Analyze the financial condition of a company using vertical, horizontal, and ratio analysis to make informed decisions.

Analyze the financial condition of a company using vertical, horizontal, and ratio analysis to make informed decisions..

  • Analyze the financial condition of a company using vertical, horizontal, and ratio analysis to make informed decisions.

Shoals Corporation puts significant emphasis on cash flow when planning capital investments. The company chose its discount rate of 8 percent based on the rate of return it must pay its owners and creditors. Using that rate, Shoals Corporation then uses different methods to determine the most appropriate capital outlays.

This year, Shoals Corporation is considering buying five new backhoes to replace the backhoes it now owns. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes.

The following information is available to use in deciding whether to purchase the new backhoes:

Old Backhoes

New Backhoes

Purchase cost when new

$90,000

$200,000

Salvage value now

$42,000

Investment in major overhaul needed in next year

$55,000

Salvage value in 8 years

$15,000

$90,000

Remaining life

8 years

8 years

Net cash flow generated each year

$30,425

$43,900

Instructions

1. Evaluate, discuss, and compare whether to purchase the new equipment or overhaul the old equipment. (Hint: For the old machine, the initial investment is the cost of the overhaul. For the new machine, subtract the salvage value of the old machine to determine the initial cost of the investment.)

  • Calculate the net present value of the old backhoes and the new backhoes.
  • Discuss the net present value of each, including what the calculations reveal about whether the company should purchase the new backhoes or continue using the old backhoes.
  • Calculate the payback period for keeping the old backhoes and purchasing the new backhoes. (Hint: For the old machines, evaluate the payback of an overhaul.)
  • Discuss the payback method and what the payback periods of the old backhoes and new backhoes reveal about whether the company should purchase new backhoes or continue using the old backhoes. Calculate the profitability index for keeping the old backhoes and purchasing new backhoes.
  • Discuss the profitability index of each, including what the calculations reveal about whether the company should purchase the new backhoes or continue using the old backhoes.

2. Identify and discuss any intangible benefits that might influence this decision.
3. Answer the following: Should the company purchase the new backhoes or continue using the old backhoes? Explain your decision.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is:

  • Analyze the financial condition of a company using vertical, horizontal, and ratio analysis to make informed decisions.

Analyze the financial condition of a company using vertical, horizontal, and ratio analysis to make informed decisions.

Get a Quick Quote

Approximately 250 words
Total price (USD) $: 10.99

Reviews from Clients who Ordered from Our Website

Hire Top Writer to Do Your Upcoming Essay

Too many looming deadlines or so much to do in so little time?  As a student, perhaps you have just joined for your first year, or you’re moving to another level which means new coursework. Sometimes you have to choose between writing your essays or catching up with classwork. Other times, you can hardly make sense of what that essay the professor gave you because it is new territory. We know student life is not a bed of roses but it doesn’t have to be so difficult either.  You can delegate some of that work to an essay writing service like PaperHelpWriter.com. It is advisable to hire and paper help writer who is good at what they do so that you can get some breathing. Remember, you can only do so much, there is no need to risk burnouts.

Our essay writing service is like a one-stop-shop for all your custom essay needs. We have, in our employ, a variety of paper help writers who are equally diverse in many academic fields with ample experience to back them up.  The best writing service will always make it easier to provide custom paper help by eliminating the costs that come with time wastage and information. PaperHelpWriter.com makes it convenient for you to hire a seasoned writer as soon as you need them to do your custom essay. As an essay, we thrive on facilitating the connection between you and the custom paper help writer.

From the time you ask PaperHelpWriter.com, “Can you write my essay” to the time your ‘Write my essay’ job request is delivered, every step of the way we assure you peace of mind. You do not have to worry about getting burnt out or failing to complete your coursework.Getting custom paper help does not even have to be expensive. When you get a custom paper writer with a proven track record you only pay for what you need. We affirm ourselves a cheap essay writing service because the writers who handle each request are trustworthy and do not demand hidden fees. Therefore, we will only bill you for the amount of work that you can afford.

Though we say we are a cheap essay writing service, the work delivered by our top writers is exemplary because we are not penny-pinchers. PaperHelpWriter.com is both one of the best essay writing services and a cheap essay writing service because we do not skimp on the quality of our work and that is what makes us affordable. Our writers have flexible working hours and are reachable whenever you need your job done because the deadline is tomorrow of just want to have a long-term engagement for a lengthy custom paper. By all means, you should go ahead and use our essay writing service by shooting us that, ‘Write My Essay’ request. We would be glad to take on your custom essay and deliver on our promises of your own original essay.

Our Features

w

Customer Support

We have available customer service to help you with any queries

Quality Control

We have an editing team to review all work before submission

Affordable

Our prices are student friendly with regular coupons and discounts

v

Chat with Writer

Our interface allows you to chat with writer incase of any queries or clarification

Private

All your personal details are encrypted and we NEVER share with third parties

c

Grammar checks

We review all syntax error via software such as grammar and human proofreaders

Z

Plagiarism Report

All orders are reviewed and checked for plagiarism prior to submission

Revisions

We provide you with revisions of your order to make sure you get what you order

Place Your Order in 4 Steps & Get it on Your Email

R

Order Details

Provide detailed instructions of your assignment such as a suitable title, attachments, rubric, readings, subject, urgency etc
R

Make Payment

Complete payment for your order and assign writer via our safe and secure checkout button. One payment is completed, we assign your order to the suitable tutor

R

Relax & Wait

A suitable writer works on your paper and moves for editing. Our editors reviews the order for any errors and sends your order back to writers in case of any changes
R

Get Your Order

A notification is sent with your order to your email to login and download. Also, your order is attached to the email notification sent