FINAL EXAM ONLINE MBAD 6235 FINANCE 2020 MBAD 6235-ON FINANCE 2020 FINAL EXAM THIS IS AN EXAM. THEREFORE, REMAIN SILENT ABOUT ALL ASPECTS OF THE EXAM UNTIL THE EXAM PERIOD ENDS ON WEDNESDAY, APRIL 29,...

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        This document was exported from Numbers. Each table was converted to an Excel worksheet. All other objects on each Numbers sheet were placed on separate worksheets. Please be aware that formula calculations may differ in Excel.
        Numbers Sheet Name    Numbers Table Name    Excel Worksheet Name
        READ THIS FIRST
            Table 1    READ THIS FIRST
        IS-BS Model
            Table 1    IS-BS Model
        Flow Diagram
            Table 1    Flow Diagram
        QUESTIONS
            Table 1    QUESTIONS
        Income Statements
            Table 1    Income Statements
        Balance Sheets
            Table 1    Balance Sheets
        Financial Ratios
            Table 1    Financial Ratios
        Cost of Capital
            Table 1    Cost of Capital
        New Machine
            Table 1    New Machine
        Equity Valuation
            Table 1    Equity Valuation
        Peer Ratios
            Table 1    Peer Ratios
        Debt vs Equity Financing
            Table 1    Debt vs Equity Financing
READ THIS FIRST
    MBAD 6235-ON FINANCE 2020 FINAL EXAM
    THIS IS AN EXAM. THEREFORE, REMAIN SILENT ABOUT ALL ASPECTS OF THE EXAM UNTIL THE EXAM PERIOD ENDS
    ON WEDNESDAY, APRIL 29, 2020 AT 11:59 PM EST
    TALK TO NO ONE, INSIDE OR OUTSIDE THE COURSE.
    DO NOT FORGET TO TO SIGN THE HONOR STATEMENT AT THE TOP OF THE QUESTIONS TAB.
    Directions
        Two exam files are posted…this .xlsx file and the .docx MMI case file.
        Work smart by reading the .docx MMI case and the tabs in the .xlsx file, especially the QUESTIONS tab.
        Find the relevant course material to guide you, one question at a time.
        Use any files from the course to answer the questions. Avoid web searches.
        Write a complete focused answer to the question asked. Avoid information dumping.
        Q1-6 are about the MMI case.
        Q7-8 are not related to the MMI case.
        Keep your words and numbers typed inside the answer box. Don't cut and paste.
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IS-BS Model
    INCOME STATEMENT         BALANCE SHEET            WORKING CAPITAL
    Revenue        ASSETS    LIABILITIES AND EQUITY         spontaneous change with revenue
    Cost of sales        Cu
ent assets    Cu
ent liabilities         ?what levels of ca, cl, s-t loans?
    Gross profit        Cash     Trade payables        CAPITAL BUDGETING
    Other operating income        Investments    Other accruals         ?what projects to accept?
    Other operating expenses        Trade receivables    Tax liabilities        FINANCING
     Total cost and expenses        Inventories    Short-term loans, leases         ?what is the debt capacity?
    Operating profit (EBIT)        Non-cu
ent assets    Non-cu
ent liabilities
    Finance costs        Property, plant & equipment    Loans, debt, leases due after 1 yea
    Profit before tax        Investment property    Retirement benefit obligation        COST OF DEBT
    Income tax        Goodwill    Defe
ed tax liabilities    
    Net profit after tax             Total non-cu
ent liabilities
    Dividends                       K-WACC
    Reinvested in the business            Equity & capital reserves
                Share capital
    OPERATING LEVERAGE            Capital reserves         COST OF EQUITY
                Reserves        
    FINANCIAL LEVERAGE            Accumulated profits(Retained earnings)        VALUATION
                         CASH FLOW
             Total assets     Total liabilities & equity        COST OF CAPITAL
    INCOME STATEMENT         BALANCE SHEET            WORKING CAPITAL
    Revenue        ASSETS    LIABILITIES AND EQUITY         spontaneous change with revenue
    Cost of sales        Cu
ent assets    Cu
ent liabilities         ?what levels of ca, cl, s-t loans?
    Gross profit        Cash     Trade payables        CAPITAL BUDGETING
    Other operating income        Investments    Other accruals         ?what projects to accept?
    Other operating expenses        Trade receivables    Tax liabilities        FINANCING
     Total cost and expenses        Inventories    Short-term loans, leases         ?what is the debt capacity?
    Operating profit (EBIT)        Non-cu
ent assets    Non-cu
ent liabilities
    Interest, finance costs        Property, plant & equipment    Loans, debt, leases due after 1 yea
    Profit before tax        Investment property    Retirement benefit obligation        COST OF DEBT
    Income tax        Goodwill    Defe
ed tax liabilities    
    Net profit after tax             Total non-cu
ent liabilities
    Dividends                       K-WACC
    Reinvested in the business            Stockholder's equity (Net worth)
                Prefe
ed stock
    OPERATING LEVERAGE            Common stock         COST OF EQUITY
                Additional paid-in-capital        
    FINANCIAL LEVERAGE            Retained earnings        VALUATION
                         CASH FLOW
             Total assets     Total liabilities & equity        COST OF CAPITAL
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Flow Diagram
          CREATION TRANSFER DESTRUCTION OF SHAREHOLDER VALUE
    THUMBNAIL SKETCH:                FINANCING        DEBT EQUITY
    BRIEF ANALYSIS                    DEBT
    DUPONT RATIOS        HISTORICAL RATIOS    I/S & B/S FORECAST    EFN
    TIE
    NORMAL DEBT RATIO    WORKING CAPITAL    I/S, B/S, & RATIOS            EQUITY
    STOCK PRICE                        EBIT CHART
    MKT CAP
    EXTENDED ANALYSIS
    FULL RATIOS
     LIQUIDITY                    income    risk    control    mktblty    flexblty    timing
     LEVERAGE
     ASSET USE                    
     PROFITABILITY
     VALUATION
     GROWTH    CAPITAL BUDGETING    OP & CAP NATCF, NPV, IRR, PAYBACK
    ANALYSIS STEPS:
    1-HISTORICAL RATIOS
    2-K-WACC
    3-CAPITAL BUDGETING
    4-FORECAST & EFN                    K-WACC
    5-EQUITY VALUATION
    6-FINANCING
        VALUATION    ENTERPRISE VALUE USING FREE CASH FLOW
            MARKET MULTIPLES: P/E, MV/BV, REV, EBIT
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QUESTIONS
    Write your answers to each question in the answer box below each question.
    All exam questions are on this tab.
    Use the return key to skip to the next row when your text or numbers get close
    to the right-side of the answer box. If you need more space, insert more rows inside the box.
    Edit and revise your answers as necessary to make a strong impression.
    Focus on answering the question asked. Aim for clarity.
    Make assumptions where needed. Supply missing information where/if needed.
    Questions are equal-weighted.
    I CERTIFY THAT 100% OF THE WORK ON THIS FINAL EXAM IS ENTIRELY MY OWN. I WORKED
    ALONE. I DID NOT CONSULT ANYONE, EITHER IN THE CLASS OR OUTSIDE THE CLASS. I DID NOT PLAGIARIZE ANYONE ELSE'S WORK.
        SIGNED:    Amber Beason
                            
    
    Q1    Using income statements, balance sheets, and financial ratios
        tabs, review MMI's historical performance and identify positive
        and negative aspects. REMEMBER: Historical (actual) years only.
    As per the income statement, we can see the topline growing rom 2017 to 2019 at the CAGR pof 13%. However, the bottomlin , means the net income has grown at the rate of 1.3% which has been considerably less as compared the topline. The major reason behind this has to be the rate at which the costs have increased and the rates at which the revenue has incraeed. Costs have incraesed at a faster rate as compared to the revenue. From the operational point of view, the costs have increased significantly at at rate of more than 17%. From the financial point of view, the interest expense has increased considerably and this is a wo
ying sign.
    As far as the balance sheet is concerned, we are seeing a significant increase in the bo
owings at a rate of more than 50%. This explains the increase in the interest expense and the increase in the invetory has been at a CAGR of 51%. This ties up the excess cash in the inventory and also dentoes that the sales are not able meet the expectation of the projections.
    From the profitability perspective, the profit margins have declined across all the levels. The increase in the debt and bo
owings has deteriorated the leverage ratios. Apart from this, the efficiency of the firm has also declined since the asset turnover ratio has decreased.
    Q2    Interpret the financial forecasts (projections) using the income statements,
        balance sheets, and financial ratios tabs. REMEMBER: Forecast (projection)
        years only. How should Sam and Alice use this information? Explain why
        IS G16 & H16 are 1,000. Explain why BS G19 & H19 are 0.
    Sam and Alice should try and understand at what...