FRl 300 midterm review
Aguilera Corp. has a current accounts receivable balance of $337,800. Credit sales for the year just ended were $4,644,750. What is the company's receivables turnover? 13.75 What is the company's days' sales in receivables? 26.5 How long did it take on average for credit customers to pay off their accounts during the past year?26.5
Receivables turnover = Sales / Average Receivables Days' sales in receivables = Number of days / Receivables turnover = 365/13.75 Average collection period is same as Days' sales in receivables like synonyms
Prepare a 2015 balance sheet for Cornell Corp. based on the following information: cash = $133,000; patents and copyrights = $630,000; accounts payable = $213,500; accounts receivable = $127,500; tangible net fixed assets = $1,635,000; inventory = $296,000; notes payable = $190,000; accumulated retained earnings = $1,266,000; long-term debt = $851,000. Total liabilities & owners' equity? Common Stock?
TL & OE = CL + LTD + Common stock + Retained earnings Solving for this equation for equity gives us: Common stock = TA-TL-A.R.E
Which one of the following statements is correct concerning the NYSE?
The listing requirements for the NYSE are more stringent than those of NASDAQ.
Zombie Corp. has a profit margin of 6.3 percent, total asset turnover of 2.2, and ROE of 18.44 percent. What is this firm's debt-equity ratio?
This question gives all of the necessary ratios for the DuPont Identity except the equity multiplier, so, using the DuPont Identity: ROE = (PM)(TAT)(EM) ROE = .1844 = (6.3)(2.2)(EM) EM = .1844 / (.063)(2.2) EM = 1.31 D/E = EM - 1 D/E = 1.31 - 1 D/E = .31
Shelton, Inc., has sales of $16 million, total assets of $14.1 million, and total debt of $8.2 million. Assume the profit margin is 6 percent. What is the company's net income? What is the company's ROA? What is the company's ROE?
Paticulars Amount Sales 16,000,000.00 Profit Margin or Net Income= 16%*16m 960,000.00 Assets 14,100,000.00 ROA= 960,000/14,100,000 6.81% Equity = 14.1m - 8.2m 5,900,000.00 ROE = 960,000/5,900,000 16.27%
If Roten Rooters, Inc., has an equity multiplier of 1.53, total asset turnover of 1.10, and a profit margin of 6.3 percent, what is its ROE?
ROE = (PM)(TAT)(EM) ROE = (.063)(1.10)(1.53)
Klingon Widgets, Inc., purchased new cloaking machinery five years ago for $5 million. The machinery can be sold to the Romulans today for $4.1 million. Klingon's current balance sheet shows net fixed assets of $2.8 million, current liabilities of $720,000, and net working capital of $217,000. If all the current accounts were liquidated today, the company would receive $0.99 million cash. What is the book value of Klingon's total assets today?
1. Book value of the total assets: Current Assets = Current Liabilities + Working Capital Current Assets = 720,000 + 217,000 Book value of Total Assets = Current Assets book value + Net fixed assets = Total Assets Market Value = 990,000 + 4,100,000 =
KCCO, Inc., has current assets of $7,000, net fixed assets of $25,900, current liabilities of $5,450, and long-term debt of $13,000. Requirement 1: What is the value of the shareholders' equity account for this firm? Requirement 2: How much is net working capital?
1. Shareholder's equity: (total asset - total liability) 7,000+25,900 - (5,450+13,000) = 14450 2. Net working capital: (current asset - current liabilities) 7,000-5,450 = 1550
During 2014, Raines Umbrella Corp. had sales of $770,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $610,000, $125,000, and $180,000, respectively. In addition, the company had an interest expense of $56,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Raines's net income for 2014? b. What is the company's operating cash flow?
770,000 sales Less: 610,000 COGS 125,000 Admin. & selling expenses 180,000 Depreciation = ($145,000) EBIT 56,000 interest expense = ($201,000) loss What is its operating cash flow? (145,000) + 180,000 Depreciation = $35,000 operating cash flow
Quarles Industries had the following operating results for 2015: sales = $29,220; cost of goods sold = $19,560; depreciation expense = $5,100; interest expense = $2,490; dividends paid = $1,250. At the beginning of the year, net fixed assets were $16,880, current assets were $5,820, and current liabilities were $3,360. At the end of the year, net fixed assets were $20,460, current assets were $7,360, and current liabilities were $3,940. The tax rate for 2015 was 30 percent. a. What is net income for 2015 b. What is the operating cash flow for 2015? c. What is the cash flow from assets for 2015? d-1 If no new debt was issued during the year, what is the cash flow to creditors? d-2 If no new debt was issued during the year, what is the cash flow to stockholders?
Amount Sales 29,220 Less : Cost of goods sold 19,560 Gross Profit 9,660 Less : Depreciation expense 5,100 EBIT 4,560 Less : Interest Expense 2,490 Taxable Income 2,070 Less : Taxes 30% 621 Net Income 1,449 Answer b. Operating Cash Flow = EBIT + Depreciation - Taxes Operating Cash Flow = $4,560 + 5,100 - 621 Operating Cash Flow = $9,039 Answer c. Change in NWC = NWC end - NWC beginning Change in NWC = $(7,360-3,940) - (5,820-3,360) Change in NWC = $960 Net Capital Spending = Ending Fixed Assets - Beginning Fixed Assets + Depreciation Expense Net Capital Spending = $20,460 - 16,880 + 5,100 Net Capital Spending = $8,680 Cash flow from assets = Operating Cash flows - Change in NWC - Net Capital spending Cash flow from assets = $9,039 - 960 - 8,680 Cash flow from assets = - $601 Answer d. Cash flow to creditors = Interest - Net new Long-term debt Cash flow to creditors = $2,490 Answer e. Cash flow from Assets = Cash flow to stockholders + cash flow to creditors -601 = Cash flow to stockholders + 2,490 Cash flow to stockholders = - $3,091
The 2014 balance sheet of Sugarpova's Tennis Shop, Inc., showed $490,000 in the common stock account and $2.2 million in the additional paid-in surplus account. The 2015 balance sheet showed $530,000 and $2.4 million in the same two accounts, respectively. If the company paid out $300,000 in cash dividends during 2015, what was the cash flow to stockholders for the year? Cash flow to stockholders? =60,000
Cash Flow to Common Stockholders = Dividends Paid - (Ending Common Stock - Beginning Common Stock) - (Ending Capital Surplus - Beginning Capital Surplus) = $ 300,000 - ($ 530,000 - $ 490,000) - ($ 2,400,000 - $ 2,200,000) = $ 60,000
Which one of the following statements is correct?
Corporations can raise large amounts of capital generally easier than partnerships can
W&B Corp. has current liabilities of $510,000, a quick ratio of .93, inventory turnover of 6.9, and a current ratio of 1.5. What is the cost of goods sold for the company? Cost of goods sold?
Current ratio=current assets/current liabilities 1.5=current assets/510000 Current assets =1.5×510000 Current assets=765000 Quick ratio=(current assets-inventory)/current liabilities .93=(765000-inventory)/510000 Inventory=765000-(.93*510000) Inventory=290700 Inventory turnover=cost of good sold/inventory 6.9=cost of good sold/290700 cost of good sold=6.9×226800 cost of good sold=2005830
Makers Corp. had additions to retained earnings for the year just ended of $192,000. The firm paid out $182,000 in cash dividends, and it has ending total equity of $4.87 million. The company currently has 100,000 shares of common stock outstanding. What are earnings per share? What are dividends per share? What is the book value per share? If the stock currently sells for $65 per share, what is the market-to-book ratio? What is the price-earnings ratio? If the company had sales of $3.18 million, what is the price-sales ratio?
Dividend per share = Total dividend /No of shares = 182000/100000 = $1.82 per share Book value per share = Book value of equity /No of shares Hence = 4870000/100000 =Book value per share = $48.7 EPS or Earnings per share = Retained earnings + dividend issue /No of shares = 192000+182000/100000 =$3.74 is the earning per share MArket to book ratio = Market price of the share /Book value per share = 65/48.7 = 1.33 Price-earnings ratio =price per share/EPS 65/3.7 =17.3 price sales ratio 31.8m/shares
The Green Corporation has ending inventory of $483,260, and cost of goods sold for the year just ended was $4,276,851. What is the inventory turnover? What is the days' sales in inventory?
Inventory turnover = cost of goods sold/inventory days' sales in inventory= number of days / inventory turnover
Decisions made by financial managers should primarily focus on increasing which one of the following?
Market value per share of outstanding stock.
Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?
Maximum loss limited to the capital invested.
Bowyer Driving School's 2014 balance sheet showed net fixed assets of $5.4 million, and the 2015 balance sheet showed net fixed assets of $6 million. The company's 2015 income statement showed a depreciation expense of $425,000
Net capital spending = Net fixed assets 2015 - Net fixed assets 2014 + Depreciation Net capital spending = $6,000,000 - 5,400,000 + 425,000 = $1,025,000
Ridiculousness, Inc., has sales of $48,000, costs of $21,200, depreciation expense of $1,900, and interest expense of $1,200. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
To calculate OCF, we first need the income statement: Income Statement Sales $ 48,000 Costs 21,200 Depreciation 1,900 EBIT $ 24,900 Interest 1,200 Taxable income $ 23,700 Taxes (35%) 8295 Net income $ 15,405 OCF = EBIT + Depreciation - Taxes OCF = $24,900 + 1,900 - 8,295 OCF = $18,505
You are given the following information on Kaleb's Welding Supply: Profit margin 6.9 % Capital intensity ratio .78 Debt-equity ratio .9 Net income $ 86,000 Dividends $ 16,800 Calculate the sustainable growth rate?
g = ROE * retention ratio Dividend payout ratio = 16800/86000 = 0.1953 So Retention ratio = 1- payout ratio = 1-0.1953 = 0.8047 ROE = Profit margin * Total asset turnover * EM Profit margin = 6.9% = 0.069 Total asset turnover = 1/Capital intensity = 1/0.78 = 1.2820 EM = 1+ D/E = 1+0.9 = 1.9 So ROE = 0.069 * 1.2820 * 1.9 = 0.1680 So g = ROE * Retention ratio g = 0.1680* 0.8047 = 0.1351 = 13.51 Sustainable growth rate = g = 13.51%
The 2014 balance sheet of Steelo, Inc., showed current assets of $3,195 and current liabilities of $1,450. The 2015 balance sheet showed current assets of $3,340 and current liabilities of $1,740. What was the company's 2015 change in net working capital, or NWC? Net working capital -145
net working capital = current assets - current liabilities change in net working capital = ( $3,340 -$1,740) -($3,195 - $1,450) = -$145 Comment
Stone Sour Co. has an ROA of 11 percent and a payout ratio of 28 percent. What is its internal growth rate?
retention (B) ratio should be 72 .11*.72
