Monday, December 26, 2016

FIN 580 Personal Financial Planning Week 1 Problem Set Answer – Homeworkmade


FIN 580 Week 1 Problem Set Answer
Week 1 Problem Set
Answer the following questions and solve the following problems in the space provided. When you are done, save the file in the format flastname_Week_1_Problem_Set.docx, where flastname is your first initial and you last name, and submit it to the appropriate dropbox.
Chapter 1 (page 19)
1. What is the most important difference between a corporation and all other organizational forms?
2. What does the phrase limited liability mean in a corporate context?
3. Which organizational forms give their owners limited liability?
4. What are the main advantages and disadvantages of organizing a firm as a corporation?
5. Explain the difference between an S corporation and a C corporation.
Chapter 2
TABLE 2.5 2009–2013 Financial Statement Data and Stock Price Data for Mydeco Corp.
29.
In fiscal year 2011, Starbucks Corporation (SBUX) had revenue of $11.70 billion, gross profit of $6.75 billion, and net income of $1.25 billion. Peet’s Coffee and Tea (PEET) had revenue of $372 million, gross profit of $72.7 million, and net income of $17.8 million.
• a. Compare the gross margins for Starbucks and Peet’s.
• b. Compare the net profit margins for Starbucks and Peet’s.
• c. Which firm was more profitable in 2011?

Information is given that:
Starbucks Corporation (SBUX)
Peet’s Coffee and Tea (PEET)
Revenue            
$11,700,000,000
Revenue
$372,000,000
Gross profit
$6,750,000,000
Gross profit
$72,700,000
Net Income
$1,250,000,000
Net Income
$17,800,000
31.
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
• a. How did Mydeco’s accounts receivable days change over this period?
• b. How did Mydeco’s inventory days change over this period?
• c. Based on your analysis, has Mydeco improved its management of its working capital during this time period?
32.
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.
• a. Compare Mydeco’s accounts payable days in 2009 and 2013.
• b. Did this change in accounts payable days improve or worsen Mydeco’s cash position in 2013?
33.
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp.

• a. By how much did Mydeco increase its debt from 2009 to 2013?
• b. What was Mydeco’s EBITDA/Interest coverage ratio in 2009 and 2013? Did its coverage ratio ever fall below 2?
• c. Overall, did Mydeco’s ability to meet its interest payments improve or decline over this period?
42.
For fiscal year 2011, Starbucks Corporation (SBUX) had total revenues of $11.70 billion, net income of $1.25 billion, total assets of $7.36 billion, and total shareholder’s equity of $4.38 billion.
• a. Calculate the Starbucks’ ROE directly, and using the DuPont Identity.

• b. Comparing with the data for Peet’s in Problem 41, use the DuPont Identity to understand the difference between the two firms’ ROEs.

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