Cost Accounting Acct 351 Discussion Board 2 400-500 Words

Cost Accounting Acct351discussion Board 2 400 500 Wordsprimary Ta

Cost Accounting (ACCT351) Discussion Board words) Primary Task Response: Within the Discussion Board area, write 500 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas. · Discuss the 2 pros and 2 cons of activity-based costing. Give an example of a situation where activity-based costing could be used effectively. Explain your reason. Discussion Board words) Primary Task Response: Within the Discussion Board area, write 500 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas. · Discuss what absorption , variables , and throughput costing are. · Determine when each would be used. Provide an explanation and example of all three. Financial Management (FINC400) Individual Project words) Library Research Assignment Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2014 and 2015: · Liquidity Ratios Current ratio [current assets / current liabilities] Quick ratio [(current assets – inventory) / current liabilities] · Asset Turnover Ratios Collection period [accounts receivable / average daily sales] Inventory turnover [cost of goods sold / ending inventory] Fixed asset turnover [sales / net fixed assets] · Financial Leverage Ratios Debt-to-asset ratio [total liabilities / total assets] Debt-to-equity ratio [total liabilities / total stockholders’ equity] Times-interest-earned (TIE) ratio [EBIT / interest] · Profitability Ratios Net profit margin [net income / sales] Return on assets (ROA) [net income / total assets] Return on equity (ROE) [net income / total stockholders’ equity] · Market-Based Ratios Price-to-earnings (P/E) ratio [stock price / earnings per share] Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity] · You are now ready to interpret the ratios that you have calculated. If a ratio increased from 2014 to 2015, why do you think that it increased? Is it a good or bad sign that the ratio increased? Please explain. If a ratio decreased from 2014 to 2015, why do you think that it decreased? Is it a good or bad sign that the ratio decreased? Please explain. If a ratio was unchanged from 2014 to 2015, why do you think that it was unchanged? Is it a good or bad sign that the ratio was unchanged? Please explain. Discussion Board words) Primary Task Response: Within the Discussion Board area, write 400–600 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas. The time value of money concept is one of the 3 major principles of the study and practice of financial management. It is used to evaluate potential investments, determine a rate of return on a project, calculate the required payments on a loan or annuity, and estimate a future value of funds currently invested and the present value of funds to be received at some future date. It is imperative that managers at all levels of business have a working knowledge of this topic. In your first task, you have been asked to engage your colleagues in a detailed and documented discussion about the time value of money concept: what it is, why it is important, how it is used, and generally, how the applications to single and periodic payments are computed using various calculation methods and formulas. In your initial post, identify and recommend at least 1 credible Web site that an investor can visit to find the current market value of market indexes such as the Dow Industrial Averages, and address at least 3 of the following: · What is the discounted cash flow concept, and why is it essential for financial managers to understand and employ this important concept? · What are the methods associated with evaluating single or periodic payments, and what at least 1 application of each? · Discuss the different methods that can be used to calculate these amounts, and explain how at least 1 of these models can be used. · How can the time value of money models or formulas be used to determine the rate of return for an investment or the time it will take for a current sum to grow to a desired future amount? · Discuss the "Rule of 72" and how it can be used to estimate how long it takes for money to double at various rates of return. · Identify and recommend at least 1 credible Web site that an investor can visit to find the current market value of market indexes such as the Dow Industrial Averages. Be sure to document your posts with in-text citations, credible sources, and properly listed references. Individual Project words with attached excel spreadsheet) After engaging in a dialogue with your colleagues on valuation, you will now be given an opportunity to apply principles that were presented in this phase. Using a Web site that provides current stock and bond pricing and yield information, complete and analyze the tables illustrated below. Your mentor suggests using a Web site similar to this one . To fill out the first table, you will need to select 3 bonds with maturities between 10 and 20 years with bond ratings of "A to AAA," "B to BBB" and "C to CC" (you may want to use bond screener at the Web site linked above). All of these bonds will have these values (future values) of $1,000. You will need to use a coupon rate of the bond times the face value to calculate the annual coupon payment. You should subtract the maturity date from the current year to determine the time to maturity. The Web site should provide you with the yield to maturity and the current quote for the bond. (Be sure to multiply the bond quote by 10 to get the current market value.) You will then need to indicate whether the bond is currently trading at a discount, premium, or par. Bond Company/ Rating Face Value (FV) Coupon Rate Annual Payment (PMT) Time-to Maturity (NPER) Yield-to-Maturity (RATE) Market Value (Quote) Discount, Premium, Par A-Rated $1,000 B-Rated $1,000 C-Rated $1,000 · Explain the relationship observed between ratings and yield to maturity. · Explain why the coupon rate and the yield to maturity determine why the bonds would trade at a discount, premium, or par. · Based on the material you learn in this Phase, what would you expect to happen to the yield to maturity and market value of the bonds if the time to maturity was increased or decreased by 5 years? In this step, you have been asked to visit a credible Web site that provides detailed information on publicly traded stocks and select 1 that has at least a 5-year history of paying dividends and 2 of its closest competitors. To fill up the first table, you will need to gather information needed to calculate the required rate of return for each of the 3 stocks. You will need to calculate the risk-free rate for this assignment. You will need the market return that was calculated in Phase 2, and the beta that you should be able to find on the Web site. Company 5-year Risk-Free Rate of Return Beta (β) 5-Year Return on Top 500 Stocks Required Rate of Return (CAPM) To complete the next table, you will need the most recent dividends paid over the past year for each stock, expected growth rate for the stocks, and the required rate of return you calculated in the previous table. You will also need to compare your results with the current value of each stock and determine whether the model suggests that they are over- or underpriced. Company Current Dividend Projected Growth Rate (next year) Required Rate of Return (CAPM) Estimated Stock Price (Gordon Model) Current Stock Price Over/Under Priced In the third table, you will be using the price to earnings ratio (P/E) along with the average expected earnings per share provided by the Web site. You will also need to compare your results with the current value of each stock to determine whether or not the model suggests that the stocks are over- or underpriced. Company Estimated Earning (next year) P/E Ratio Estimated Stock Price (P/E) Current Stock Price Over/Under Priced After completing the 3 tables, explain your findings and why your calculations coincide with the principles related to bonds that were presented in the Phase. Be sure to address the following: · Explain the relationship observed between the required rate of return, growth rate and the dividend paid, and the estimated value of the stock using the Gordon Model. · Explain the value and weaknesses of the Gordon model. · Explain the how the price-to-earnings model is used to estimate the value of the stocks. · Explain which of the 2 models seemed to be the most accurate in estimating the value of the stocks. Based on the material that you learn in this Phase, what would you expect to happen to the value of the stock if the growth rate, dividends, required rate of return, or the estimated earnings per share were to increase or decrease? Be sure to explain each case separately. Individual Project words with attached excel spreadsheet) Your next assignment as a financial management intern is to apply the knowledge that you acquired while engaging in the cost of capital discussion that you had with your colleagues. In this task, you will be calculating the weighted cost of capital for a firm using the book value of the components and the concepts presented in this phase. Using the most current annual financial statements from the company you analyzed in Phase 1, determine the percentage of the firm's assets that are currently be financed with debt (total liabilities), preferred stock, and common stock (common equity). It is very possible that your firm will have very little or no preferred stock, so in this class, the percent would be "zero." Your ratios should add up to 100%. You will also need to calculate the firm’s average tax rate using the income tax expense divided by the firm's income before taxes. Use the following tables: Company Total Assets Total Liabilities Total Preferred Stock Total Common Equity Dollar Value % of Assets Company Income before Tax Income Tax Expense Average Tax Rate (%) The first component to determine is the cost of debt. You mentor suggests using the Web site that you used in the previous Phase to find the pretax yield-to-maturity of a bond with at least 5 years left before maturity. Using the following table, calculate the firm's after-tax cost of debt: Yield to Maturity 1 - Average Tax Rate After-tax Cost of Debt Now you will need to calculate the cost of preferred stock. You can use the following table: Annual Dividend Current Value of Preferred Stock Cost of Preferred Stock (%) To calculate the cost of common equity, you can use the CAPM model. Using current stock data, the yield on the 5-year treasury bond, and the return on the market calculated in Phase 2, you can calculate the cost of common equity using the following table: 5-year Treasury Bond Yield (risk-free rate) Stock's Beta Return on the Top 500 Stocks (market return) Cost of Common Equity Now, you can use the cost and ratios from above to calculate the firm's weighted average cost of capital (WACC) using the following table: After-Tax Cost of Debt Cost of Preferred Stock Cost of Common Equity WACC Unweighted Cost Weight of Component Weighted Cost of Component · After completing the required calculations, explain your results in a Word document, and attach the spreadsheet showing your work. Be sure to explain the following: How would you expect the weighted average cost of capital (WACC) to differ if you had used market values of equity rather than the book value of equity, and why? What would you expect would happen to the cost of equity if you had to raise it by selling new equity, and why? If the after-tax cost of debt is always less expensive than equity, why don't firms use more debt and less equity? What are some of the advantages and disadvantages of raising capital by using debt? How would "floatation costs" impacted the WACC, and how could they have been incorporated in the formula?