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The initialperiod 4dialoguepost has two parts. To complete the first part of your post, read the attached Upstate NY Real Estate .pdffileand indicate your leasing decision. Cite specific ratios and...

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The initialperiod 4dialoguepost has two parts. To complete the first part of your post, read the attached Upstate NY Real Estate .pdffileand
indicate your leasing decision. Cite specific ratios and trends obtained from Mission’s data, and any other supportable opinion you may have of Mission’s business and the macroeconomic environment. Keep your decision to 300 words or less.





Upstate NY Dialogue 4 Part 1.pdf

Upstate NY Dialogue 4 Part 1.pdf - Alternative Formats




For the second part of the period 4 dialogue, read the attached FT Interview with Warren Buffet. In 200 words or less, state your argument as to why you agree or disagree with Mr. Buffet. Include at least one bible passage in your analysis.




Warren Buffett on why companies cannot be moral arbiters | Financial Times.pdf

Warren Buffett on why companies cannot be moral arbiters | Financial Times.pdf - Alternative Formats




For a response post, find a teammate with whom you agree, on either the leasing decision or the analysis of Mr. Buffett'sinterview. Adda specific point to augment their argument. The response post should be 150 to 300 words.

The post I am responding to:






Lease or Not to Lease



COLLAPSE









It is critical to analyze Mission Furniture’s Statement of Income and Balance Sheet, as both are used to understand the company’s Cash Conversion Cycle (CCC) and its overall financial health. Using data from 2016 to 2017, PP recognizes that Mission Furniture has a production cycle of 146 days (average inventory of $187M, inventory turnover rate of 2.5). While the furniture company experiences a longer production cycle than some companies, an inventory turnover rate of 2.5 is quite normal in the furniture industry, especially considering what materials it takes to make high-quality furniture (Furniture & Fixtures Industry,
2023). However, this is not enough to agree to lease the space. The company’s average accounts receivable (using data from 2016 to 2017) is $27.5M, their accounts receivable turnover rate is 36 times, and their collection cycle, therefore, takes approximately 10.1 days, meaning customers pay within two weeks, which is excellent for stability. Finally, their average accounts payable is $21.3M, with a turnover rate of 21.91 times and an accounts payable cycle of XXXXXXXXXXThe company takes over two weeks to pay its suppliers, giving it a CCC of XXXXXXXXXXdays, a normal for the furniture industry. At the end of 2017, the company had a debt ratio of only .12, which means that it has 12 cents of debt for every dollar, much better than in 2015. Additionally, the company in 2017 had a times interest earned of XXXXXXXXXXand a cash coverage ratio of XXXXXXXXXXI suggest PP lease to Mission Furniture, especially since they have low debt, fall into a normal CCC for their industry, and have a tremendous cash coverage ratio, which means it can generate cash from operations to meet financial obligations (Brooks, 2019, p. 435).


References



Brooks, R. M. (2019).Financial Management: Core Concepts(4th ed.). Pearson.






Furniture & Fixtures Industry. Furniture & Fixtures Industry Efficiency, Revenue per Employee, Inventory and Receivable Turnover Ratios Q XXXXXXXXXXRetrieved April 25, 2023, from https://csimarket.com/Industry/industry_Efficiency.php?ind=407






A mininum of two references is needed for each response.






Answered 4 days After Apr 27, 2023

Solution

Sandeep answered on May 01 2023
5 Votes
Yes, PP has sufficient reason to believe that Mission Furniture business are stable and earning with ability to generate cash from Operations to mee the Short-Term Financials obligations.
This is further co
oborated by the following Financial Ratio’s and Analysis:
    Liquidity Measurement Ratios
    20X5
    20X6
    20X7
    
    
    
    
    Cu
ent Ratio = Cu
ent Assets/Cu
ent Liabilities
    2.74
    9.90
    10.94
    
    
    
    
    Quick Ratio= (Cu
ent Assets - Inventory)/Cu
ent Liabilities
    1.27
    4.45
    4.90
    
    
    
    
    DSO = (AR(Opening) + AR(Closing))2/Revenue/365
    10.17
    9.79
    10.15
    
    
    
    
    DIO = ((Inventory Opening + Inventory Ending)/2)/COGS/365
    76.37
    70.63
    69.01
    
    
    
    
    Operating Cycle = DSO + DIO
    86.54
    80.42
    79.16
    
    
    
    
    DPO = (AP(Opening) + AP(Closing))2/Revenue/365
    10.02
    8.84
    7.86
    
    
    
    
    CCC = DSO +DIO -DPO
    76.52
    71.58
    71.30
    
    
    
    
    Inventory Turnover Ratio=
    2.20
    2.46
    2.50
    
    
    
    
    Receivable Turnover Ratio
    35.88
    37.27
    35.96
    
    
    
    
    Payable Turnove
    16.79
    19.62
    21.91
    Debt Ratios
    
    
    
    
    
    
    
    Debt Ratio = Total Liabilities/Total Assets
    0.262
    0.131
    0.056
    
    
    
    
    Debt Equity Ratio = Total Liabilities/Total Equity
    0.356
    0.150
    0.060
    
    
    
    
    Interest Coverage Ratio =EBIT/Interest Expense
    269.83
    285
    212.75
    
    
    
    
    Operating Performance Ratios
    
    
    
    
    
    
    
    Fixed Asset Turnover= Revenue/NetPPE
    3.27
    3.59
    3.59
    
    
    
    
    Asset Turnover = Revenue/Total Avg. Assets
    1.28
    1.38
    1.41
    
    
    
    
    Cash Flow Indicator Ratios
    
    
    
    
    
    
    
    Operating Cash Flow Sales = Operating Cash Flows/Revenue
    19.34%
    19.32%
    19.36%
    
    
    
    
    Cash Flow Coverage = Operating Cash Flows/Total Debt
    1.81
    40.91
    45.60
    Profitability Indicator Ratios
    20X5
    20X6
    20X7
    
    
    
    
    Gross Profit Margin = Gross Profit/ Revenue
    53.91%
    52.49%
    52.82%
    
    
    
    
    Operating Profit Margin = Operating Income/Revenue
    17.09%
    17.18%
    17.21%
    
    
    
    
    Pre-Tax Profit Margin
    17.03%
    17.12%
    17.13%
    
    
    
    
    Net Profit Margin
    12.18%
    11.04%
    11.57%
    
    
    
    
    NI per EBT=Net Income/EBT
    71.54%
    64.50%
    67.53%
    
    
    
    
    EBT per EBIT =EBT/EBIT
    99.63%
    99.65%
    99.53%
    
    
    
    
    EBIT per Revenue=EBIT/Revenue
    17.09%
    17.18%
    17.21%
My Analysis:
Mission...
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