Making Long Term FM Decisions – Integrative CaseTitle:Analyzing Long Term Financial Decision

Making Long Term FM Decisions – Integrative CaseTitle:Analyzing Long Term Financial Decision Making in the Firm (LearningDemonstration 3)Initial Steps to Completion:1. Organize your team, choose a leader, and accept accountability for being the leadanalyst for one or more parts of this list of tasks.2. Complete your draft assigned task(s) and post in a common area for review by yourteam members.3. Review, comment on, and suggest changes to draft completed tasks by the team.4. Discuss and resolve differences and come to a consensus on the best responses.5. Organize your analysis, conclusions, and recommendationsCourse Deliverable: Write a report responding to the tasks assigned to your team.Clearly organize your report and effectively communicate the team’s analysis,conclusions and recommendations (if appropriate) associated with each task. Provide thedetails supporting your analysis as attachments. You should be completing tasks along theway – do not wait until the end of the course to complete your tasks.Introduction:As a special analytical group set up by ACME Iron by the firm’sController, you have been tasked to respond to the following issues raised in a meetingwith the CFO. You and your team must look over several prospective financial strategiesto aid in the successful growth of ACME Iron.You are to work over an 10 week period on several projects, detail your work as youproceed on these projects, and assemble the report for the CFO to make to the board onthe items listed while you work in a team environment. Management will be looking atthe team over this period on how well they self-organize and analyze the research areaswhich will include:Capital investment analysisCAPM – Capital Asset Pricing Model determination for the companyWACC – Weighted Average Cost of Capital computationsEVA – Economic Value AnalysisMVA – Market Value AddedCapital structure of the companyDividend policyStock repurchase and option pricing strategyBankruptcy risk analysisDecision Tree Creation1
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Real option analysis of projectsThe CFO wants to test your team out on a simple project in the first task before you getinto preparing items for his board presentation in subsequent tasks and projects. He wantsto see how well you perform tasks as a team as well as how accurate and thoughtful youare in your work. Details are important to him as well as good organization/presentationand communication.Financial Statements for use on TasksHere are the financial statements you are to use in this exercise:ACME IronBalance SheetAssetsCurrent assets:20142015changeCash500,000600,000100,000Investments1,000,0001,025,00025,000Inventories110,000,000117,000,0007,000,000Accounts receivable11,750,00012,500,000750,000Pre-paid expenses2,500,0002,600,000100,000Other00-Total current assets125,750,000133,725,0007,975,000Fixed assets:20142015changeProperty and equipment165,000,000175,000,00010,000,000Leasehold improvements00-Equity and other investments55,000,00065,000,00010,000,000Less accumulated depreciation15,000,00015,500,000500,000Total fixed assets235,000,000255,500,00020,500,000Other assets:20142015changeGoodwill75,000,00070,000,000(5,000,000)Total other assets75,000,00070,000,000(5,000,000)Total assets435,750,000459,225,00023,475,0002
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