Subject: Business    / Management    

Question

1.) Project UMUC is to produce 200 widgets and is scheduled to take five weeks. Each unit is planned to cost $90. The project is severely cost constrained. Performance data for the project at the end of week three is presented below:

    120 total units were planned to be produced
    130 units have actually been produced
    The financial manager reported that the business had actually spent $13,000 on the project by the end of week three.


Please answer the following questions


    Quantify cost variance. Is the project ahead or behind budget?
    Quantify schedule variance. Is the project ahead or behind schedule?
    Quantify cost performance efficiency. Is the project performing better or worse than planned?
    Quantify schedule performance efficiency. Is the project performing better or worse than planned?
    What is the forecast of project cost at completion assuming current cost performance efficiency remains the same? How much budget variance is expected at completion?
    What is the forecast of funding needed to complete the project (from this point forward)?
    What cost performance efficiency would be required for the remainder of the project to complete the project within the original budget?
    As the project financial manager, what recommendations would you make


2.) This question is based on the information provided in the abbreviated year-end Income Statement and abbreviated year-end Balance Sheet for NMC Corporation shown below.


NMC Corporation Income Statement for the Calendar Year (January 1 – December 31)
    

Thousands of dollars (except stock price, earnings per share, and dividends per share)

Net sales
    

$3000

Cost and expenses:
    

$2734

EBIT
    

$266

Less interest expense:
    

$66

Earnings before taxes
    

$200

Taxes
    

$80

Net income before preferred dividends
    

$120

Dividends to preferred stockholders
    

$8

Net income available to common stock holders
    

$112

Per share common stock:
    

Stock Price
    

$26.50

Earnings per share
    

$2.24

Dividends per share
    

$1.84


NMC Corporation Balance Sheet (Average of beginning and end of year)
    

Assets (thousands of dollars)
    

    

Liabilities and Equity (thousands of dollars)

Cash
    

$50
    

Accounts payable
    

$60

Market securities
    

$0
    

Notes payable
    

$100

Accounts receivable
    

$350
    

Accrued Wages
    

$10

Inventories
    

$300
    

Accrued Taxes
    

$130

Total Current Assets:
    

$700
    

Total Current Liabilities:
    

$300

Net plant and equipment:
    

$1300
    

Total Long Term Debt:
    

$800

    

    

Total Stock Holder’s Equity:
    

$900

Total Assets:
    

$2000
    

Total liabilities and equity:
    

$2000


8a. Calculate the NMC financial ratios contained in the following table

Financial Ratios
    

NMC Values
    

Industry Values

Current Ratio
    

    

2.5 times

Quick (Acid) Ratio
    

    

1.0 times

Total Debt to Total Assets
    

    

40%

Return on Assets (ROA)
    

    

9%

Price/Earnings Ratio
    

    

12.5 times


8b. Compare your results to the industry ratios and describe what NMC should do to improve its position in the market.