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  • Q1:A. What are the three firms from the list which most interest you, and why? What sector and industry is each of them in? B. For the industries each of your three companies is in, what is your outlook (positive, neutral, or negative) for each of those industries, and what criteria are you using? C. What characteristics, conditions, forces, influences and trends do you see in the industries of your three companies? How else do you consider the similarities or differences among these industries? What would you include in an an industry comparison for the industries of your three companies? D. As an analyst, you will need to develop a list of peer companies for a firm you are analyzing (please note, you would find different peers for each of the three firms). What peer companies would you use as a comparison to each of your three firms? Why did you choose the peer companies you did? E. For each of the three companies you chose from the list, what is the composition of their sales, and the proportion of revenue components? How did their revenue behave during the last five years, and why? F. For each of the three companies you chose, how has their operating income and operating margins behaved? How would you go about developing a model of their cost structure -- what are the key costs to understand? How would you quantify & scale these key costs? G. For each of the three companies you chose, how have interest, tax and non-cash costs affected their net income? Were there any significant non-operating elements on their income statements (e.g. impairments, losses/gains from disposition of assets, etc.)? How do these non-operating items fit into your beliefs about future performance of these companies? H. For each of the three companies you chose, what has been their investment in long-term operating assets in the last five years? How would you quantify & scale the amounts? I. For each of the three companies you chose, what are the specific elements of net working capital? J. For each of the three companies you chose, how has their net working capital behaved in the last five years? How would you quantify & scale the movement of the net working capital?See Answer
  • Q2:INDIANA CORP. INDIANA Corp. produces a product, cleverly named "Product X" for which the following standard costs have been established for the production of ONE unit: Direct materials Direct labor At the start of the year, the company did some planning and, based on market conditions and other information available, they forecasted sales of 600 units for the upcoming year. The company also has a Just-in-Time (3) inventory system under which materials are only ordered and units are only produced in response to customer orders. No inventories are kept and, therefore, the number of units produced always equals the number of units sold. 7 As the year unfolded, demand for the Product X was not as strong as originally anticipated and actual production and sales amounted to 500 units. The following actual costs were incurred in connection with the production of the 500 units during the year: Direct matenals Direct labor 6 lbs@ 3.5 hours@ $1.25 per lb. $12 per hour 1. DIRECT MATERIALS REQUIRED: For both direct materials AND direct labor, provide a meaningful analysis showing the following: 2,900 lbs @ average cost of 1,500 hours@average wage rate of 2. DIRECT LABOR: a. The amount used as shown on the master planning budget b. The flexible budget amount c. The actual cost incured d. The static budget variance (or total budget variance) e. The flexible budget variance (or standard costvariance) f. The price variance g. The usage (or quantity) variance h. 2 possible explanations for the price and usage variance. $1.30 per pound $11.50 per hour a. The amount used as shown on the master planning budget b. The flexible budget amount c. The actual cost incured d. The static budget variance (or total budget variance) e. The flexible budget variance (or standard costvariance) f. The rate variance g. The efficiency vai arce h. 2 possible explanations for the price and usage varianceSee Answer
  • Q3:A. What are the three firms from the list which most interest you, and why? What sector and industry is each of them in? B. For the industries each of your three companies is in, what is your outlook (positive, neutral, or negative) for each of those industries, and what criteria are you using? C. What characteristics, conditions, forces, influences and trends do you see in the industries of your three companies? How else do you consider the similarities or differences among these industries? What would you include in an an industry comparison for the industries of your three companies? D. As an analyst, you will need to develop a list of peer companies for a firm you are analyzing (please note, you would find different peers for each of the three firms). What peer companies would you use as a comparison to each of your three firms? Why did you choose the peer companies you did? E. For each of the three companies you chose from the list, what is the composition of their sales, and the proportion of revenue components? How did their revenue behave during the last five years, and why? F. For each of the three companies you chose, how has their operating income and operating margins behaved? How would you go about developing a model of their cost structure -- what are the key costs to understand? How would you quantify & scale these key costs? G. For each of the three companies you chose, how have interest, tax and non-cash costs affected their net income? Were there any significant non-operating elements on their income statements (e.g. impairments, losses/gains from disposition of assets, etc.)? How do these non-operating items fit into your beliefs about future performance of these companies? H. For each of the three companies you chose, what has been their investment in long-term operating assets in the last five years? How would you quantify & scale the amounts? 1. For each of the three companies you chose, what are the specific elements of net working capital? J. For each of the three companies you chose, how has their net working capital behaved in the last five years? How would you quantify & scale the movement of the net working capital?See Answer
  • Q4:A. For Company I, list ten firms which you consider "comparable" to Company I. Create a single table of these ten firmsshowing the Trailing P/E, Price/Sales, Price/Book and Enterprise Value/EBITDA ratio for each (You can find ratioslike these easily using public information sources like Yahoo Finance. For an illustrated example, click on this link:Yahoo finance has useful ratios).B. Assess the value of Company I using these criteria:• What is the average and median Trailing P/E for the ten firms you chose as comparable to Company I? What dothese suggest about the value of Company I?• What is the average and median Price/Sales ratio for the ten firms you chose as comparable to Company I?What do these suggest about the value of Company I?• What is the average and median Price/Book for the ten firms you chose as comparable to Company I? What dothese suggest about the value of Company I?• What is the average and median Enterprise Value/EBITDA for the ten firms you chose as comparable toCompany I? What do these suggest about the value of Company I?See Answer
  • Q5:A. For Company I, list ten firms which you consider "comparable" to Company I. Create a single table of these ten firms showing the Trailing P/E. Price/Sales, Price/Book and Enterprise Value/EBITDA ratio for each (You can find ratios like these easily using public information sources like Yahoo Finance. For an illustrated example, click on this link: Yahoo finance has useful ratios). B. Assess the value of Company I using these criteria: • What is the average and median Trailing P/E for the ten firms you chose as comparable to Company I? What do these suggest about the value of Company I? • What is the average and median Price/Sales ratio for the ten firms you chose as comparable to Company I? What do these suggest about the value of Company I? • What is the average and median Price/Book for the ten firms you chose as comparable to Company I? What do these suggest about the value of Company I? • What is the average and median Enterprise Value/EBITDA for the ten firms you chose as comparable to Company I? What do these suggest about the value of Company I? C. For Company II, list ten firms which you consider "comparable" to Company II. Create a single table of these ten firms showing the Trailing P/E. Price/Sales, Price/Book and Enterprise Value/EBITDA ratio for each. D. Assess the value of Company II using these criteria: • What is the average and median Trailing P/E for the ten firms you chose as comparable to Company II? What do these suggest about the value of Company II? • What is the average and median Price/Sales ratio for the ten firms you chose as comparable to Company II? What do these suggest about the value of Company II? • What is the average and median Price/Book for the ten firms you chose as comparable to Company II? What do these suggest about the value of Company II? • What is the average and median Enterprise Value/EBITDA for the ten firms you chose as comparable to Company II? What do these suggest about the value of Company II? E. For Company III, list ten firms which you consider "comparable" to Company III. Create a single table of these ten firms showing the Trailing P/E. Price/Sales. Price/Book and Enterprise Value/EBITDA ratio for each. F. Assess the value of Company III using these criteria: • What is the average and median Trailing P/E for the ten firms you chose as comparable to Company III? What do these suggest about the value of Company III? • What is the average and median Price/Sales ratio for the ten firms you chose as comparable to Company III? What do these suggest about the value of Company III? • What is the average and median Price/Book for the ten firms you chose as comparable to Company III? What do these suggest about the value of Company III? • What is the average and median Enterprise Value/EBITDA for the ten firms you chose as comparable to Company III? What do these suggest about the value of Company III? G. Explain the limitations, problems and shortcomings of using multiples in developing an objective valuation. Be specific and use examples from your work on Company I, Company II and Company III. H. Examine the Statements of Cash Flows for Company I for the past five years. Explain in detail the dividends, stock repurchases, and other payouts made to equity holders during that five-year period. If there were stock repurchases, what reasons did management give for the repurchase? What specific changes in retained earnings do you see on the balance sheets for those same five years, and how did those payouts specifically affect the retained earnings balances during that time? Explain and describe the per-share dividend history of Company I for the past five years. Explain the limitations, problems and shortcomings of using dividends in developing an objective valuation of Company I. 1. Examine the Statements of Cash Flows for Company Il for the past five years. Explain in detail the dividends, stock repurchases, and other payouts made to equity holders during that five-year period. If there were stock repurchases, what reasons did management give for the repurchase? What specific changes in retained earnings do you see on the balance sheets for those same five years, and how did those payouts specifically affect the retained earnings balances during that time? Explain and describe the per-share dividend history of Company II for the past five years. Explain the limitations, problems and shortcomings of using dividends in developing an objective valuation of Company II. J. Examine the Statements of Cash Flows for Company III for the past five years. Explain in detail the dividends, stock repurchases, and other payouts made to equity holders during that five-year period. If there were stock repurchases, what reasons did management give for the repurchase? What specific changes in retained earnings do you see on the balance sheets for those same five years, and how did those payouts specifically affect the retained earnings balances during that time? Explain and describe the per-share dividend history of Company III for the past five years. Explain the limitations, problems and shortcomings of using dividends in developing an objective valuation of Company III. See Answer

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