## (Solved) Rasmussen College - F490c - Module 06 Assignment Problem 1 1. Imagine Paul's Pizza and Pizza Paulina are considering a merger. The owners get

For Problems 3 and 4 in the assignment, use Harley-Davidson's financial statements included in separate tabs in the attached document.

3. Using the income statement, calculate the percent change using horizontal analysis (2011 to 2012) for the revenue and evaluate the results.

Change:

Evaluation:

4. Using the income statement, calculate the percent change using vertical analysis (2011 to 2012) for the revenue, COGS, gross profit, operating expenses and EBIT, and evaluate the results.

Revenue:

Gross profit:

OE:

EBIT:

Evaluation:

Rasmussen College - F490c - Module 06 Assignment
Problem 1 1. Imagine Paul's Pizza and Pizza Paulina are considering a merger. The owners get together and analyze the proje
cash flows as the following:
Years
0
\$ 1
150,000 \$ 2
200,000 \$ 3
300,000 \$ 4
500,000 After the 4th year, they expect the cash flows to grow at a constant rate of 5%. The post merger beta is estimat
market risk premium is 4%. What is the value of the combined pizzeria? Should the merger proceed?
Explanation: ether and analyze the project. They find that the incremental net post merger beta is estimated to be 1.5. The risk-free rate is 6%. The
merger proceed? Rasmussen College - F490c - Module 06 Assignment
Problem 2
2. Calculate the NPV of a project that your company is considering. Use the assumptions in yellow.
Project description:
The project is expected to generate revenue over 7 years (no sales in year 8).
The tax rate is 35%.
The project requires an initial investment of \$10,826. It is depreciated using the straight-line method over 7 years.
The salvage value is \$1,210.
The inflation rate is as shown below. The sales revenue per unit, variable cost per unit, and cash fixed costs are all
expected to grow with inflation. DCF Analysis NPV (in \$1000's)
2013 2014 2015 Key Assumptions
Unit Sales
Inflation Rate
Cost of Capital
Tax Rate 2000
2.0%
9.0%
35.0% 4000
2.5%
9.2%
35.0% Discounting
Discount Rate = Cost of Capital
Cumulative Discount Factor 11.2%
11.2% 11.2% Price or Cost / Unit
Sales / Unit
Variable Cost / Unit
Cash Fixed Costs
Cash Flow Forecasts
Sales
Variable Costs
Gross Margin
Cash Fixed Costs
Depreciation
Total Fixed Costs \$9.69
\$7.86
\$5,320 2016
5700
3.0%
9.4%
35.0% 2017
6700
3.5%
9.6%
35.0% Operating Profit
Taxes
Net Profit
Operating Cash Flow
Investment in Plant &amp; Equipmen
Cash Flows
PV of Annual Cash Flow
Net Present Value (\$10,826) ns in yellow. ne method over 7 years. d cash fixed costs are all 2018
7450
4.0%
9.8%
35.0% 2019
3712
4.0%
10.0%
35.0% 2020
1816
4.0%
10.2%
35.0% \$1,210 Rasmussen College - F490c - Module 06 Assignment
Problem 3
For Problems 3 and 4 in the assignment, use Harley-Davidson's financial statements included in separate tabs. 3. Using the income statement, calculate the percent change using horizontal analysis (2011 to 2012) for the reve Change:
Evaluation: uded in separate tabs. 1 to 2012) for the revenue and evaluate the results. Rasmussen College - F490c - Module 06 Assignment
Problem 4 4. Using the income statement, calculate the percent change using vertical analysis (2011 to 2012) for the revenu
EBIT, and evaluate the results.
Revenue:
Gross profit:
OE:
EBIT:
Evaluation: to 2012) for the revenue, COGS, gross profit, operating expenses and Rasmussen College - F490c - Module 06 Assignment
Problem 5 5. Imagine you work for a small business owner. Your boss operates Harry's Hot Dogs. He wants to determine the
data on advertising dollars spent as well as sales revenue from the restaurant. It certainly seems reasonable th
measure the strength of that relationship and then use the information to help forecast sales revenue for futur
calculations. Interpret the results. Weekly
1
\$125
2
\$150
3
\$125
4
\$175
5
\$200
6
\$100
7
\$250
8
\$125
9
\$175
10
\$175
11
\$250
12
\$300
13
\$200
14
\$250
15
\$125
16
\$175
17
\$200
18
\$225
19
\$250
20
\$300 Weekly Sales
Revenue
\$24,006
\$27,695
\$26,798
\$29,049
\$31,204
\$24,302
\$29,679
\$25,403
\$27,001
\$30,004
\$29,454
\$32,405
\$28,330
\$31,044
\$24,560
\$30,059
\$30,495
\$29,405
\$31,003
\$30,348 Interpretation:
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.8363387015
R Square
0.6994624236
0.6827658915
Standard Error
1411.3987716
Observations
20
ANOVA
df
Regression
Residual
Total Intercept
1 83452160.33411
18 35856836.86589
19
119308997.2 Coefficients Standard Error
21791.768445 1100.008196288
35.202227378
5.4387749304 wants to determine the effect on sales revenue of advertising strategies. You collected weekly
y seems reasonable that advertising, at least in part, drives sales revenue, but you need to
sales revenue for future periods. You run regression analysis and see the following Interpretation: MS
F
Significance F
83452160.334 41.892677026 4.345737E-006
1992046.4925 t Stat
P-value
Lower 95%
Upper 95% Lower 95.0% Upper 95.0%
19.810550975 1.13516E-013 19480.7369814 24102.79991 19480.736981 24102.79991
6.4724552549 4.34574E-006 23.7757852551 46.628669501 23.775785255 46.628669501 12 Months Ended
Dec. 31, 2012 Document And Entity Information (USD \$) Jan. 31, 2013 Jul. 01, 2012 Document and Entity Information [Abstract]
Entity Registrant Name
Entity Central Index Key
Current Fiscal Year End Date
Entity Filer Category
Document Type
Document Period End Date
Document Fiscal Year Focus
Document Fiscal Period Focus
Amendment Flag
Entity Common Stock, Shares Outstanding
Entity Well-known Seasoned Issuer
Entity Voluntary Filers
Entity Current Reporting Status
Entity Public Float HARLEY DAVIDSON INC.
793952
-19
Large Accelerated Filer
10-K
31-Dec-12
2012
FY
0
226,249,774
Yes
No
Yes
\$10,329,347,573 Consolidated Statements Of Operations (USD \$)
Revenue:
Motorcycles and related products
Financial services
Total revenue
Costs and expenses:
Motorcycles and related products cost of goods sold
Financial services interest expense
Financial services provision for credit losses
Restructuring expense and asset impairment
Total costs and expenses
Operating income
Investment income
Interest expense
Loss on debt extinguishment
Income before provision for income taxes
Provision for income taxes
Income from continuing operations
Income (loss) from discontinued operations, net of tax
Net income (loss)
Earnings per common share from continuing operations:
Basic
Diluted
Earnings (loss) per common share from discontinued operations:
Basic
Diluted
Earnings (loss) per common share:
Basic
Diluted
Cash dividends per common share 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
\$4,942,582,000 \$4,662,264,000
637,924,000
649,449,000
5,580,506,000 5,311,713,000
3,222,394,000
195,990,000
22,239,000
1,111,232,000
28,475,000
4,580,330,000
1,000,176,000
7,369,000
46,033,000
0
961,512,000
337,587,000
623,925,000
0
\$623,925,000 3,106,288,000
229,492,000
17,031,000
1,060,943,000
67,992,000
4,481,746,000
829,967,000
7,963,000
45,266,000
0
792,664,000
244,586,000
548,078,000
51,036,000
\$599,114,000 \$2.75
\$2.72 \$2.35
\$2.33 \$0
\$0 \$0.22
\$0.22 \$2.75
\$2.72
\$0.62 \$2.57
\$2.55
\$0.48 onths Ended
Dec. 31, 2010
\$4,176,627,000
682,709,000
4,859,336,000
2,749,224,000
272,484,000
93,118,000
1,020,371,000
163,508,000
4,298,705,000
560,631,000
5,442,000
90,357,000
85,247,000
390,469,000
130,800,000
259,669,000
-113,124,000
\$146,545,000
\$1.11
\$1.11
(\$0.48)
(\$0.48)
\$0.63
\$0.62
\$0.40 Consolidated Statements Of Comprehensive Income (USD \$)
Net income
Other comprehensive income, net of tax
Derivative financial instruments:
Unrealized net gains (losses) arising during the period
Net losses (gains) reclassified into net income
Total derivative financial instruments
Marketable securities:
Unrealized gains (losses) on marketable securities
Net (gains) losses reclassified into net income
Total marketable securities
Pension and postretirement benefit plans:
Amortization of net prior service (credit) cost
Amortization of actuarial loss
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net
Unamortized Gain (Loss) Arising During Period, Net of Tax
Actuarial loss reclassified into net income due to settlement
Prior service credit (cost) reclassified into net income due to net curtailment loss
Total pension and postretirement benefit plans
Total other comprehensive (loss) income, net of tax
Comprehensive income 12 Months End
Dec. 31, 2012
\$623,925,000
1,400,000
-513,000
-9,631,000
-10,144,000
350,000
0
350,000
-563,000
32,295,000
-158,213,000
3,930,000
0
122,551,000
-130,945,000
\$492,980,000 12 Months Ended
Dec. 31, 2011 Dec. 31, 2010
\$599,114,000 \$146,545,000
-5,616,000 9,449,000 -966,000
19,185,000
18,219,000 -7,852,000
4,880,000
-2,972,000 460,000
0
460,000 -133,000
0
-133,000 -564,000
23,584,000 925,000
20,944,000 -146,768,000
18,431,000
173,000
2,942,000
1,000
-1,393,000
123,574,000 -41,849,000
-110,511,000
48,193,000
\$488,603,000 \$194,738,000 Consolidated Balance Sheets (USD \$)
Dec. 31, 2012 Dec. 31, 2011
In Thousands, unless otherwise specified
Current assets:
Cash and cash equivalents
\$1,068,138
\$1,526,950
Marketable securities
135,634
153,380
Accounts receivable, net
230,079
219,039
Finance receivables, net
1,743,045
1,760,467
Inventories
393,524
418,006
Restricted Cash and Cash Equivalents
188,008
229,655
Deferred income taxes
110,853
132,331
Other current assets
181,655
102,378
Total current assets
4,050,936
4,542,206
Finance receivables, net
4,038,807
4,026,214
Property, plant and equipment, net
815,464
809,459
Goodwill
29,530
29,081
Deferred income taxes
171,845
202,439
Other long-term assets
64,191
64,765
Total assets
9,170,773
9,674,164
Current liabilities:
Accounts payable
257,386
255,713
Accrued liabilities
513,591
564,172
Short-term debt
294,943
838,486
Current portion of long-term debt
437,162
1,040,247
Total current liabilities
1,503,082
2,698,618
Long-term debt
4,370,544
3,843,886
Pension liability
330,294
302,483
Postretirement healthcare liability
278,062
268,582
Other long-term liabilities
131,167
140,339
Commitments and contingencies (Note 17) Shareholders' equity:
Series A Junior participating preferred stock, none
issued
0
0
Common stock, 341,265,838 and 339,107,230
shares issued in 2012 and 2011, respectively
3,413
3,391
1,066,069
968,392
Retained earnings
7,306,424
6,824,180
Accumulated other comprehensive loss
-607,678
-476,733
Stockholders equity before treasury stock
7,768,228
7,319,230
Less: Treasury stock (115,165,744 and
108,566,699 shares in 2012 and 2011,
respectively), at cost
-5,210,604
-4,898,974
Total shareholders' equity
2,557,624
2,420,256
Total liabilities and shareholders' equity
9,170,773
9,674,164
Variable Interest Entity, Primary Beneficiary
[Member]
Current assets: Finance receivables, net
Restricted Cash and Cash Equivalents
Other current assets
Finance receivables, net
Current liabilities:
Current portion of long-term debt
Long-term debt 470,134
176,290
5,288
1,631,435 591,864
229,655
7,221
2,271,773 399,477
\$1,048,299 640,331
\$1,447,015 Consolidated Balance Sheets (Parenthetical) Dec. 31, 2012 Dec. 31, 2011
Statement of Financial Position [Abstract]
Preferred stock, shares issued
Common stock, shares issued
Treasury stock, shares 0
341,265,838
115,165,744 0
339,107,230
108,566,699 Consolidated Statements Of Cash Flows (USD \$)
In Thousands, unless otherwise specified
Statement of Cash Flows [Abstract]
Net cash provided by operating activities of continuing operations (Note 2)
Cash flows from investing activities of continuing operations:
Capital expenditures
Origination of finance receivables
Collections on finance receivables
Purchases of marketable securities
Sales and redemptions of marketable securities
Net cash (used by) provided by investing activities of continuing operations
Cash flows from financing activities of continuing operations:
Proceeds from issuance of medium term notes
Repayment of medium term notes
Repayment of senior unsecured notes
Proceeds from securitization debt
Repayments of securitization debt
Net borrowings of asset-backed commercial paper
Net repayments in asset-backed commercial paper
Net increase (decrease) in credit facilities and unsecured commercial paper
Net change in restricted cash
Dividends
Purchase of common stock for treasury, net of issuances
Excess tax benefits from share-based payments
Issuance of common stock under employee stock option plans
Net cash (used by) provided by financing activities of continuing operations
Effect of exchange rate changes on cash and cash equivalents of continuing operations
Net increase (decrease) in cash and cash equivalents of continuing operations
Cash flows from discontinued operations:
Cash flows from operating activities of discontinued operations
Cash flows from investing activities of discontinued operations
Effect of exchange rate changes on cash and cash equivalents of discontinued operations
Net cash used by discontinued operations, total
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents:
Cash and cash equivalents - beginning of period
Cash and cash equivalents of discontinued operations - beginning of period
Net increase (decrease) in cash and cash equivalents
Less: Cash and cash equivalents of discontinued operations - end of period
Cash and cash equivalents - end of period 12 Months Ended
Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2010
\$801,458 \$885,291 \$1,163,418 -189,002
-2,858,701
2,768,089
-4,993
23,296
-261,311 -189,035
-2,622,024
2,760,049
-142,653
130,121
-63,542 -170,845
-2,252,532
2,668,962
-184,365
84,217
145,437 993,737
420,870
0
763,895
1,405,599
200,417
24,301
-744,724
41,647
141,681
-311,632
13,065
45,973
-990,073
-8,886
-458,812 447,076
59,211
0
1,082,599
1,754,568
0
483
237,827
59,232
111,011
-224,548
6,303
7,840
-308,944
-7,788
505,017 0
200,000
-380,757
598,187
1,896,665
0
845
30,575
77,654
94,145
-1,706
3,767
7,845
-1,856,090
4,940
-542,295 0
0
0
0
-458,812 0
0
0
0
505,017 -71,073
0
-1,195
-72,268
-614,563 1,526,950
0
-458,812
0
\$1,068,138 1,021,933
0
505,017
0
\$1,526,950 1,630,433
6,063
-614,563
0
\$1,021,933 Consolidated Statements Of Shareholders' Equity (USD \$)
Beginning Balance at Dec. 31, 2009
Beginning Balance, shares at Dec. 31, 2009
Other comprehensive income, net of tax
Net income (loss)
Amortization of net prior service cost, net of taxes
Amortization of actuarial loss, net of taxes
Change in net unrealized gains (losses):
Other Comprehensive Income (Loss), Net of Tax
Adjustment for consolidation of QSPEs under ASC Topics 810 and 860
Dividends
Repurchase of common stock
Share-based compensation and 401(k) match made with Treasury shares
Issuance of nonvested stock (in shares)
Issuance of nonvested stock
Exercise of stock options
Exercise of stock options (in shares)
Tax benefit of stock options and nonvested stock
Ending Balance at Dec. 31, 2010
Ending Balance, shares at Dec. 31, 2010
Other comprehensive income, net of tax
Net income (loss)
Amortization of net prior service cost, net of taxes
Amortization of actuarial loss, net of taxes
Change in net unrealized gains (losses):
Other Comprehensive Income (Loss), Net of Tax
Dividends
Repurchase of common stock
Share-based compensation and 401(k) match made with Treasury shares
Issuance of nonvested stock (in shares)
Issuance of nonvested stock
Exercise of stock options
Exercise of stock options (in shares)
Tax benefit of stock options and nonvested stock
Ending Balance at Dec. 31, 2011
Ending Balance, shares at Dec. 31, 2011
Other comprehensive income, net of tax
Net income (loss)
Amortization of net prior service cost, net of taxes
Amortization of actuarial loss, net of taxes
Change in net unrealized gains (losses):
Other Comprehensive Income (Loss), Net of Tax
Dividends
Repurchase of common stock
Share-based compensation and 401(k) match made with Treasury shares Total
\$2,108,118,000 146,545,000
-925,000
20,944,000
48,193,000
-37,108,000
94,145,000
1,706,000
26,961,000
0
7,845,000
2,163,000
2,206,866,000 599,114,000
564,000
23,584,000
-110,511,000
111,011,000
224,551,000
49,996,000
0
7,840,000
2,513,000
2,420,256,000 623,925,000
563,000
32,295,000
-130,945,000
141,681,000
311,632,000
42,058,000 Issuance of nonvested stock (in shares)
Issuance of nonvested stock
Exercise of stock options
Exercise of stock options (in shares)
Tax benefit of stock options and nonvested stock
Ending Balance at Dec. 31, 2012
Ending Balance, shares at Dec. 31, 2012 0
45,973,000
-1,666,000
9,670,000
\$2,557,624,000 Common Stock [Member] Additional Paid-In Capital [Member] Retained Earnings [Member] \$3,368,000
336,800,970 \$871,100,000 \$6,324,268,000 0 0 146,545,000 0
0
0
0
0
823,594
8,000
6,000
635,892
0
3,382,000
338,260,456 0
0
0
0
26,961,000
-8,000 0
-40,591,000
94,145,000
0
0
0 7,839,000 0 2,163,000
908,055,000 0
6,336,077,000 0 0 599,114,000 0
0
0
0
473,240
5,000
4,000
373,534
0
3,391,000
339,107,230 0
0
0
49,993,000
-5,000 0
111,011,000
0
0
0 7,836,000 0 2,513,000
968,392,000 0
6,824,180,000 0 0 623,925,000 0
0
0
0 0
0
0
42,056,000 0
141,681,000
0
0 535,807
6,000
16,000
1,622,801
0
\$3,413,000
341,265,838 -6,000 0 45,957,000 0 9,670,000
\$1,066,069,000 0
\$7,306,424,000 Accumulated Other Comprehensive Income
(Loss) [Member] Treasury Balance [Member] (\$417,898,000) (\$4,672,720,000) 0 0 48,193,000
3,483,000
0
0
0
0 0
0
0
1,706,000
0
0 0 0 0
-366,222,000 0
-4,674,426,000 0 0 -110,511,000
0
0
0
0 0
0
224,551,000
3,000
0 0 0 0
-476,733,000 0
-4,898,974,000 0 0 -130,945,000
0
0
0 0
0
311,632,000
2,000 0 0 0 0 0
(\$607,678,000) 0
(\$5,210,604,000) Consolidated Statements Of Shareholders'
Equity (Parenthetical) (USD \$) 12 Months Ended In Thousands, unless otherwise specified Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2010 Statement of Stockholders' Equity
[Abstract]
Derivative financial instruments, tax
(expense) benefit \$513 \$966 \$7,852

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