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L7-ch03-problem3

Course: FINANCE fin 3701, Spring 2011
School: Assumption College
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3 Balance Problem Sheet Cash AR Inventories CA 100 700 950 1,750 FA 2,500 TA 4,250 AP NP CL LTD TL CS RE TL & TE 500 185 685 1,300 1,985 1,750 515 4,250 Income Statement Sales -CGS GP -Op. Exp. EBIT - Int EBT - Tax EAT 6,500 3,800 2,700 1,200 1,500 800 700 280 420 Industry Average Current ratio 2.35 times Quick ratio 1.40 times Inv TO 1.40 times ACP 40 days FATO 2.55 times TATO 1.60 times Debt...

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3 Balance Problem Sheet Cash AR Inventories CA 100 700 950 1,750 FA 2,500 TA 4,250 AP NP CL LTD TL CS RE TL & TE 500 185 685 1,300 1,985 1,750 515 4,250 Income Statement Sales -CGS GP -Op. Exp. EBIT - Int EBT - Tax EAT 6,500 3,800 2,700 1,200 1,500 800 700 280 420 Industry Average Current ratio 2.35 times Quick ratio 1.40 times Inv TO 1.40 times ACP 40 days FATO 2.55 times TATO 1.60 times Debt ratio 38% Times Int. Earned 2.10 times GPM 40.80% OPM 23% NPM 7.2% ROA 11.5% TRUE or FALSE questions 1. can Co. meet S-T obligations easily. 2. Co. may have some difficulties meeting interest expenses. 3. Co. requires longer time to collect AR from credit customers. 4. Co. can use FA efficiently. 5. Co. has better profitability that industry average. 6. Industrys interest expense is 11% of sales. 7. Weight of LTD in the capital mix of the CO. is 30% 8. Lower ROA of the Co. is due to higher profitability but lower efficiency. 9. Industrys ROE is more than Co.s ROE due to higher industrys ROA.
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Assumption College - FINANCE - fin 3701
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Assumption College - FINANCE - fin 3701
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Assumption College - FINANCE - fin 3701
Chapter 1111Capital BudgetingandRisk AnalysisClick to edit Master subtitle styleP. 373 - 381THREE MEASURES OF APROJECTS RISKProject StandingRiskAlone Riskdiversified awaywithin firm as thisProjectsContributionto-Firm Riskproject is combine
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1. Emma Corporation has $1,500,000 debt with 12% interest and has$480,000 preferred equity with 15% annual dividend. The company was ableto sell 50,000 units of i ts product at $80 per unit in the current year.Contribution margin ratio is 30% and all c
Assumption College - FINANCE - fin 3701
1. Emma Corporation has $1,500,000 debt with 12% interest and has$480,000 preferred equity with 15% annual dividend. The company was ableto sell 50,000 units of i ts product at $80 per unit in the current year.Contribution margin ratio = CM/SALES is 30
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CHAPTER18P.665669ST23A,5A,7A,8A,12A,13A,15BA)18%B)Netcashreceive=200,000L(20%)L=200,000L=250,000ST2CB=(20%)L=$50,000Interest=16%xL=40,000Netcashreceive=$200,000APR=(40,000/200,000)=20%2ST2C)Netcashreceive=200,000L(20%)L(14%)L=200,000L=3
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Chapter8StockValuationCommonStock Isavariableincomesecurity. Dividendsmaybeincreasedordecreased,dependingonearnings. Representsequityorownership. Includesvotingrights. Limitedliability:liabilityislimitedtoamountofownersinvestment. Priority:lower
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Stock ValuationStockCH 8Preferred StockPreferredAhybridsecurity: Itslikecommonstocknofixedmaturity.Technically,itspartofequitycapital.Itslikedebtpreferreddividendsarefixed.Missingapreferreddividenddoesnotconstitutedefault,butpreferreddividendsar
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Chapter12CostofCapital1BalanceSheetBuyWhat?TheinvestmentdecisionAssets CurrentAssets FixedAssetsWheredoIgetthemoney?ThefinancingdecisionLiabilities&Equity CurrentLiabilities LongtermDebt PreferredStock CommonEquity2CostofCapital ForInves
Assumption College - FINANCE - fin 3701
CH 12CHCost of CapitalBuy What?The investment decisionAssetsAssetsCurrent AssetsFixed AssetsWhere do I get themoney?The financing decisionLiabilities & EquityCurrent LiabilitiesLong-term DebtPreferred StockPreferredCommon EquityCommonCo
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Assumption College - FINANCE - fin 3701
What is Finance?What Creating wealth and maintaining itLaunch new product lineOpen new storeBuy stocksGoal of the FirmGoalMaximize shareholders wealthORMaximize profitsGoal of the FirmGoal1) Profit Maximization?this goal have problems with:
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