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Get college assignment help at uniessay writers Case Description Device Co. is a telecom company offering a variety of services across the spectrum – App development, app support, data centre, data network, voice network etc. The company has gone through several divestitures in recent years, but its IT cost base has grown disproportionately to revenue. The company has outsourced some of its functions app support, infrastructure, network, and end-user computing. This has led to certain complications as significant share of spend for the company is for outsourced services across all IT tower. Added to that, limited governance boundaries has led to vendor proliferation and approval of unnecessary projects adding to costs. The CEO of the company, Mr Michael Smith, has approached Bain to understand the reason for dwindling profits despite healthy revenues and devise a medium term strategy to combat this problem. Bain followed four steps to crack Device Co’s issues 1. Reviewed cost saving opportunities and formulated plans 2. Identified cost levers 3. Prioritized costs for consideration 4. Developed tools for client to use beyond Bain engagement Q2. What according to you was the most likely sequence that Bain followed? a) 4-> 3-> 2-> 1 b) 1- 2-> 4->3 c) 3-> 1-> 4-> 2 d) 2-> 3-> 1-> 4
Orange Co. is global Pharmaceutical, which has witnessed a sharp decline in its share price and has also slipped considerably into negative when compared to the broader peer set over the last one year. Shareholders are not pleased with the management and expect recovery Market for its primary category, Cardiology, which accounts for majority of its revenue, is shrinking due to an increase in competition. Profitability has also been a concern for the company with operating margins continuously falling. Its current strategy, which requires the company to focus on entering and growing in attractive categories such as Generic and Imaging, has failed to deliver results. Orange Co.’s current CEO has approached Bain to devise a near-term strategy to turnaround its share price performance. Bain partners are of the view that it is Orange Co’s conservative R
Since profitability was a concern, Bain benchmarked EBITDA margin of Client co against the peer set to understand competitive positioning. The chart below represents margin range of all companies in Pharmaceutical industry with three key players highlighted separately. 2015 represents the actual margins while 2017 refers to estimates based on analyst perception of companies’ current strategy EBITDA margin range 40% 31% 30 Peer 2 27% Peer 2 20 Peer 1 Peer 1 10 Client co Client co 8% 7% CY2015 CY2017 Q4. Which of the following most accurately describes the chart (Figure 1) insight? a) Peer 1 is the margin leader while Client Co is the laggard b) Average profitability of the industry is estimated to improve but Client Co will continue to deliver bottom-quartile margin performance c) No change in average profitability over time but anticipated improvement in Client Co’s margins d) Peer 2 is the median performer on margins
The chart below describes how analyst perception of Client Co. has changed over time in terms of Buy, Sell and Hold ratings Overview of analyst perception (% of analysts) Client Co’s share price 100% 3,000 Buy 75 2,000 Hold 50 1,000 25 Sell Dec 10 Dec ’11 Dec 12 Dec 13 Dec 14 Dec 15 Upside (% 11% -8 % -5% -4% 3% -9% Figure 2 *Upside- (Target-Actual)Actual Q6. What do you infer from the chart (Figure 2) above? a) Share price decline in recent years indicate increase in ‘Sell’ recommendations from the analysts b) Analysts are positive on company’s turnaround plan c) Analysts are skeptical on Orange Co’s M
The chart below describes how analyst perception of Client Co. has changed over time in terms of Buy, Sell and Hold ratings Overview of analyst perception (% of analysts) Client Co’s share price 100% 3,000 Buy 75 2,000 Hold 50 1,000 25 Sell Dec 10 Dec ’11 Dec 12 Dec 13 Dec 14 Dec 15 Upside (% 11% -8 % -5% -4% 3% -9% Figure 2 *Upside- (Target-Actual)Actual Q7. Calculate the Orange Co’s target approximate share price in Dec’11: a) 1200 b) 1500 c) 2000 d) 2500
Bain’s final recommendations to the Orange co. were in-line with key analysts. Below is some commentary from the Orange Co’s analyst reports. “We feel that Orange Co. should be focusing on emerging categories, reduce its offerings in unattractive categories and invest more aggressively in R
INTEGRATED CASE 2 Iaonenlt NEW WORLD CHEMICALS INC. 17-16 FINANCIAL FORECASTING Sue Wilson, the new financial manager of New World Chemicals (NWC), a California producer of specialized forecast for 2019. NWC’s 2018 sales w for use in fruit orchards, must prepare a formal financial increase for 2019. Wilson thinks the com billion, and the marketing department is forecasting a 25% The first step “bu forecast was to assume that vas operating at full capacity in 2018, but she for 2018 and the 2019 WC. The 2018 financial satios would remain unchanged and that it would be Assume that you were r develop the formal financial hired as Wilson’s assistant and that your first major task is to help her Assume (1) that NWC was operating at full not sure. s usual” forecast are given in Table IC 17e 2019 initial forecast, and a ratio analysis recast. She asks you to begin by answering the following questions: a assets must grow at the same rate as sales, (3) tyin 2018 with respect to all assets, (2) that all will grow at the same rate as sales, and (4) that the 201unts payable and accd nayout will be requirements to those conditions, what would the AFN equation predict the company’s financial Consultationswith several key managers within NWC, including production, inventory, and receiv- also maintained profit margin a be for the coming year? able managers, have yielded some very useful information. 1. NWC’s high DSO is largely due to one significant customer who battled through some hardships the past 2 years but who appears to be financia strong cash flow As a result, NWC’s accounts receivable manahelthy again and is geereceivables enough for rm to lower a calculated DSO of 34 days without adversely affecting sales. 2. NWC was operating slightly below capacity, but its forecasted growth will require a new facility, which is expected to increase NWC’s net fixed assets to $700 million. 3. A relatively new inventory management system (installed last year) has taken some time to catch on and to operate efficiently. NWC’s inventory turnover improved slightly last year, but this year NWC expects even more improvement as inventories decrease and inventory turnover is expected to rise to 10X. Incorporate that information into the 2019 initial forecast results, as these adjustments to the ini- tial forecast represent the final forecast for 2019. (Hint: Total assets do not change from the initial forecast.) Calculate NWC’s forecasted ratios based on its final forecast and compare them with the company’s 2018 historical ratios, the 2019 initial forecast ratios, and the industry averages. How does NWC compare with the average firm in its industry, and is the company’s financial position expected to improve during the coming year? Explain. d. Based on the final forecast, calculate NWC’s free cash flow for 2019. How does this FCF differ from the FCF forecasted by NWC’s initial “business as usual” forecast? C Initially, some NWC managers questioned whether the new facility expansion was necessary, espe- cially as it results in increasing net fixed assets from $500 million to $700 million (a 40% increase). However, after extensive discussions about NWC needing to position itself for future growth and being flexible and competitive in today’s marketplace, NWC’s top managers agreed that the expan- sion was necessary. Among the issues raised by opponents was that NWC’s fixed assets were being operated at only 85% of capacity. Assuming that its fixed assets were operating at only 85% of capac- ity,by how much could sales have increased, both in dollar terms and in percentage terms, before NWC reached full capacity? e. How would changes in the following items affect the AFN: (1) the dividend payout ratio, (2) the profit margin, (3) the capital intensity ratio, and (4) NWC beginning to buy from its suppliers on terms that permit it to pay after 60 days rather than after 30 days? (Consider each item separately and hold all other things constant.) f. 2019E 17.1 Financial Statements and Other Data on NWC (Millions of Dollars) 2018 25 A. Balance Sheets 20 300 Cash and equivalents. 24C 300 Accounts receivable 24C s 625 Inventories S 500 625 Total current assets 500 $1,250 Net fixed assets $1,000 Total assets 125 s 100 19C Accounts payable and accrued liabilities 100 $315 Notes payable $ 200 190 Total current liabilities 100 500 Long-term debt 500 Common stock 245 200 Retained earnings $1,250 $1,000 Total liabilities and equity 2019E 2018 B. Income Statements $2,500.00 $2,000.00 Sales 1,500.00 1,200.00 Variable costs 875.00 700.00 Fixed costs $ 125.00 S 100.00 Earnings before interest and taxes (EBIT) 16.00 16.00 Interest 109.00 84.00 Earnings before taxes (EBT) 43.60 33.60 Taxes (40 %) $ 65.40 S 50.40 Net income 19.62 15.12 Dividends (30%6) 45.78 35.28 Addition to retained earnings Industry Comment NWC (2019E) NWC (2018) C. Key Ratios 10.00 % 10.00% 20.00% Basic earning power 2.62 2.52 4.00 Profit margin 7.20 8.77 Return on equity 15.60 43.80 days 43.80 days Days sales outstanding (365 days) 32.00 days 8.33X 8.33X Inventory turnover 11.00x Fixed assets turnover 4.00 4.00 5.00 Total assets turnover 2.00 2.00 2.50 Total liabilities/assets 30.00% 40.40% 36.00% Times interest earned 6.25X 7.81X 9.40X Current ratio 2.50 1,99 3.00 Payout ratio 30.00% 30.00% 30.00%
A pension fund manager is considering threee mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.9%. The probability distributions of the risky funds are: Standard Expected Return Deviation Stock fund 10% 39% (s) Bond fund (B) 5% 33% The correlation between the fund returns is 0030. Suppose now that your portfolio must yield an expected return of 8% and be efficient, that is, on the best feasible CAL a. What is the standard deviation of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 38.09 % Standard deviation b-1. What is the proportion invested in the T-bill fund? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Proportion invested in the T-bill fund 37.80 % b-2. What is the proportion invested in each of the two risky funds? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Proportion Invested 60.83% Stocks Bonds 0.12 %
Suppose that you borrow $12,000 for five years at 8% toward the purchase of a car. Use PMT= to find the monthly payments and the total interest for -nt 1- the loan. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.)
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Get college assignment help at uniessay writers 1. Consider a household in the two-period consumption-savings model with well-behaved preferences over period-1 and -2 consumption given by u(ci,c2). Suppose that interest income in period 2 is taxed at a constant rate of T;. Assuming no initial endowment of wealth, Ao 0, and the terminal condition A2 = 0, the household has the following nominal lifetime budget constraint C P2c2 Y1 (11T)) Y2 Рс (11 Ti)) (a) Using indifference curve analysis, graphically locate the optimal choice (cj, c3). Label slopes and intercepts income on the graph.) on your graph. (You are not being asked to locate real labor (b) Write down the household’s intertemporal optimality condition in terms of the gen- eral utility function (c) In the United States, interest income received by saver households is taxed at positive rate taxed (ie. T0). Suppose legislators propose complete elimination of this tax a (i.e. T; >0 while interest income paid by debtor households is not Use economic logic and your answer from part (b) to explain how this policy change would (if at all) affect the consumption behavior of the following i. Net borrowers ii. Net savers for whom the substitution effect dominates the income effect iii.Net savers for whom the income effect dominates the substitution effect
A Aurora Foods Valuation Earnings per Share Imagine if firm that paid out 100 % of its income as dividends. This frim would not be re-investing for growth but just treading water using the depreciation amount to replace assets EPS 1.40 Dividend= 49 ROE 15 % Required Return 12 % Grothh Rate 9.75 % Dividend ROE |Required Return Without growth this stock would be valued as a preferred stock, give me tha value Retained Earnings Retention Ratio Growth Rate The value of the growth opportunities would be equal to the (retained earnings ((ROE/Required Return)-1)/(required return – Growth Rate) Value without Growth 1 2 Value of Growth Opportunities Please complete the table to the left. Value of Stock 3 4 6 Constant Growth DDM Value 7 0 1
The Hotel Conneaut is considering 3 the following capital budgeting projects The Hotel Conneaut has internal funind for project one with $10,000. However, the 2 other projects woul required new capital financing A new computer and software system for $10,000 with a 5 year life and an estimated return of 16 % The construction of a new deck and seating area for $8,000 also with a 5 year life and an estimated return of 12 % Lastly the purchase of a more effieicent self contained fryer system for $5,000 with a life of 4 years and an estimated return of 10 % Which projects should they undertake?
M A C G I J K IL N Total Market Value Source Debt Price Units % of Total Marginal After Tax Cot 904.53 400 S 361,812 31.14% 1,000 Preferred 100.00 100,000 8.61% 70.00 Common 10.000 700,000 60.25% 4 100.00% Totals 1,161,812 6 Additional Bond Data Tax Rate ate feach of the forms 1.000.00 Under the required return tab w caluclated the current os of capital structure. For instance it does not matter the rate at which a bond was originally issued. What is important 10 Face Value 11 Maturity 10 the current require rate of return on that bond, r the current required return 12 Flotation Cost 3% or preffered and common stock However the WACC changes as we have 13 issue new forms of capital. As the text discusses with new stock or Additional Preferred Data 14 15 Dividend S 10.00 Using the information to the left to calculate the marginal WACC. 16 Flotation Cost 5% 18 Additional Common Data S 19 Dividend 0 20 Growth Rate 96 6% 21 Flotation Cost 6% 22
A B C D E F G H I Capital Structure Information Source Price Debt S 904.53 Preferred 100.00 Please fill in the yellow boxes given the inforamtion to the left. Common 70.00 Totals Additional Bond Data Tax Rate 40% Coupon Rate Face Value 10% 1,000,00 Maturity Yield to Maturity 10 11.51% Additional Preferred Data Dividend S 10.00 Required Return 10.00% Additional Common Data Dividend 0 S 3.96 Growth Rate 6% Required Return 11.99% A B Г F F G Weighted Avg. Cost Source Price Units otal Market Valu % of Total After-tax Cost 904.53 Debt 400 Preferred 100.00 1,000 70,00 Common 10,000 Totals 5 6 7 Book Values in firm’s capital structure 10 Long term debt Preferred Equity $100,000 (issue price $100.00) Percent $400,000 ($1000.00 par) Percent 40% 11 10 % 12 50 % $500,000 (issue price $50.00) Common Equity Percent 13 14 Given the after tax cost of each form of capital calculated on tab 1 15 find the Current Total Market Values for each form of capital Complete the table with Market Value and Market Value % of total Calculate the after tax cost of each form of capaital Using the weights and the after tax costs calculate the Weighted average cost of Capital 16 17 18 19 20 21 22 13
2 Capital Structure Information 3 4 5 Source Price Debt 904.53 7 Preferred 100,00 Please fill in the yellow boxes given the inforamtion to the left. Common 70,00 10 Totals 11 12 Additional Bond Data 13 Tax Rate 40% 14 Coupon Rate 15 Face Value 10% S 1,000.00 16 Maturity 10 17 Yield to Maturity 18 19 20 Additional Preferred Data Dividend 10.00 21 22 Required Return 23 24 25 Additional Common Data 26 Dividend 0 S 3.96 27 Growth Rate 6% 28 Required Return 29 30 31 32 33 24
Media Bias Inc. issued bonds 10 years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was the required returns by bondholders at that point in time as described below: line with Real rate return Inflation premium Risk premium 4% 5 14% Total return Assume that 10 years later, due years remaining until maturity. good publicity, the risk premium is now 3 percent and is appropriately reflected the required return (or yield to maturity) of the bonds. The bonds have 20 Compute the e clulations Be A nd App 3 decimel allswer but calculate your final answer using the formula and financial calculator methods., (Do not answer to payments are your New price of the bond
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Case Description Device Co. is a telecom company offering a variety of services across the spectrum – App development, app support, data centre, data network, voice network etc. The company has gone through several divestitures in recent years, but its IT cost base has grown disproportionately to revenue. The company has outsourced some of its functions app support, infrastructure, network, and end-user computing. This has led to certain complications as significant share of spend for the company is for outsourced services across all IT tower. Added to that, limited governance boundaries has led to vendor proliferation and approval of unnecessary projects adding to costs. The CEO of the company, Mr Michael Smith, has approached Bain to understand the reason for dwindling profits despite healthy revenues and devise a medium term strategy to combat this problem. Q1. Which of the following most accurately describes the CEO’s objective to approach Bain? a) Create a broad level strategy for organizational change b) Devise plan to reduce IT costs for Device Co. c) Exploring other business models to increase sales avenues d) Getting an overview of cost structure in the industry
Toddlers who regress and pretend play that are a baby do so perhaps because? A. they are remembering from thier past development B. they may have a new sibling C. they are experiencing seperation anxiety D. all of aboce
FI Practice Exam Q-Search in Document ShareA Layout Home Insert Design References Mailings Review View A A- Ao Palatino 14 AasbccDdEc AaBbCcDc AaBbCcDdE AaBb AaBbccDdEAoBb CcDdEe AaBbCcDdEe AaBbCcDdEe Uabe X2 X Subtle Emph A Paste I Styles Pane No Spacing Heading 2 Tile Subtitle Emphasis Normal Heading 1 You have just been hired by Intel in its finance division. Your first assignment is to determine the net cash flows and NPV of a proposed new generation of mobile chips Capital expenditures to produce the new chips will initially require an investment of $1.2 billion (CapEx). The R
The post Question: Case Description Device Co. Is A Telecom Company Offering A Variety Of Services Across The Spectrum – App Development, App Support, Data Centre, Data Network, Voice Network Etc. The Company Has Gone Through Several Divestitures In Recent Years, But Its IT Cost Base Has Grown Disproportionately To Revenue. The Company Has Outsourced Some Of Its Functions … appeared first on uniessay writers.
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