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Kellogg Corp. Financial Analysis

The market value of the firm is $546.9 million. The firm's cost of capital at market was 3.3 percent.

The probable costs of alternative forms of financing are as follows:

The recommended policy for an acceptable require return on investment (ROI) for investment in a subsidiary is an ROI equal to the probable cost of financing based on the issuance of new common stock. Within the context of this policy, the minimum ROI for the proposed investment will be eight-percent.

Part I [100 Percent Equity From Parent]

Pro-Forma Balance Sheets _______________Year_________________

Item _Beginning __First___ __Second__

Cash 6,000,000 733,200 1,000,000

Securities 5,240,000 7,188,828

Receivable 1,200,000 1,700,000

Inventories 1,400,000 2,000,000

Land 3,000,000 3,000,000 3,000,000

Building 17,000,000 17,000,000 17,000,000

(Res. Depr. - 340,000 - 680,000

Equipment 12,000,000 12,000,000 12,000,000

(Res. Depr.) __________ - 1,200,000 - 2,400,000

Total 38,000,000 39,033,200 40,808,828

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Kellogg Corp. Financial Analysis. (1969, December 31). In LotsofEssays.com. Retrieved 23:29, October 24, 2014, from http://www.collegetermpapers.com/viewpaper/28350.html
 
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