## ABC, Inc. Questions

ABC, Inc. Questions \$11

ABC, Inc. has a total asset turnover of 1 and a net profit margin of 5.1%. The firm has a return on equity of 21%.

Calculate Marshall’s debt ratio.
Consider a taxable bond with a yield of 9.7% and a tax-exempt municipal bond with a yield of 4.5%.
At what tax rate would you be indifferent between the two bonds?
You are given the following data for ABC Inc.: Net income = \$600 Net operating profit after taxes (NOPAT) = \$1,409 Total assets = \$2,500 Stockholders’ equity = \$1,800 Total debt = \$700 Total operating
capital = \$5,681 Barnes’ weighted average cost of capital is 19.8%.
What is the economic value added (EVA)? You are given the following information about ABC Company: Interest expenses = \$8,104 Times Interest Earned Ratio = 2.7 times Tax Rate = 27% What is the net income?
The present value of a 17-year annuity is \$151,256.
If the interest rate is 10% and payments are made at the end of each period, what is the amount of each payment?

## Case Study Analysis: Carl Robins, New Campus Recruiter for ABC, Inc.

Case Study Analysis

In early April, Carl Robins, the new campus recruiter for ABC, Inc., successfully recruited several new hires in spite of having been at his new job for only six months; this was his first recruitment effort. He hired 15 new trainees to work for Monica Carrolls, the Operations Supervisor. He scheduled a new hire orientation to take place June 15, hoping to have all new hires working by July.

On May 15, Monica contacted Carl about the training schedule, orientation, manuals, policy booklets, physicals, drug tests, and a host of other issues, which Carl would coordinate for the new hires. Carl assured Monica that everything would be arranged in time.

After Memorial Day, Carl was at his office and pulled out his new trainee file to finalize the paperwork needed for the orientation on June 15. While going through the files, Carl became concerned. Some of the new trainees did not have applications completed or their transcripts on file, and none of them had been sent to the clinic for the mandatory drug screen. He then searched the orientation manuals and found only three copies with several pages missing from each.

Frustrated, he went for a quick walk. Upon his return to the office, he decided to check out the training room for the orientation. There he found Joe, from technology services, setting up computer terminals. Carl reviewed the scheduling log and found that Joe had also reserved the room for the entire month of June for computer training seminars for the new database software implementation.

Carl panicked. He went back to his office, put his head on his desk, and thought to himself, “What am I going to do?”

INSTRUCTIONS: Writing the Case Analysis

In writing the case analysis, we need to combine aspects of the case and key issues with perceptions and supported opinions. Then, examine alternatives, choose the most viable solution, and provide evidence to support your views. Evidence is obtained from text readings, outside research, and personal experiences.

a. Introduction. Determine a thesis. Summarize the principal outcome of your analysis.

b. Background. Take the central problem, and place it in a context for the reader providing background information about the case. Written presentation should focus your diagnosis of the problems on the most important issues.

c. Identify Key Problems.

d. Analyze possible alternatives. Discuss these alternatives and why you rejected them in determining your solution to the case. Why are these viable alternatives?
What are the constraints (e.g. money, time, personnel, resources) imposed and the reason that you do not recommend the alternative at this time?

e. Discuss your proposed solution providing support with solid evidence. The proposed solution should be specific and realistic.

f. Recommendations for further action that might be taken to resolve some of these issues. Be specific about what should be done and who should do it. What specific strategies that the individuals in the case can do to accomplish the proposed solution.

ANSWERS AVAILABLE.

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