Week 4 Final Project

Week 1

1-800-Flowers.com Inc.
Financial Ratios
	2014	2013	2012	2011
Current Ratio	1.24	1.22	1.35	1.21
Debt Ratio	0.30	0.32	0.39	0.45
Quick Ratio	0.45	0.49	0.70	0.60
Debt-Equity Ratio	0.44	0.48	0.64	0.81
Total Asset Turnover	0.73	0.75	0.69	0.68
Profit Margin	8%	7%	10%	3%
Inventory Turnover
Return on Assets	6%	5%	7%	2%
Receivables Turnover	14.61	12.48	12.19	11.44
Return on Equity	8%	7%	11%	4%

Return on Assets & Equity Analysis

Re turn on Assets 2014 2013 2012 2011 5.7450601527082736E-2 4.9269613272924305E-2 6.6626895426810856E-2 2.2268837249125321E-2 Return on Equity 2014 2013 2012 2011 8.2592763730536548E-2 7.2788605254296368E-2 0.10909563023963202 4.0392203923451053E-2 Profit Margin 7.889266963309674E-2 6.5986503856041129E-2 9.6684053651266769E-2 3.2742420947824993E-2

Week 2

Question(a)
PV= FV/ (1+0.085)^6
$24000/1.6315
pv= $14710.389
thus, $14710.39 will be worth$24000 in 6 years at rate of 8.5%
Pv= $14710.389
Question(b)
Pv = $12000
FV = $24000
period 7 years
IRR=?
IRR = (FV/PV)^(1/N)^-1
IRR = (24000/12000)^(1/7)^-1
2^0.414286 -1
IRR= 0.104092
IRR = 10.41%
The rate of return is 10.41% more than the previous return rate, therefore the deal is good and should continue.
Question ©	( c)
Dividents = $ 4.25
currently selling at $ 36 per share
held for 5 years
growth rate 3%
required return 11%
maximum price?
( divident *(1+ growth)
( future dividents / (expected rate of return- growth rate)
4.25*(1+0.03)= 4.3775
4.3775/ (0.11-0.03)
price per share = 54.7185
question (d )
Bonds
per value = $1000
maturity = 16 years
coupon rate- 5%
currently selling at $987
callable next 4 years
call price 105
YTM = [ (face value/bond price)^1/n]-1
=[(1000/987)1/16]-1
=5.12%
calculating the YTC
YTC = Call price (105% of 1000)
YTC = (Annual interest + (call price- markert price)/ number of years to call)/[call price + market price]/ 2
YTC =( 5 + (105-987)/4)/ (105+987)/2
YTC= -30.46

Week 3

1)
Year	0
Initial investment	312000
2)
Year	1	2	3	4	5	6
Cost saving	105500	105500	105500	105500	105500
After tax saving	68575	68575	68575	68575	68575
Deprectiation	62,400	99,840	59,904	35,942	35,942	17,971
Tax saving due to depreciation	21,840.00	34944	20966.4	12579.84	12579.84	6289.92
After-tax operating cash flows	90415	103519	89541.4	81154.84	81154.84	6289.92
3)
Year	5
Salvage value	25,000.00
WCI	11,000.00
Book value	17,971.20
Tax on profit on sale of asset	2,460.08
Terminal cash flows	33,539.92
4-6)
Disc rate	11.99%
Year	Cash flow	Cumulative cashflows
0	(323,000.00)	-323000
1	$90,415.00	-232585
2	103519	-129066
3	89541.4	-39524.6	-0.4870270214	-5.8443242572
4	81154.84	41630.24
5	114694.76
NPV	18,509.65
IRR	15%
Payback period	3 Y 6 months
7)
Initial investment	323,000.00
Presnet value of future cash flows	341,509.65
PI	1.06

1

2

3

4

5

6

7

8

9

A

B

1)

Year

0

Initial investment

312000

2)

Year

1

Cost saving

105500

After tax saving

68575

Deprectiation

62,400

Tax saving due to depreciation

21,840.00