Determining a company’s investment

Feedback from professor SF003

Learning Objective 3.2: Determine a company’s investment in accounts receivable.:

NEEDS IMPROVEMENT
1
Determination of average sales per day is computed incorrectly. Determination of company’s investment in accounts receivable is inaccurate and/or incomplete.

Additional Comments: Use the correct input for average collection period in formula.

Learning Objective 3.3: Determine a company’s annual inventory turnover ratio.:

MEETS EXPECTATIONS
2
Determination of inventory turnover ratio is accurate and complete.

Additional Comments:

Learning Objective 4.1: Calculate the cash conversion cycles for two companies.:

MEETS EXPECTATIONS
2
Calculations are accurate and complete.

Additional Comments:

Learning Objective 4.2: Analyze the cash conversion cycles of two companies.:

MEETS EXPECTATIONS
2
Analysis is accurate and complete.

Additional Comments:

Learning Objective 5.1: Calculate AFN.:

NEEDS IMPROVEMENT
1
Calculation doesn’t use the correct inputs. Calculation is incorrect.

Additional Comments: Your answer is incorrect. The formula is:

AFN =[ (A/So)(change in sales)] – [ (L/So)(change in sales)] – [(profit margin)(forecasted sales)(retention ratio)]

Retention ratio = 0.30

Profit Margin = 0.05

Check with tutor before submitting third assessment.

Learning Objective 5.2: Analyze strategies for reducing a company’s AFN.:

MEETS EXPECTATIONS
2
Analysis identifies at least two strategies for reducing AFN. Analysis is specific to the facts of the scenario.

Additional Comments:

Learning Objective 6.1: Calculate the cross rates between two currencies.:

MEETS EXPECTATIONS
2
Calculation uses the correct inputs. Calculation is correct.

Additional Comments:

Learning Objective 6.2: Write and solve an original cross rate problem.:

MEETS EXPECTATIONS
2
Cross rate problem uses the correct inputs. Cross rate problem is solved correctly.

Additional Comments: Good example.

Feedback SF004
Learning Objective 5.2: Identify the horizon date for a stock.:

NEEDS IMPROVEMENT
1 Identification of the horizon date for a stock is inaccurate.

Date selection is not supported by a clear rationale.
Additional Comments: Not answered. I gave you the correct answer in the last feedback.

Learning Objective 5.3: Calculate a company’s horizon or continuing value.:

NEEDS IMPROVEMENT
1 Calculation is inaccurate and/or incomplete.

Calculation is not documented in detail.
Additional Comments: At the end of Year 2, constant growth begins and the new growth rate is 5%.D1 & D2 were calculated correctly.

D3 = D2 (1+.05)

Horizon value = P2 = [D3/(.10 – .05)]

Check with tutor about math.

Learning Objective 5.4: Calculate a company’s intrinsic value today.:

NEEDS IMPROVEMENT
1 Calculation is inaccurate and/or incomplete.

Calculation is not documented in detail.
Additional Comments: Intrinsic Value = Po = (PV of D1) + (PV of D2) + (PV of Horizon Value

PV of D1 = D1/(1.10)

PV of D2 = D2/[(1.10)^2]

PV of Horizon Value = P2/[(1.10)^2]

Learning Objective 6.1: Calculate a company’s cost of common equity capital.:

NEEDS IMPROVEMENT
1 Calculation is inaccurate and/or incomplete.

Calculation is not documented in detail.
Additional Comments:Pay attention to my feedback. Do is given. Calculate D1 = Do(1+g)

Cost of equity = [(D1/Po) + g]

Learning Objective 6.2: Use a company’s cost of equity capital to compute the company’s WACC.:

NEEDS IMPROVEMENT
1 Calculation is inaccurate and/or incomplete.

Calculation is not documented in detail.
Additional Comments: Use correct cost of equity in WACC formula.

WACC = [(cost of equity) x (proportion of equity)] + [(cost of debt) x (proportion of debt) x (1-Tax Rate)]

Cost of debt is 7%, not 7.2%.

Check with tutor about math.

Learning Objective 6.3: Provide a recommendation based on analysis of a company’s WACC.:

NEEDS IMPROVEMENT
1 Recommendation does not identify weaknesses in the proposed expansion plan.

Recommendation does not provide a clear rationale.
Additional Comments: Review carefully the feedback provided in the last assessment.

Learning Objective 6.4: Calculate NPV, IRR, MIRR, payback, and discounted payback.: