Problem set 1 37229 .pdf - FINC301 Introduction to...

FINC301 Introduction to Finance Problems set (1)
1
Question 1:
The following financial data for 2015 are also available:
1. Sales totaled $1,800,000.
2. The gross profit margin was 25%.
3. Inventory turnover was 6.0.
4. There are 365 days in the year.
5. The average collection period was 40 days.
6. The current ratio was 1.60.
7. The total asset turnover ratio was 1.20.
8. The debt ratio was 60%.
Question 2:
Ocean Terminal Company Limited started its business in 2014 with retained earnings of
$68,450,000. It paid two semi-annual dividends of $0.23 per share to 3,250,000 preferred
stockholders during the year. Common stockholders, holding 9,800,000 common shares,
were paid four quarterly dividends of $0.25 per share.
• The company had a net profit after taxes of $6,340,000. Prepare the statement of
retained earnings for the year ended December 31, 2014.
Question 3:
David Chan operates Speedy Delivery Service Company, a fleet of delivery trucks in a
large metropolitan area and has just completed his first full year in business. During the
year, the company billed $420,000 for delivery services.
David has a total of 11 employees (10 truck drivers and a clerical assistant). In addition
to his own monthly salary of $5,000, David paid annual salaries of $12,100 and $10,000 to
each of the truck drivers and the clerical assistant, respectively. Employment taxes and
benefit costs for David and his employees totalled $42,600 for the year. Miscellaneous
expenses, including office supplies, totalled $12,400 for the year.

FINC301