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Pick the best answer to each question and explain. You are researching XMI Corporation (XMI). XMI has shown steady earnings per share growth (18% a year during the last seven years) and trades at a very high multiple to earnings (its P/E is currently 40% above the average P/E for a group of the most comparable stocks). XMI has generally grown through acquisition, by using XMI stock to purchase other companies whose stock traded at lower P/Es. In investigating the financial disclosures of these acquired companies and talking to industry contacts, you conclude that XMI has been forcing the companies it acquires to accelerate the payment of expenses before the acquisition deals are closed. As one example. XMI asks acquired companies to immediately pay all pending accounts payable, whether or not they are due. Subsequent to acquisition, SMI reinstitutes normal expense payment patterns. What are the effects of XMI’s pre-acquisition expensing policies? The statement is made that XMI’s “P/E is currently 40% above the average P/E for a group of the most comparable stocks.” What type of valuation model is implicit in that statement? Richardson, a new analyst at Guardian Capital, is asked to evaluate three companies that are retailers of men’s clothing: Diamond Co., Renaissance Clothing, and Deluxe Men’s Wear. Richardson stars his analysis by evaluating the characteristics of the men’s retail clothing industry. He finds few barriers to new retail entrants, high intra-industry rivalry among retailers, low product substitution costs for customers, and a large number of wholesale clothing suppliers. While conducting his analysis, Richardson discovers that Renaissance Clothing included three non-recurring items in their most recent earnings release: a positive litigation settlement, a one-time tax credit, and the gain on the sale of a non-operating asset. To estimate each firm’s intrinsic value, Richardson applies appropriate discount rates to each firm’s estimated free-cash flows over a ten-year time horizon and to the estimated value of the firm at the end of the ten-year horizon. Based on Richardson’s industry analysis, which of the following characteristics of men’s retail clothing retailing would positively affect its profitability? The industry’s: Entry costs. Substitution costs. Number of suppliers. Which of the following statements about the reported earnings of Renaissance Clothing is most accurate? Relative to sustainable earnings, reported earnings are likely: Unbiased. Upward biased. Downward biased. Which valuation model is Richardson applying in his analysis of the retailers? Relative value Absolute value Sum-of-the-parts Michelle Lee, a junior technology analyst at Guardian, asks the director of research for advice as to which valuation model to use for VEGA, a fast growing semiconductor company that is rapidly gaining market share. The director of research states that “the valuation model selected must be consistent with the characteristics of the company being valued.” Lee tells the director of research that VEGA is not expected to be profitable for several more years. According to management guidance, when the company turns profitable, it will invest in new product development; as a result it does not expect to initiate a dividend for an extended period of time. Lee also notes that she expects that certain larger competitors will become interested in acquiring VEGA because of its excellent growth prospects. Which valuation model should the director of research most likely recommend Lee use to estimate the value of VEGA? Free cash flow Dividend discount P/E relative valuation.
Write a 2-3 pages paper for “A Modest Proposal” by Johnathan Swift discussing how the community is established.
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When the paperback version comes out, the hardcover books go on sale for $5. How many hardcovers should be produced?
Determine the availability for each of these cases MTBF 40 days, average repair time 3 days MTBF 300 hours, average repair time 6 hours.
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