check the attached files for instructionsIntegrative assignment 3 Your task for integrative...

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Integrative assignment 3 Your task for integrative assignment #3 is to understand the financial impact to a hypothetical company from launching two different products – Product A or Product B. In a separate Excel file (“Integrative Assignment 3 – Exhibit 1 and 2) located in this module, I have provided to you the hypothetical company’s projected balance sheet (Exhibit 1) and the company projected income statement (Exhibit 2) for year’s 1 and 2 from launching either product A or B. In this assignment you will want to provide a recommendation on which product launch (A or B) provides the most value to the company in terms of strengthening its financial position. In your analysis, you will use the “DuPont Method”, also referred to as the “Return on Equity” model, to compare the income statement and balance sheet from both product launches. Your analysis will focus on how the company is able to generate returns between these two product launches based on how these two scenarios impact the company’s asset utilization, profitability, and leverage ratios. In addition, you will also provide an analysis on the company’s ability to generate operating cash flow from each product launch. Specifically, you will answer the following three questions directly on the Canvas quiz/assignment “Integrative Assignment #3”. 1. For the product launch that you believe adds the most value, at the end of year 2, what will be the company’s: 1. Net Profit Margin 2. Asset Utilization Ratio 3. Financial Leverage Ratio 4. Return on Equity 5. Return on Net Operating Assets **When calculating financial ratios, where appropriate please use average balances from the balance sheet. Also, assume a tax rate of 21%. 2. What is the incremental difference in operating cash flow between the two product launches (enter answer in absolute value)? 3. Based on your financial analysis, provide a 2-3 paragraph explanation to support your answer on why you think either product A or product B adds the most value to the company. In your discussion make sure to highlight the key financial risk versus return aspects of your analysis. In your analysis, assume that the industry’s financial ratio averages of other comparable companies are as follows: A. Net Profit Margin is 12.8%, B. Asset Utilization is 1X C. Financial Leverage is 1.8X

integrative-assignment-3-nlknfmaj.docx integrative-assignment-3-exhibit-1-and-2-bobet5md.xlsx

Md Ishtyaque · Accepted Answer

Exhibit 1 - Balance Sheeet
	Exhibit 1: Balance Sheet 
			Product A		Product B
			End of Year 1	End of Year 2	End of Year 1	End of Year 2
	Assets
		Cash	$   49,208	$   548,397	$   703,430	$   555,165
		Accounts Receivable	$   1,816,875	$   1,907,719	$   2,549,167	$   3,345,781
		Pre-Paid Assets/Expenses	$   555,700	$   570,235	$   647,375	$   999,741
		Inventory	$   1,387,500	$   1,456,875	$   1,960,000	$   2,058,000
	Total Current Assets		$   3,809,283	$   4,483,226	$   5,859,971	$   6,958,687
		Long Term Investments in Securities	$   5,000,000	$   5,000,000	$   10,000,000	$   10,000,000
		Property, Plant and Equipment Net	$   25,714,286	$   21,428,571	$   30,857,143	$   25,714,286
		Goodwill (Patent Acquisition)	$   - 0	$   - 0	$   5,000,000	$   4,500,000
	Total Long Term Assets		$   30,714,286	$   26,428,571	$   45,857,143	$   40,214,286
	Total Assets		$   34,523,568	$   30,911,797	$   51,717,114	$   47,172,973
	Liabilities
		Deferred Revenue	$   2,907,000	$   3,052,350	$   1,911,875	$   2,007,469
		Accounts Payable	$   2,601,563	$   2,428,125	$   1,633,333	$   1,286,250
		Short-Term Notes Payable	$   - 0	$   - 0	$   - 0	$   - 0
	Total Current Liabilities		$   5,508,563	$   5,480,475	$   3,545,208	$   3,293,719
		Long Term Bonds Payable	$   10,000,000	$   1,500,000	$   29,000,000	$   19,500,000
	Total Liabilities		$   15,508,563	$   6,980,475	$   32,545,208	$   22,793,719
	Equity
		Common Stock Net	$   15,000,000	$   15,000,000	$   15,000,000	$   15,000,000
		Retained Earnings	$   4,015,006	$   8,931,322	$   4,171,905	$   9,379,254
	Total Equity		$   19,015,006	$   23,931,322	$   19,171,905	$   24,379,254
	Total Liabilities & Equity		$   34,523,568	$   30,911,797	$   51,717,114	$   47,172,973
		Check	$   - 0	$   (0)	$   0	$   - 0
		Workings :-
		Average total assets = 	(Assets in the beginning + assets at the end)/2
			Product A	Product B
			32,717,683	49,445,043
		Average total equity	21,473,164	21,775,580
Exhibit 2 - Income Statement
	Exhibit 2: Income Statement
			Product A		Product B
			End of Year 1	End of Year 2	End of Year 1	End of Year 2
	Total Net Revenue 		$   36,337,500	$   38,154,375	$   38,237,500	$   40,149,375
	Cost of Goods Sold		$   20,812,500	$   21,853,125	$   19,600,000	$   20,580,000
	Total Gross Profit		$   15,525,000	$   16,301,250	$   18,637,500	$   19,569,375
	SG&A Expense
		Marketing Expense	$   1,600,000	$   1,600,000	$   1,600,000	$   1,600,000
		Salary and Wages	$   1,050,000	$   1,050,000	$   1,050,000	$   1,050,000
		Other Expenses	2,907,000	3,052,350	3,823,750	4,014,938
		Total SG&A Expense	$   5,557,000	$   5,702,350	$   6,473,750	$   6,664,938
	Other Expense
		Depreciation 	$   4,285,714	$   4,285,714	$   5,142,857	$   5,142,

Integrative assignment 3 Your task for integrative assignment #3 is to understand the financial impact to a hypothetical company from launching two different products – Product A or Product B. In a...

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