dataset. Task: A. Complete the attached “Capital Budgeting Template” by doing the following: 1. Calculate the net cash flow that should be used for each year in the discounted cash flow analysis. 2. Calculate the net present value (NPV) of this project using a discount rate equal to

the company’s weighted average cost of capital. Round all doll ar amounts to the nearest whole dollar. 3. Calculate the expected yield on the project using the discounted cash flow internal rate of return (IRR) method. Round all dollar amounts to the nearest whole dollar. 4. Calculate the accounting rate of return for this project. 5. Calculate the unadjusted payback period . State your answers in years and months. B. 1. Identify what the correct net cash flow for the second year would be if all cash expenses were as described in the scenario but there were no depreciation expense. a. Explain the impact of depreciation on net cash flow for the second year. 2. Based upon your NPV analysis in part A2, make a recommendation to Entrepreneur D regarding what decision to make. a. Explain why this is an appropriate action. 3. Based upon your IRR analysis in part A3, make a recommendation to Entrepreneur D regarding what decision to make. a. Explain why this is an appropriate action. 4. Explain why the accounting rate of return on this project is different fro m the internal rate of return for the same capital investment. 5. Explain the relative significance of the unadjusted payback period in this decision situation. 6. Explain how the weighted average cost of capital should be used in capital budgeting analysis when utilizing the NPV method. 7. Explain how the weighted average cost of capital should be used in capital budgeting analysis when utilizing the IRR method.

Get Answer From: https://studyacer.com/solution/fnt1-task-2-subdomain-3191-accountingfinance-subdomain-3192-information-technology-competency-31913-capital-budgeting-analysis-thegraduate-correctly-applies-time-value-of-money-techniques-and-techniques-that-21734 Want More Tutorials? Explore: http://homework.ecrater.com/

Get Answer From: https://studyacer.com/solution/fnt1-task-2-subdomain-3191-accountingfinance-subdomain-3192-information-technology-competency-31913-capital-budgeting-analysis-thegraduate-correctly-applies-time-value-of-money-techniques-and-techniques-that-21734 Want More Tutorials? Explore: http://homework.ecrater.com/

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