Financial management
Question 1
Suppose you calculate the intrinsic value for a stock to be $150/share. The stock price is currently $180/share. Should you recommend buying or selling this stock? Explain.
Question 2
Approximately how many different shareholders own:
· GE?
· IBM?
Please identify all sources of information that you consulted.
Question 3
What is the current price per share for Berkshire Hathaway (Class A) stock? Identify the date of the closing stock price. Also state your source(s) of information.
Question 4
Based upon the results to Question 2 above, explain why the principals are probably at a disadvantage to the agents.
Question 1
You are investigating the stock performance of Johnson & Johnson. For the calendar year, 2013, determine each of the following.
· Capital gain return
· Dividend yield return
· Actual total return
Show all work. Identify all your sources of information.
Question 2
Update the annual interest rate for each of the following money market instruments for September, 2014. Identify the specific date in September, 2014 you are using. Also identify all your sources of information.
· 3 month (91 day) U.S. Treasury bill
· 180 day commercial paper
· 180 day bankers' acceptances
· 180 day NCDs (negotiable certificates of deposit)
Question
Which company's stock would probably trade in a more efficient stock market? Explain.
A medium capitalization company stock in a Western European stock market, OR
A large capitalization company stock in a central African nation's stock market
Question
Based upon your results to Question 3 above, discuss the possible implications on investing strategy.
Question 1
In the "current liabilities" section of a corporation's balance sheet, most items included are considered "operating" items. Why is "notes payable" (or "short term debt"), not considered an operating item? Discuss.
Question 2
Suppose that during the year 2014, a corporation reports a substantial net cash inflow. Discuss why such cash inflow may NOT necessarily be favorable.
For the following questions, please refer to the financial statements for DuPont Corporation.
Question 3
For 2013, calculate DuPont's "net working capital." Show all calculations.
Question 4
For 2013, calculate DuPont's "net operating working capital." Show all calculations.
Question 5
For 2013, calculate DuPont's "total common equity." Show all calculations.
Question 6
For 2013, calculate DuPont's "free cash flow" (FCF). Tax rate = 18%. Capital expenditures = $1,800 million. Depreciation & amortization = $1,603 million. Show all work.
Question 7
Interpret your results from Question 6.
Question 1
For both 2012 and 2013, calculate each of the following ratios for DuPont. Show the equations and calculations.
A. Current ratio
B. Quick (or "acid-test") ratio
C. Days sales outstanding (DSO)
D. Total debt to total assets ratio
E. Times interest earned
Question 2
Identify the 1-year trend for each of the ratios in Question 1. Favorable or not?
Question 3
For both 2012 and 2013, calculate the "rate of return on common equity." Kindly note that $10.0 million of preferred dividends was declared in each of the years 2012 and 2013. Again, show the equations and calculations.
Question 4
For both 2012 and 2013, breakdown the rate of return on common equity into these 3 components (the DuPont formula!). Show all equations and calculations.
· Profit margin (or return on sales)
· Total asset turnover
· Equity (or leverage) multiplier
Question 5
Using your results from Questions 3 & 4, identify the 1-year trends. Discuss why rate of return on common equity is changing.