fin 311 - exam 1 - computational

Herring Corporation has operating income of $235,000 and a 40% tax rate. The firm has short-term debt of $115,000, long-term debt of $321,000, and common equity of $436,000. What is its return on invested capital?

16.17%

Zero Corp's total common equity at the end of last year was $370,000 and its net income was $70,000. What was its ROE?

18.92%

Royce Corp's sales last year were $250,000, and its net income was $23,000. What was its profit margin?

9.20%

Refer to Exhibit 4.1. What is the firm's quick ratio? Do not round your intermediate calculations.

0.65

Scranton Shipyards has $11.0 million in total invested operating capital, and its WACC is 10%. Scranton has the following income statement: Sales$10.0 million Operating costs6.0 million Operating income (EBIT)$ 4.0 million Interest expense2.0 million Earnings before taxes (EBT)$ 2.0 million Taxes (40%)0.8 million Net income$ 1.2 million What is Scranton's EVA? Answer options are provided in whole dollar.

$1,300,000

Over the years, O'Brien Corporation's stockholders have provided $20,000,000 of capital, when they purchased new issues of stock and allowed management to retain some of the firm's earnings. The firm now has 1,000,000 shares of common stock outstanding, and it sells at a price of $33.00 per share. How much value has O'Brien's management added to stockholder wealth over the years, i.e., what is O'Brien's MVA?

$13,000,000

Meyer Inc's total invested capital is $660,000, and its total debt outstanding is $185,000. The new CFO wants to establish a total debt to total capital ratio of 55%. The size of the firm will not change. How much debt must the company add or subtract to achieve the target debt to capital ratio?

$178,000

Prezas Company's balance sheet showed total current assets of $3,250, all of which were required in operations. Its current liabilities consisted of $975 of accounts payable, $600 of 6% short-term notes payable to the bank, and $250 of accrued wages and taxes. What was its net operating working capital?

$2,025

Refer to Exhibit 4.1. What is the firm's EPS? Do not round your intermediate calculations.

$2.54

Vasudevan Inc. recently reported operating income of $5.35 million, depreciation of $1.20 million, and had a tax rate of 40%. The firm's expenditures on fixed assets and net operating working capital totaled $0.6 million. How much was its free cash flow, in millions?

$3.81

Rao Construction recently reported $20.00 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. What was Rao's operating income, or EBIT, in millions?

$4.40

C. F. Lee Inc. has the following income statement. How much after-tax operating income does the firm have? Sales$2,700.00 Costs1,850.00 Depreciation192.00 EBIT$658.00 Interest expense285.00 EBT$373.00 Taxes (35%)130.55 Net income$242.45

$427.70

Watson Oil recently reported (in millions) $8,250 of sales, $5,750 of operating costs other than depreciation, and $1,000 of depreciation. The company had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free cash flow? Do not round the intermediate calculations.

$446

Brown Office Supplies recently reported $17,000 of sales, $8,250 of operating costs other than depreciation, and $1,750 of depreciation. It had $9,000 of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 40%. How much was the firm's earnings before taxes (EBT)?

$6,370

During 2015, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $187,500 of retained earnings versus the prior year's retained earnings of $159,600. How much net income did the firm earn during the year?

$61,425

Hayes Corporation has $300 million of common equity, with 6 million shares of common stock outstanding. If Hayes' Market Value Added (MVA) is $198 million, what is the company's stock price? (Round your final answer to two decimal places.)

$83.00

Last year Almazan Software reported $10.50 million of sales, $6.25 million of operating costs other than depreciation, and $1.30 million of depreciation. The company had $5.00 million of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $0.63 million. By how much will net income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes. (Round your final answer to 3 decimal places.)

-$0.410

Last year Hamdi Corp. had sales of $500,000, operating costs of $450,000, and year-end assets (which is equal to its total invested capital) of $435,000. The debt-to-total-capital ratio was 17%, the interest rate on the debt was 7.5%, and the firm's tax rate was 35%. The new CFO wants to see how the ROE would have been affected if the firm had used a 50% debt-to-total-capital ratio. Assume that sales, operating costs, total assets, total invested capital, and the tax rate would not be affected, but the interest rate would rise to 8.0%. By how much would the ROE change in response to the change in the capital structure? Do not round your intermediate calculations.

1.74%

Hoagland Corp's stock price at the end of last year was $48.50, and its book value per share was $25.00. What was its market/book ratio?

1.94

Song Corp's stock price at the end of last year was $16.75 and its earnings per share for the year were $1.30. What was its P/E ratio?

12.88

A bond issued by the State of Pennsylvania provides a 9.50% yield. What yield on a Synthetic Chemical Company bond would cause the two bonds to provide the same after-tax rate of return to an investor in the 35% tax bracket?

14.62%

Refer to Exhibit 4.1. What is the firm's profit margin? Do not round your intermediate calculations.

2.17%

A 5-year corporate bond yields 9.70%. A 5-year municipal bond of equal risk yields 6.5%. Assume that the state tax rate is zero. At what federal tax rate are you indifferent between the two bonds? (Round your final answer to two decimal places.)

32.99%

Refer to Exhibit 4.1. What is the firm's total debt to total capital ratio? Do not round your intermediate calculations.

48.00%