Fewer companies are willing to enter the market because of the SOX requirements that make going public too costly. Plus, the maintenance required to stay public is too expensive for smaller companies, forcing companies to look elsewhere to raise capital. Rising costs persuade large numbers of companies to exit the public markets to sidestep SEC regulation, creates two problems. First, the overall economy could suffer because corporations limit investment projects due to the higher-cost sources of capital to fund potentially new operations. Second, financially stressed companies that go dark are the very companies’ shareholders need to monitor usually and where transparency is most important.
e. Do you expect that those notes will be called or redeemed? a. MSFT is raising money for general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of stock and acquisitions. Also they choose to raise money at this time because the yields for treasury instruments are low, so Microsoft can issue in a lower rate. b. No, because the yields for treasury instruments are very low at the time, so the premium the company will add to their rate is very low, and the investors will get less money for the same level of riskiness, so the paper is not really cheap.
The overall costs of assets required for operating expenses has reduced as a percent of revenue. The financial health of the company is strong without a large reliance on long-term debt. As Coke has grown it has lost some efficiency in converting the assets into revenue, but has still managed to significantly increase income and retained earnings overall. Coke has established a good cash flow and has the ability to cover liabilities satisfactorily. In 1996 Coke did not have strong working capital.
With these potential benefits, target companies will often agree to be purchased when they know they cannot survive alone. Here the issue is of financing the merger. A firm’s optimal capital structure is that mixture of debt and equity than minimizes its weighted average cost of capital (WACC). Since the after-tax cost of debt is lower than equity for many corporations. It turns out that, while debt reduces a company’s tax liability because interest payments are deductible expenses, increasing amounts of debt raise both the cost of equity capital and the interest rate on debt because of the increasing probability of bankruptcy.
When comparing the two projects one would suggest that the manager presents top management with Project Janus even though the evealuate team scored it less than Project Gemini the net present value out weighed project two. Project Janus is a far less investment and has a longer life of return. The project weighted score can be jusified through other screening methods than just the simplified scoring method. That method does not provide an accurate measuring system mathematically. It doesn’t give on a scale the far difference or relevance between low and high for either project.
Why might it cost the Ritz-Carlton less to “do things right” the first time? There are high direct costs involved in fixing mistakes. Specially in the service industry, those mistakes can cause a huge loss of future revenue. When dealing with high-end clientele, they are likely to have fewer customers than a mid-level hotel. Therefore, the loss of just a few customers could cost them a lot.
Overall in this example, this is a risky investment. An investor would not be as eager to hand off more than half of their investment into this company’s debt. Current Ratios ideally should be at a minimum 1.7. This company having a current ratio of 0.97 is significantly less than the ideal displays that they have issues paying their bills on time. Moreover, the Quick
This falls in the mid to lower quartiles for the industry. A lower current ratio could be an indication of liquidity issues. The quick ratio is a bit higher than the median for the industry. This is good, this means they do not have too much inventory around. The cash ratio is lower than the median.
Two disadvantages to automation are that it costs more and it is not easily changed. 6. A products margin is determined by subtracting its manufacturing cots (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the customer buying criteria, how would you increase margins for a low end product?
If the gross profit falls from one year to the next or is thought to be too low the firm may need to decrease the costs of its purchases or may try to increase the sales without increasing the cost of the goods sold. The same thing applies to the net profit margin if it is too low or falls year on year then the business may need to look for cheaper premises or cut staffing costs. Return on Capital Employed will be used to see if an investment is worth the capital outlay, if the return from the capital outlay is higher than the interest offered by banks for money invested then the outlay is justified. you then have to talk about Liquidity,The Debtors’ and creditors’ and then an overview of it all