CorpA Balance Sheets Corporation A Comparative Balance Sheets As of December 31 Assets:20X3 20X2 20X1 Cash $ 210,000$ 780,000$ 1,530,000 Accounts Receivable 315,000265,000 240,000 Inventory...

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CorpA Balance Sheets Corporation A Comparative Balance Sheets  As of December 31  Assets:20X3 20X2 20X1  Cash $ 210,000$ 780,000$ 1,530,000 Accounts Receivable 315,000265,000 240,000  Inventory 436,000405,000 330,000  Prepaid Insurance 15,00018,000 21,000  Total Current Assets $ 976,000$ 1,468,000$ 2,121,000 Land 1,650,000 1,630,000 1,400,000  Buildings 2,300,000 1,760,000 1,400,000  Less: Accumulated Depreciation (560,000) (490,000) (440,000)  Net Buildings 1,740,000 1,270,000 960,000  Total Long-Term Assets 3,390,000 2,900,000 2,360,000  Total Assets 4,366,000 4,368,000 4,481,000  Liabilities & Stockholder's Equity Accounts Payable 215,000 134,000 185,000  Salaries and Wages Payable 63,000 49,000 40,000  Dividends Payable 69,702 36,818 0  Notes Payable—Line of Credit 356,000 205,000 98,000  Total Current Liabilities 703,702 424,818 323,000  Notes Payable—Long-Term 1,393,722 949,811 1,017,219  Bonds Payable 1,000,000 1,000,000 1,000,000  Less: Discount on Bonds Payable (41,583) (48,317) (54,603)  Net Bonds Payable 958,417 951,683 945,397  Total Long-term Liabilities 2,352,139 1,901,494 1,962,617  Total Liabilities 3,055,841 2,326,312 2,285,617  Contributed Capital 1,500,000 1,500,000 1,500,000  Retained Earnings 1,449,159 1,080,688 730,383  Treasury Stock (1,639,000) (539,000) (35,000)  Total Stockholders’ Equity (SE) 1,310,159 2,041,688 2,195,383  Total Liabilities & Stockholdler's Equity$4,366,000 $4,368,000 $4,481,000  CorpA Income Statements Corporation A Comparative Income Statements For the 12 Months Ended December 31  20X3 20X2 20X1  Sales Revenue $4,010,000 $3,400,000 $2,300,000  Cost of Goods Sold Expense (2,520,000) (1,910,000) (940,000)  Salaries and Wages Expense (660,000) (840,000) (750,000)  Depreciation Expense-Building (115,000) (88,000) (70,000)  Insurance Expense (117,000) (102,000) (95,000)  Total Expenses (3,412,000) (2,940,000) (1,855,000)  Operating Income 598,000 460,000 445,000  Interest Expense—Notes (76,911) (69,591) (54,749)  Interest Expense—Bonds (66,734) (66,286) (65,868)  Gain (Loss) Sale of Buildings (2,000) 45,000 (51,000)  Gain (Loss) Sale of Land (3,000) 43,000 7,000  Total Other (148,645) (47,877) (164,617)  Net Income $449,355 $412,123 $280,383  Earnings per share $6.71 $4.74 $2.83  CorpA Statement of Cash Flows Corporation A Comparative Statements of Cash Flow For the 12 Months Ended December 31  For the 12 Months Ended December 3120X320X2 Cash received from customers$ 3,938,484$ 3,335,116 Cash paid to suppliers-2,470,000-2,022,000 Cash paid for salaries and wages-646,000-831,000 Cash paid for insurance-114,000-99,000 Cash paid for income taxes-145,556-129,709 Cash paid for interest—Bonds-60,000-60,000 Cash paid for interest—Notes Payable-52,740-66,946 Net Cash from Operating Activities$ 450,188$ 126,461 Investment in Land-300,000-1,420,000 Investment in Building-930,000-640,000 Sale of Building343,000287,000 Sale of Land277,0001,233,000 Net Cash from Investing Activities$ (610,000)$ (540,000) Proceeds (Payment) Notes Payable-32,188128,539 (Purchase) Sale Treasury Stock-330,000-440,000 Dividends Paid-48,000-25,000 Cash from Financing Activities$ (410,188)$ (336,461) Net Change in Cash-570,000-750,000 Beginning Cash780,0001,530,000 Ending Cash$ 210,000$ 780,000 CorpA Firm & Industry Ratios Corporation A Firm and Industry Financial Ratios 20X3 20X2 20X3/20X2  Industry  Return on Equity 0.27 0.19 0.14  Dividend Payout 0.18 0.15 0.10  Return on Assets 0.10 0.09 0.10  Return on Sales 0.11 0.12 0.11  Asset Turnover 0.92 0.77 1.02 ` Current Ratio 1.39 3.46 2.35  Quick Ratio 0.75 2.46 1.75  Debt/Assets 0.70 0.53 0.35  Accounts Receivable Days 26.40 27.11 19.50  Inventory Days 60.91 70.23 41.50  Accounts Payable Days 25.59 31.73 28.40  Summary: Cash Conversion Days 61.71 65.61 32.60  CorpA Other Information Corporation A Common Stock: The firm has 400,000 shares authorized and 100,000 shares issued at year-end 20X1, 20X2, and 20X3. Treasury Stock: The firm purchased 1,000 shares of treasury stock at year-end 20X1, 12,000 at year-end 20X2, and 20,000 at year-end 20X3. Market Valuation: The market price of the stock was $31 at year-end 2006, $35 at year-end 20X1, $42 at year-end 20X2, and $55 at year-end 20X3. o   For valuation purposes, industry experts use the dividend valuation model to value the common equity interest of industry firms. Potential investors’ required rate of return for this firm is 14%; growth rate is 13% for 20X4 and 20X5, and then declines to 12% for all later years. Market Returns: The stock returns for the market as a whole were as follows: 15.7% in 20X1, 8.2% in 20X2, and 12.1% in 20X3. CorpB Balance Sheets Corporation B Comparative Balance Sheets  As of December 31, 20X3 20X2 20X1  Cash 210,000 780,000 1,530,000  Accounts Receivable 410,000 360,000 300,000  Less: Allowance for Doubtful Accounts (4,100) (14,616) (1,500)  Net Accounts Receivable 405,900 345,384 298,500  Inventory 436,000 405,000 330,000  Prepaid Insurance 15,000 18,000 21,000  Total Current Assets 1,066,900 1,548,384 2,179,500  Land 1,650,000 1,630,000 1,400,000  Buildings 2,300,000 1,760,000 1,400,000  Less: Accumulated Depreciation (560,000) (490,000) (440,000)  Net Buildings 1,740,000 1,270,000 960,000  Total Long-Term Assets 3,390,000 2,900,000 2,360,000  Total Assets 4,456,900 4,448,384 4,539,500  Accounts Payable 215,000 134,000 185,000  Salaries and Wages Payable 63,000 49,000 40,000  Dividends Payable 93,216 44,178 0  Notes Payable—Line of Credit 356,000 205,000 98,000  Total Current Liabilities 727,216 432,178 323,000  Notes Payable—Long Term 778,032 961,219 939,680  Bonds Payable 1,000,000 1,000,000 1,000,000  Add: Premium on Bonds Payable 89,826 105,753 121,062  Net Bonds Payable 1,089,826 1,105,753 1,121,062  Total LT Liabilities 1,867,857 2,066,973 2,060,743  Total Liabilities 2,595,073 2,499,151 2,383,743  Contributed Capital 1,500,000 1,500,000 1,500,000  Retained Earnings 1,167,827 925,233 691,757  Treasury Stock (806,000) (476,000) (36,000)  Total Stockholders’ Equity (SE) 1,861,827 1,949,233 2,155,757  Total Liabilities and SE 4,456,900 4,448,384 4,539,500  CorpB Income Statements Corporation B Comparative Income Statements For the 12 Months Ended December 31  20X3 20X2 20X1  Sales Revenue 4,010,000 3,400,000 2,300,000  Cost of Goods Sold Expense (2,520,000) (1,810,000) (940,000)  Salaries and Wages Expense (660,000) (840,000) (750,000)  Depreciation Expense—Building (115,000) (88,000) (70,000)  Bad Debt Expense (11,000) (18,000) (8,000)  Insurance Expense (117,000) (102,000) (95,000)  Total Expenses (3,423,000) (2,858,000) (1,863,000)  Operating Income 587,000 542,000 437,000  Interest Expense—Notes (52,740) (66,946) (51,647)  Interest Expense—Bonds (44,072) (44,691) (45,285)  Loss from Inventory Write-Off 0 (86,000) 0  Gain (Loss) Sale of Buildings (2,000) 45,000 (1,700)  Gain (Loss) Sale of Land (3,000) 43,000 7,000  Total Other (101,812) (109,637) (91,633)  Net Income Before Taxes 485,188 432,363 345,367  Income Tax Expense (30 percent rate) 145,556 129,709 103,610  Net Income 339,631 302,654 241,757  Earnings per share 4.04 3.40 2.44  CorpB Statement of Cash Flows Corporation B Comparative Statements of Cash Flow For the 12 Months Ended December 31  20X3 20X2  Cash received from customers 3,938,484 3,335,116  Cash paid to suppliers (2,470,000) (2,022,000)  Cash paid for salaries and wages (646,000) (831,000)  Cash paid for insurance (114,000) (99,000)  Cash paid for income taxes (145,556) (129,709)  Cash paid for interest—Bonds (60,000) (60,000)  Cash paid for interest—Notes Payable (52,740) (66,946)  Net Cash from Operating Activities450,188 126,461  Investment in Land (300,000) (1,420,000)  Investment in Building (930,000) (640,000)  Sale of Building 343,000 287,000  Sale of Land 277,000 1,233,000  Net Cash from Investing Activities(610,000) (540,000)  Proceeds (Payment) Notes Payable (32,188) 128,539  (Purchase) Sale Treasury Stock (330,000) (440,000)  Dividends Paid (48,000) (25,000)  Cash from Financing Activities(410,188) (336,461)  Net Change in Cash (570,000) (750,000)  Beginning Cash 780,000 1,530,000  Ending Cash 210,000 780,000  CorpB Firm & Industry Ratios Benson, Cundiff, & Gilbert Interview Ratios Firm and Industry Financial Ratios 20X3 / 20X2 20X320X2Industry Return on Equity0.250.210.19 Dividend Payout0.20.160.1 Return on Assets0.110.10.1 Return on Sales0.120.130.11 Asset Turnover0.90.761.02 Current Ratio1.473.582.35 Quick Ratio0.852.641.75 Debt/Assets0.580.560.35 Accounts Receivable Days35.0435.4335.68 Inventory Days60.9174.1141.5 Accounts Payable Days25.5933.5528.4 Summary: Cash Conversion Days70.3675.9848.78 CorpB Projected Balance Sheet Corporation B Projected Comparative Balance Sheets  As of December 31  20X320X420X520X620X7 Cash$ - 0$ - 0$ - 0$ - 0$ - 0 Accounts Receivable040,00060,00070,0000 Inventory200,000230,000250,000260,0000 Current Assets200,000270,000310,000330,0000 Equipment400,000400,000400,000400,000400,000 Less: Accumulated Depr.0-132,000-312,000-372,000-400,000 Net Equipment400,000268,00088,00028,0000 Other00000 Total Long-Term Assets400,000268,00088,00028,0000 Total Assets$ 600,000$ 538,000$ 398,000$ 358,000$ - 0 Accounts Payable140,000161,000175,000182,0000 Total Liabilities140,000161,000175,000182,0000 Equity460,000377,000223,000176,0000 Total Liabilities & Equity$ 600,000$ 538,000$ 398,000$ 358,000$ - 0 CorpBProjected Income Statement Corporation B Projected Comparative Income Statements For the Years Ending December 31  20X420X520X620X7 Sales Revenue$ 440,000$ 510,000$ 560,000$ 630,000 Cost of Goods Sold 140,000160,000210,000250,000 Salaries Expense60,00075,00090,000120,000 Depreciation Expense132,000180,00060,00028,000 Other Expense10,00010,00010,00010,000 Total Operating Expenses342,000425,000370,000408,000 Gain (Loss) Sale Asset00040,000 Net Income Before Taxes98,00085,000190,000262,000 Income Tax Expense29,40025,50057,00078,600 Net Income$ 68,600$ 59,500$ 133,000$ 183,400 Page 1 of 6 I. Title: Integrated Accounting & Financial Management Individual project II. Introduction: Course Outcomes Assessed in this Project: A. Measurement, Analysis, & Interpretation: Apply financial statement analysis to evaluate stockholder’s equity and capital budgeting for two corporations B. Strategic Perspective: Evaluate data and information for implementation of strategic plans. C. Decision making: Evaluate the strengths and weaknesses of corporate strategies from recent financial performance. D. Communication: Communicate clearly in writing and speaking, meeting expectations for content, purpose, organization, audience, and format especially APA Style. Scenarios Having just graduated with your MS degree in accounting and financial management, you’re eager to start applying for positions with higher salaries. That is, of course, one reason you decided to earn your master’s degree! Fortunately, you’re one of the top three candidates for a position at Benson, Cundiff, & Gilbert a financial accounting and brokerage firm in the heart of Washington, DC. You’ve always wanted to live in the District, as locals call it. Sasha, the head of Human Resources at Benson, Cundiff, & Gilbert called this morning. After a brief discussion, Sasha says, “in preparation for your third interview you will prepare a financial analysis of financial statements and respond to questions prepared by our Board of Directors. We’ve done this type of interviewing in the past and sometimes more than one candidate is hired: not for the same position but in related jobs. Are you willing to partake in this type of interview?” Without giving it a lot of thought because you didn’t want to sound hesitant, you say “Absolutely; what time and where?” III. Steps to Completion: 1. Review the financial statements, ratios, and Other Information for Corporation A in Appendix A. 2. Answer the Corporation A Stockholders’ Equity Questions in paragraph format. Do not rewrite the questions in your report. Page 2 of 6 Corporation A. Stockholders’ Equity Questions: i. Calculate the average stock return from 20X1–20X3. ii. Calculate the standard deviation over this same period. iii. Calculate the coefficient of variation over this period. iv. Assume that the CAPM holds, the Corporation has a beta of 1.50, and the 30-year U.S. Treasury bonds sell at an 8% yield. Using the CAPM, calculate Corporation A’s required rate of return. v. Calculate the dollar amount of dividends that were declared during 20X3. vi. Calculate the (intrinsic) value of Corporation A’s stock price at year- end 20X3 using
Answered 3 days AfterSep 25, 2021

Answer To: CorpA Balance Sheets Corporation A Comparative Balance Sheets As of December 31 Assets:20X3 20X2...

Abhishek answered on Sep 29 2021
113 Votes
Corporation A
    Coirporation A
    Solution 1 :    Year    Stock prices    Average of Stock prices    Returns %    Absolute Returns ($)    Average returns    Average Stock Return %
        2001    $35    $44    15.70%    $5.50    $5.20    11.81364%
        2002    $42    $44    8.20%    $3.44    $5.20    11.81364%
        2003    $55    $44    12.10%    $6.66    $5.20    11.81364%
    Solutioin 2 :    Standard Deviation for the period 2001-2003
        Year    Absolute Returns ($)    Average Return    Deviation     Deviation Sqaured
        2001    $5.50    $5.20    $0.30    0.088209
        2002    $3.44    $5.20    ($1.75)    3
.076516
        2003    $6.66    $5.20    $1.46    2.122849
                        Average .D.S    1.7625246667
                        Standard Deviation     1.3276010947
    Solution 3 :     Coefficient of Variation
        Coefficient of Variation     11.24
    Solution 4 :
        Beta (βi)    1.50
        Risk-free rate (Rf)    8%
        Market Risk Premium(ERm - Rf)    (11.81% - 8%)    3.81%
        βi (Erm - Rf)    0.05715
        CAPM, Required rate of return    13.72%    (after applying the formula)
    Solution 5 :
        Dividend paid in the year 20X3    $48,000
        Dividend payable at the end of the year 20X3    $69,702
        Dividend declared for the year 20X3    $117,702
    Solution 6:
        Total Outstanding shares at the end of the 20X3    80,000
        Dividend declared for the year 20X3    $117,702
        Dividend per share for the year 20X3    $1.47
        Growth rate for the year 20X4 (given), g0 and g1    13%
        Dividend growth for the year 20X4 and 20X5    113%
        Expected Dividend for the year 20X4, D1    $1.66
        Required rate of return (given), k    14%
        D2, Dividend for the year 20X5    $1.88
        Growth rate for the year 20X4 (given), g2    12%
        Dividend growth for the year 20X6 and later on    112%
        D3, Dividned for the year 2006    $2.10
        K - g2    2%
        P2, Intrisic Value of the stock price in 20X5    $105.21
        (1+ K)^1    114%
        (1+k)^2    129.9600%
        D2 + P2    $107.08
        D1/ (+k)^1    $1.46
        D2+ P2 / (1 + k)^2    $82.40
        P0, Instrisic value of the stock price in 20X3    $83.86
    Solution 7 :
    Solution 8 :     Intrinsic value     $83.86
        Market value (given)    $55
        Total amount in stockholder's equity ($)    1310159.00
        Total Outstanding shares at the end of the 20X3    80,000
        Book value     $ 16.38
    Solution 9 :    Tressury shares purchased at the end of year 20X3    20,000
        Journal Entry for Purchase of the treasury stock in the year 2003
        Particulars     Debit     Credit
        Treasury Stock a/c Dr    $330,000
         To Cash a/c         $330,000
        (Being 20,000 treasury stock purchased in the year 20X3)
    Solution 10 :
        Now,
        Earning Per Share for the year 20X3 :
        Total number of Outstanding shares at the end of 20X3    100,000
        Net income for the year 20X3    $449,355
        Earning Per Share for the year 20X3     $4.49
        Current Ratio for the year 20X3 :
        Total Current assets for the year 20X3    $1,306,000
        Total Current liabilities for the year 20X4    $703,702
        Currrent Ratio for the year 20X3    1.8558992301
        Debt-to Assets ratio for the year 20X3 :
        Total debt for the year 20X3 :     $2,352,139
        Total assets for the year 20X3    $4,696,000
        Debt-to-assets ratio     0.5008813884
    Solution 10 b.:
    Solution 11 :
    a
    b
    c
        Market price at the end of year 20X3     $55
        Sale of treasury shares at January 20X4    1,000
        Cash used for purchasing the shares     $55,000
        Value of treasury shares purchased at 20X1 (given)    $35,000
        Journal Entry for this purchase transaction
    Date     Particulars     Debit     Credit
    January , 20X4    Cash a/c     $55,000
         To Cash a/c         $35,000
         To Gain on purchase of treasury stock        $20,000
        (Being treasury stock sold at $55 per share that was purchased in 20X1)
    Solution 12 :
In soultion 1, the average stock returns are required to calculate, now for calculating the average stock returns for the period 2001 -2003, we need to ascertain the average returns earned on the stock. For this, the given market price for each particular year needs to be averaged . The market returns should be ascertained and then it also should be averaged.
Standard Deviation / Expected returns. Now, in this formula of coeffcient of variation, the expected return is the average stock return percentage for the period 2001-2003.
The Capital Asset Pricing Model helps the financial analysts to price the securities with underlying systematic risks and expected returns. Through this model, the required rate of return for any corporation can be ascertained through the CAPM model formula : ERi​=Rf​+βi​(ERm​−Rf​). In which Rf is risk free return, βi is beta or risk for the security and ERm​−Rf is the market risk premium.
The dollar amount of dividend declared during the accounting year 20X3 can be ascertained after adding the dividend paid for the year and dividend payable for the year. Because the dividend payable is the amount which is declared as dividend but cannot be paid due to insufficient funds in that accounting year and will be paid in the next accounting years.
The dividend growth model...
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