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Managerial Finance: Please submit a Word document including your answers to the 4 questions at the end of the instructions. Johnson CompanyThe Johnson company and wants to increase its sales and would like to seek additional borrowing. The company’s management and investors are concerned about the firm’s survival and its expansion plans. The President wants to improve the financial condition of the company and wants to make sure that the company can survive in the short term. The company’s 2015 actual balance sheet is given and its projected 2016 projected balance sheet is based on getting additional financing.You are a newly hired Berkeley graduate and the president of the company wants you to conduct an analysis of the company’s financial position and recommend what steps or actions Johnson must take to improve its financial health. Balance SheetProjected 2016 2015 Cash $ 85,632 $ 7,282 Accounts receivable 878,000 632,160 Inventories 1,716,480 1,287,360 Total current assets $ 2,680,112 $ 1,926,802 Gross fixed ssets 1,197,160 1,202,950 Less accumulated depreciation 380,120 263,160 Net fixed assets $ 817,040 $ 939,790 Total assets $ 3,497,152 $ 2,866,592 Liabilities and EquityAccounts payable $ 436,800 $ 524,160 Notes payable 300,000 636,808 Accruals 408,000 489,600 Total current liabilities $ 1,144,800 $ 1,650,568 Long-term debt 400,000 723,432 Common stock 1,721,176 460,000 Retained earnings 231,176 32,592 Total equity $ 1,952,352 $ 492,592 Total liabilities and equity $ 3,497,152 $ 2,866,592 Income Statement 2015 Sales $ 7,035,600 Cost of goods sold 5,875,992 Other expenses 550,000 Total operating costs
excluding depreciation $ 6,425,992 EBITDA $ 609,608 Depreciation 116,960 EBIT $ 492,648 Interest expense 70,008 EBT $ 422,640 Taxes (40%) 169,056 Net income $ 253,584 Ratio Analysis Industry2016 2015 Average Current 2.7´Quick 1.0´Inventory turnover 6.1´Days sales outstanding 32.0Fixed assets turnover 7.0´Total assets turnover 2.6´Debt ratio 50%Times interest earned 6.2´ Operating margin (EBIT) 7.3%Net Profit margin 3.5%ROA 9.1%ROE 18.2%Answer the following questions:1. Calculate the free cash flows from an operating perspective for the company for 2016.2. Calculate the ratios for 2015 and analyze and compare these ratios to the industry ratios.3. As a supplier of materials to Johnson Company, would you still give it credit?4. As a banker, will you give Johnson a loan in 2016? Explain in detail the financial reasons based on the ratios.Purchase the answer to view itPurchase the answer to view it
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