Managerial Finance Problem Set #1

 Question 1‘Jenny Cochran, a graduate of The University of Tennessee with 4 years of experience as an equities analyst, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components.During the previous year, Computron had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Cochran was assigned to evaluate the impact of the changes. She began by gathering financial statements and other data. (Data Attached)

  1. What effect did the expansion have on sales and net income? What effect did the expansion have on the asset side of the balance sheet?  What do you conclude from the statement of cash flows?
  2. What is Computron’s net operating profit after taxes (NOPAT)? What are operating current assets? What are operating current liabilities? How much net operating working capital and total net operating capital does Computron have?
  3. What is Computron’s free cash flow (FCF)? What are Computron’s “net uses” of its FCF?
  4. Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?
  5. What is Computron’s EVA?  The cost of capital was 10% in both years.
  6. Assume that a corporation has $200,000 of taxable income from operations. What is the company’s federal tax liability?
  7. Assume that you are in the 25% marginal tax bracket and that you have $50,000 to invest. You have narrowed your investment choices down to municipal bonds yielding 7% or equally risky corporate bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indifferent?

Question 2James Madison was brought in as assistant to Computron’s chairman, who had the task of getting the company back into a sound financial position.  Madison must prepare an analysis of where the company is now, what it must do to regain its financial health, and what actions to take. Your assignment is to help her answer the following questions, using the recent and projected financial information shown next. Provide clear explanations, not yes or no answers.

Don't use plagiarized sources. Get Your Custom Essay on
Managerial Finance Problem Set #1
Just from $13/Page
Order Essay
  1. Why are ratios useful? What three groups use ratio analysis and for what reasons?
  2. Calculate the profit margin, operating profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE).  What can you say about these ratios?
  3. Calculate the inventory turnover, days sales outstanding (DSO), fixed assets turnover, operating capital requirement, and total assets turnover.  How does Computron’s utilization of assets stack up against other firms in its industry?
  4. Calculate the current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position and its trend?
  5. Calculate the debt ratio, liabilities-to-assets ratio, times-interest-earned, and EBITDA coverage ratios.  How does Computron compare with the industry with respect to financial leverage?  What can you conclude from these ratios?
  6. Calculate the price/earnings ratio and market/book ratio.  Do these ratios indicate that investors are expected to have a high or low opinion of the company?
  7. Use the extended DuPont equation to provide a summary and overview of Computron’s projected financial condition.  What are the firm’s major strengths and weaknesses?
  8. What are some potential problems and limitations of financial ratio analysis?
  9. What are some qualitative factors analysts should consider when evaluating a company’s likely future financial performance?

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Writall
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Philosophy
The essay was very well formatted and the writer really made it detailed and concise. Followed prompt and had good evidence
Customer 454933, October 5th, 2021
Communications
I got an A. Thanks because I can rely on this excellent work.
Customer 453877, February 17th, 2021
Criminal Justice
Absolutely LOVE having help especially from the person who wrote this last one. THANK YOU
Customer 454561, February 16th, 2021
Nursing
Thank you!
Customer 454959, February 4th, 2022
Business Studies
Hello Can I please get a copy of a plagiarism report? Thanks, Dan
Customer 454899, September 30th, 2021
Accounting
Thanks so much! The writer did an excellent job!
Customer 454503, June 21st, 2020
Education
Thank you!
Customer 455113, March 21st, 2022
Social Work and Human Services
I love how the writer pays attention to detail, this is allowing me great opportunity to learn even more from his writing styles!!
Customer 453933, October 1st, 2020
Business Studies
unbelievable!!
Customer 454811, January 29th, 2022
Psychology
Awesome Job... you are the best!
Customer 454497, February 18th, 2021
Nursing
Job well done!
Customer 455293, April 15th, 2022
Nursing
Thank you!
Customer 454959, February 6th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Live Chat+1(978) 822-0999EmailWhatsApp