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Luna Lighting Company’s free cash flow

Posted on March 11, 2023 | by admin3

1. In the Chapter 2 discussion assignment, you were provided with the following information for the Luna Lighting Company:
Luna Lighting Company
Balance Sheets as of December 31, 2021, and 2022
2021 2022
Accounts Payable $ 361 $ 444
Short-term Notes Payable 315 270
Long-term Deferred Taxes 318 412
Long-term Debt 2,869 2,956
Common Stock 456 610
Retained Earnings 4,591 4,741
Total Liabilities & Equity $8,910 $9,433
2021 2022
Cash $ 141 $ 184
Marketable securities 56 32
Accounts receivable 1,025 1,167
Inventory 918 963
Net Fixed Assets 6,770 7,087
Total Assets $8,910 9,433
a. Considering the left-hand side of the cash flow identity (cash flows from assets associated with investment activities), determine Luna Lighting Company’s free cash flow (FCF) for the year 2022.
b. Luna has 1,000 shares of common stock outstanding. Under the assumption that FCFs will grow by 2 percent into the foreseeable future, compute an estimate of the price per share based on FCFs if investors require a 9 percent return.
c. If Luna’s current dividend is also expected to grow at 2 percent into the foreseeable future, what would the estimated price per share be?

The trin ratio for day

Posted on March 11, 2023 | by Brian Leakey

Day 1 2 3 4
Advances 1023 1245 2460 2509
Declines 2334 2004 1178 980
Volume Advancing(m) 214349 225066 666012 679332
Volume Declining(m) 616678 555010 198058 172311
Yield on Top Rated bond 6.80% 6.70% 6.70% 6.60%
Yield on Intermediate-grade bond 7.40% 7.40% 7.50% 7.60%
What is the trin ratio for day 1?
What is the trin ratio for day 4?
Does the change in the trin ratio from day 1 to day 4 show a bullish or bearish trend?

The leverage ratio of the company

Posted on March 11, 2023 | by Brian Leakey

Suppose you are an analyst in pharmaceutical industry for Bank of America. You collect the following data to estimate the expected growth rate of dividends and use it as an input for valuing an oil company’s common stock.
Return on Assets 10%
Profit Margin 8%
Debt/Equity 3
Payout Ratio 50%

a. The leverage ratio of this company is
b. The company’s expected growth rate is

Required rate of return of the stock

Posted on March 11, 2023 | by Brian Leakey

You are a financial analyst at Bank of America and you have collected following information for Lotus Tech Company. The company has beta of 1.5 and a ROE of 20%. The dividend payout ratio is 50%. Last twelve month earnings were $4 per share. The annual dividend was just paid. The consensus estimate of the coming year’s market return is 11%, and T-bills currently offer a 8% return.
(keep two decimal places please.)
a. What is the required rate of return of the stock? (input format: 15.32%)
b. What is the growth rate of the stock? (input format: 15.32%)
c. What is the intrinsic value of the stock? (input format: $15.32)
d. What is PVGO of the stock? (input format: $15.32)
e. Suppose your research convinces you that company will announce momentarily that it will immediately change its dividend payout ratio to 75%. Find the intrinsic value of the stock. (input format: $15.32)

The net cash

Posted on March 11, 2023 | by admin3

You have collected the following cash flow data of Herman Miller Office Furniture for the year ended December 31, 2019

Sale of a used Bus 45450
Cash dividend 90000
Purchase of land 28280
Interest payment on debt 26260
Cash Payment on Salary 90900
Purchase of a New Drilling machine 76760
Purchase of New Wood working machine 60000
Repurchase of stock 75000
Cash payments to Vendor 161600
Cash collections from customers 393900
Cash at the beginning of the year 400000

Please answer the following questions:
a . What is the net cash provided by or used in operating activities?
b . What is the net cash provided by or used in investing activities?
c . What is the net cash provided by or used in financing activities?
d . What is the cash at the end of the year?