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You are the CFO of ABC Corp. You are looking to hire a financial analyst, and you've given an assignment to two short-listed candidates. You've
You are the CFO of ABC Corp. You are looking to hire a financial analyst, and you've given an assignment to two short-listed candidates. You've given the following information to the job applicants: The company reported net sales of $1,875 million. Assume that there were no noncash sales. Operating costs (excluding depreciation and amortization) were 65% of the company's total revenues. Depreciation and amortization charges were 5% of total sales. Interest charges were 15% of earnings before interest and taxes (EBIT) with a tax rate of 40%. You've asked the candidates to give you a number that best represents the cash flow situation of the company. Finn submits a report stating that the firm has $381 million in cash available. Arty submits a report stating that the firm has $286.875 million in cash. Based on the information given to them, which applicant has provided a better estimate of the company's current cash flows? Check all that apply. [J Finn Arty Income Statement For the Year Ended on December 21 (Millions of dollars) J&H Corp. Industry Average MNet sales 1,500 1,875 Operating costs, except depreciation and amortization 1,200 1,500 Depreciation and amortization 60 75 Total operating costs 1,260 1,575 Operating income (or EBIT) 240 $300 Less: Interest 24 45 Earnings before taxes (EBT) 216 255 Less: Taxes (40%) a6 102 Net income 130 153 Based on the information given to leffrey, he submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply. (] 3&H Corp. has -$176.0 million of noninterest-bearing current assets net of noninterest-charging liabilities. 18H Corp. has $296.0 million in nonoperating assets. [J J&H Corp.'s NOPAT is $144.0 million, which is lower than the industry average of $180.0 million. [J Based on the information on industry averages, J&H Corp. would generate higher profits than the other players in the industry if all players were of a similar size and had no debt or held no financial assets
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