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Moore Plumbing Supply Company

Capital Structure

Mort Moore founded Moore Plumbing Supply after returning from duty in the South Pacific during World War II. Before joining the armed forces, he had worked for a locally owned plumbing company and wanted to continue with that type of work once the war effort was over. Shortly after returning to his hometown of Minneapolis, Minnesota, he became aware of an unprecedented construction boom. Returning soldiers needed new housing as they started families and readjusted to civilian life. Mort felt that he could make more

money by providing plumbing supplies to contractors rather than performing the labor, and he decided to open a plumbing supply company. Mort’s parents died when he was young and was raised by his older brother, Stan, who ran a successful shoe business during the 1920s. Stan often shared stories about owning his own business and in particular about a large expansion that was completed just before the market collapsed. Because of the economic times, Stan lost the business but was lucky to find employment with the railroad. He dutifully saved part of each paycheck and was so thankful that his brother returned home safely that he decided to use his sizable savings to help his brother open his business. Mort kept in mind his brother’s failed business and vowed that his company would operate in such a way that it would minimize its vulnerability to general business downturns.

Moore’s extensive inventory and reasonable prices made the company the primary supplier of the major commercial builders in the area. In addition, Mort developed a loyal customer base among the home repair person, as his previous background allowed him to provide excellent advice about specific projects and to solve unique problems. As a result, his business prospered and over the past 20 years, sales have grown faster than the industry. Because of the large orders, the company receives favorable prices from suppliers, allowing Moore Plumbing Supply to remain competitive with the discount houses that have sprung up in the area. Over the years, Mort has kept his pledge and the company has remained in a very strong financial position. It had a public sale of stock and additional stock offers to fund expansions including regional supply outlets in Milwaukee, Wisconsin, and Sioux City, Iowa.

Recently, Stan decided that the winters were too long, and he wanted to spend the coldest months playing golf in Florida. He retired from the day-to-day operations but retained the position of President and brought in his grandson, Tom Moore, to run the company as the new Chief Executive Officer. Tom was an excellent choice for the position. After graduating summa-cum-laud with a degree in communications from the University of Wisconsin, he worked in the Milwaukee operation where he was quickly promoted to manager. In ten years, sales quadrupled under his leadership and employees remained loyal. He was familiar with the supply and demand of various components and was able to spot new trends in the industry before they became widely accepted. Although he had developed a keen sense of financing working capital, he had no background in higher-level corporate finance decision-making

Tom spent the first few months on the new job trying to get a better handle on the bigger picture and puzzled over the company’s historical balance sheets, income statements, and cash flow statements. One area that concerned him was the company’s heavy reliance on equity financing. Moore Plumbing has a large line of credit and uses this and short-term debt to finance its temporary working capital requirements. However, it does not use any permanent debt capital. Other construction related retail and wholesale companies have between 30 and 40 percent of their long-term capitalization in debt. Tom wonders why other companies use more permanent debt and what affect adding long-term debt would have on the company’s earnings and stock price.

Tom met with the company’s vice president of finance, Walt Harriman, and learned that the company projected its earnings before interest and taxes to be $12 million for the next year with projected tax rate to be 40 percent. Tom next talked to the company’s investment bankers and discovered that the company’s cost of equity was 16 percent. Since the company did not use debt or preferred stock financing, this also represented the company’s current weighted average cost of capital. The investment bankers indicated that the company could issue at least $30 million of long-term debt at a cost of 9 percent. The company bonds would be highly rated and would carry a low coupon because the company easily service the debt.

Because of Stan’s depression experience and his early involvement in funding the initial operation, the company not only avoided debt but also followed a policy of paying out most of its earnings as dividends, Stan was frequently quoted saying “a company with a high dividend policy rarely declared bankruptcy.” In lieu of using retained earnings to reinvest in the company, the company used accounts payable and deferred taxes to meet its operating capital needs and issued capital was purchased by members of the Moore family and they currently hold 75 percent of the outstanding equity.

Tom is interested in gaining additional insights into capital structure issues and has asked Walt to brief him in the area. He wants a basic review of the terminology but is particularly interested in the impact of different types of risk and in understanding of the better-known financial theorists. Walt knew that Tom could grasp complex issues quickly and felt that a thorough discussion of Modigliani and Miller’s work would be appropriate. He also felt that Miller’s addition of personal taxes to the earlier models would be good to cover, and he determined that a good approximation of personal tax rate on debt income was 28 percent and for stock income was 20 percent. He decided to add the more recent considerations of financial distress, agency costs, and information asymmetry for a comprehensive overview. To help with this analysis, Walt developed the following estimates for cost of debt and cost of equity that included an increasing premium for financial distress and agency costs as the debt ratio increases.

Debt ratio kd ks

0% 16.0%

10% 9.00% 17.0%

20% 9.25% 17.8%

30% 9.75% 19.0%

40% 10.50% 20.5%

50% 12.00% 22.0%

60% 15.00% 26.0%

70% 20.00% 30.0%

80% 30.00% 40.0%

90% 50.00% 60.0%

You have been assigned to help Walt develop the briefing and he has prepared the following questions to help direct your energies. He has also asked you to think about other relevant issues that Moore might bring up. Walt is aware of Tom’s keen intellect but is also aware of his reputation for “asking the right questions” and for having little tolerance for people who are not adequately prepared, so he is concerned about covering the issues in an understandable manner.

Questions

What is meant by capitalization? What is meant by a firm’s capital structure? For financial planning purposes, explain why either book or market value should be used to determine the firm’s capital structure. What is capital structure theory?
Discuss the following issues relating to business risk and financial risk.
1. What is the difference between business risk and financial risk? Explain some of the factors that contribute to each. Evaluate Moore Plumbing Supply’s level of business risk.
2. How do these risks relate to total risk?
3. How does business risk affect capital structure decisions?
Discuss the following issues relating to Modigliani and Miller’s (MM) 1958 capital structure model.
1. What was the importance of the model?
2. What are the basic assumptions of the model?
Discuss MM’s later models (1963) in which they relaxed the no-tax assumption and added corporate taxes. Discuss Proposition I and II. Miller added personal taxes to the model in his 1976 Presidential Address to the American Finance Association. What happens to Miller’s model, in general, if there are no corporate or personal taxes? What happens when only corporate taxes exist?
Briefly describe the asymmetric information theory of capital structure. What are its implications for financial managers?
Prepare a summary of the implications of capital structure theory that can be presented to Tom Moore. What insights can capital structure theory provide managers regarding the factors that influence their firm’s optimal capital structures?
Finally, what recommendations would you make about the capital structure of Moore Plumbing Supply Company? Justify your answer.

Thesis and Introduction

Using your brainstorming assessment about creating positive change in the community by reducing gun violence in New Orleans. Write an introductory paragraph with a three-part thesis statement. Be sure to include:

A clear topic sentence that introduces your course project's main topic.
3-4 additional sentences on the topic and why it is essential.
Close the paragraph with your three-part thesis statement.

Nursing Pediatric Assignment

Develop a discharge plan with three goals listed in order of priority before discharge from current orders. Provide a rationale for why you listed the goals in a particular order. Also, list three nursing interventions to meet each goal (you should have nine interventions in total). Last, the mother should give the child the exact dosage she will need for acetaminophen, ibuprofen, and cefuroxime when she gets home and explain why the same dosage is essential.

Scenario:

A 5-year-old Gabriel, a multiracial male weighing 48 lbs with a penicillin allergy, arrives in the emergency room; no cultural considerations are identified. You are handed the following notes on the patient that read:

He arrived in the ER with his mother after falling out of bed after jerking movement activity, as witnessed by his older brother while sleeping. The right upper extremity appears with deformity. Mother and child speak English. The child has no significant medical history. The mother reports incontinent of urine during the episode.

The physician discharges Gabriel from the ER to home with a diagnosis of Right ear infection, Acute Febrile Seizure, and fracture of the right ulna.

Discharge orders include:

Discussion 3 of 103 Econ

Part 1 Discussion Questions:

Externalities and the Environment
Meyer describes the "Tragedy of the Commons." The IMF article explains how this type of problem is an example of an "externality." What is an externality? What might be a good government policy to solve the problem of the environmental externality that leads to high greenhouse gas emissions?
Moral Hazard and Adverse Selection
"Moral hazard" is a term often used in the context of peoples' behavior once they have insurance. Szuchman and Anderson explore the idea of moral hazard in personal relationships. How would you define moral hazard? Provide an example of a moral hazard that you have observed in your own community or workplace.

How does moral hazard differ from adverse selection? Provide an example to illustrate this concept.

Part 2 Dis of 5

Monetary Policy and Inflation

Discussion Questions:

The Fed and Monetary Policy
Monetary policy is the action taken by the Federal Reserve to expand or contract the money supply and influence interest rates.

What are the current unemployment and inflation rates? How has the Fed redefined its targets for inflation and unemployment, and how do current conditions compare to those targets?

As the top advisor to the chair of the Federal Reserve, define contractionary and expansionary monetary policies and explain which you advise the Fed to pursue today—given the inflation and unemployment targets versus the current rates.
Inflation – Winners and Losers
We often hear of inflation characterized as a bad thing, but Meyer describes both winners and losers from inflation. Give an example of one way in which you would win from unexpected inflation and an example of one way in which you would lose from unexpected inflation.

Before answering these questions, review this Summary of New Fed Monetary Policies. You may consult other sources as well and include them in your bibliography.

Part 3 of Discussion 7

Graded Discussion Week 7

Classical or Keynesian?

Classical v. Keynesian Approaches to Smoothing Business Cycles

Fiscal policies are the actions of Congress on spending and taxing. (Note this is different from monetary policy, which is the action taken by the Federal Reserve to change the money supply and interest rates.)

Explain and compare the Keynesian and classical points of view on whether or not to intervene during the business cycle (an expansion = positive real GDP growth; and a recession = negative real GDP growth).
Are we in recession today? Use today's real GDP growth rates to explain your answer.
As the President's chief economist, describe the Keynesian fiscal policy you think the administration should follow, given today's economic conditions. Support your point of view using principles of Keynesian economics, as described by Mayer in Chapter 16 of Everything Economics.
The attached summary (How our Government Supports its Citizens) outlines a number of government functions that contribute to a well-functioning society and economy.

List and explain two ways that in your everyday life there is a need for an effective government role in the economy.

What are two examples of government functions that help correct a market failure?

How our Government Supports its Citizens .docx(this document is attach, go through it before answering)

HowourGovernmentSupportsitsCitizens.docx

How our Government Supports its Citizens

The government, while often criticized, plays a crucial role in supporting its citizens in various aspects of life. Here are some key ways in which the government acts as a friend to its people:

Public Services and Infrastructure

The government provides essential services that form the backbone of our daily lives:

– Maintains roads, bridges, and public transportation systems

– Operates public parks, libraries, and community centers

– Ensures clean water supply and waste management

These services, often taken for granted, are fundamental to our quality of life and economic functioning.

Safety and Security

Protection of citizens is a primary government function:

– Law enforcement agencies maintain public order

– Fire departments respond to emergencies

– The military defends against external threats

– Food and drug safety regulations protect public health

Social Safety Net

Government programs provide crucial support during challenging times:

– Social Security offers financial security for retirees and disabled individuals

– Medicare and Medicaid provide healthcare access for elderly and low-income citizens

– Unemployment benefits offer temporary assistance to those who lose their jobs

– Programs like SNAP (food stamps) help ensure access to nutritious food

Education

The government plays a vital role in educating the population:

– Funds public schools, making education accessible to all children

– Provides student loans and grants to support higher education

– Invests in research and development at universities

Economic Stability

Several government functions aim to maintain economic stability:

– The Federal Reserve works to prevent financial crises

– Small business loans and grants support entrepreneurship

– Consumer protection laws safeguard against fraud and unfair practices

Environmental Protection

The government acts as a steward of the environment:

– Implements regulations to preserve natural resources

– Maintains national parks and wildlife refuges

– Funds research on climate change and environmental issues

Scientific Research and Innovation

Government funding drives progress in various fields:

– Supports medical research, leading to new treatments and cures

– Invests in technological advancements that benefit society

– Explores space through agencies like NASA, expanding our understanding of the universe

While the effectiveness of government actions can be debated, these functions demonstrate how the government aims to support and protect its citizens. By providing essential services, maintaining safety, offering social support, and investing in the future, the government acts as a friend to its people, working to improve their lives and well-being.

Additional Reading:

[1] https://www.usa.gov/benefits

[2] https://www.nycbar.org/get-legal-help/article/public-benefits/

[3] https://www.usa.gov/benefit-finder

[4] https://otda.ny.gov/programs/temporary-assistance/

[5] https://www.ny.gov/services/social-programs

[6] https://sarahlaviajera.com/2012/06/13/naked-economics-by-charles-wheelan/

[7] https://www.cliffsnotes.com/study-notes/3593883

[8] https://www.shortform.com/blog/naked-economics-undressing-the-dismal-science/

Benchmark Information

The purpose of this assignment is to identify a problem or concern in your organization, local community, or state in which change can occur through advocacy and legislation.

Nurses often become motivated to change aspects within the larger health care system based on their real-world experience. As such, many nurses take on an advocacy role to influence a change in regulations, policies, and laws that govern the larger health care system.

Identify a problem or concern in your organization, local community, or state. Examples of problems relevant to nursing include, but are not limited to, title "nurse" protection, sharps injury prevention, nursing shortage, nurse well-being, valuation of nursing services, etc. Research the issue you selected and use the attached "Creating Change Through Advocacy" template to complete this assignment.

You are required to cite a minimum of three sources to complete this assignment. Sources must be published within the last 5 years, appropriate for the assignment criteria, and relevant to nursing practice.

While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. A link to the LopesWrite technical support articles is located in Class Resources if you need assistance.

Benchmark Information

This benchmark assignment assesses the following programmatic competencies and professional standards:

RN-BSN

9.4: Comply with relevant laws, policies, and regulations.

American Association of Colleges of Nursing Core Competencies for Professional Nursing Education

One of the five elements of emotional intelligence is self-awareness.

One of the five elements of emotional intelligence is self-awareness. Explain what it means to be self-aware and describe why emotional intelligence is crucial for effective leadership. Discuss what behaviors someone with a high degree of self-awareness would demonstrate within the context of leading and managing groups. Provide an example.

Initial discussion question posts should be a minimum of 200 words and include at least two references cited using APA format. Responses to peers or faculty should be 100-150 words and include one reference. Refer to "RN-BSN Discussion Question Rubric" and "RN-BSN Participation Rubric," located in Class Resources, to understand the expectations for initial discussion question posts and participation posts, respectively.

American Association of Colleges of Nursing Core Competencies for Professional Nursing Education

Reflect on your personal and professional

Reflect on your personal and professional values and conscious or unconscious biases that influence your leadership style. What is one strength and one weakness of your leadership style? How does your leadership style impact your relationship dynamics and conflict management approach?

American Association of Colleges of Nursing Core Competencies for Professional Nursing Education

Hassessm2

list the parts of a comprehensive mental status examination (MSE) for mental health patients. Give examples of each and describe the significance to the advanced practice nurse.

The assignment should be formatted per current APA and 2-4 pages in length, excluding the title, abstract, and references page.
Incorporate a minimum of 5 current (published within the last five years) scholarly journal articles or primary legal sources (statutes, court opinions) within your work.