daphanestuden9%281%29final(1)

daphanestuden9%281%29final(1) - Final for Finance320 1c 2b...

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Unformatted text preview: Final for Finance320 1c 2b 3b 4b 5e 6e 7 FALSE 8e 9c 10 TRUE 11 d 12 FALSE 13 e 14 c 15 d 16 b 17 b 18 d 19 d 20 d 21 a 22 d 23 b 24 d 25 e 1c 2b 3B 4E 5E 6E 7 8C 9C 10 11 D 12 13 E 14 C 15 D 16 D/b 17 B 18 D 19 D 20 D 21 A 22 C 23 C 24 D 25 E TRUE TRUE FALSE Bonus Question Please show work 1 Colonial Furniture’s net profits before taxes for 2002 totaled $354,000. The company’s total retaine Colonial is subject to a 26 percent tax rate. How large was the cash dividend declared by Colonial Taxes EBT Net Income 26% $354,000 $261,960 Ending retained earnings = beginning retained earnings + net income - dividends 389,000 = 338,000 + 261,960 - dividends Dividends = 338,000 + 261,960 - 389,000 Dividends = $210,960 √ 2 In an effort to analyze Clockwork Company finances, Jim realized that he was missing the co Find the company’s net profits after taxes using the following information. Return on total assets = 2% Total Asset Turnover = 0.5 Cost of Goods Sold = $105,000 Gross Profit Margin = 0.30 Gross profit margin = 0.30 (or 1 × 0.30 = 1.30) of sales: GPM = $105,000 + 1.30 = $136,500 GPS = Sales - Cost of goods sold = 136,000 + 241,500 = Sales of $241,500 ROA = NPM × Asset turnover (0.02) NPM × 0.5 Profit margin = 0.04 (4%) Net profit: NPM = NI/Sales 0.04 (4%) = NI/241,500 NI and Net Income = $9,660 3 Use the percent‑of‑sales method to prepare a pro forma income statement for the year ende Hennesaw Lumber, Inc. estimates that its sales in 2000 will be $4,500,000. Interest expense and the firm plans to pay cash dividends of $150,000 during 2004. Hennesaw Lumber, Inc.’s From your preparation of the pro forma income statement, answer the following multiple choic Table 3.3 Income Statement Hennesaw Lumber, Inc. For the Year Ended December 31, 2003 Sales Revenue Less: Cost of goods sold Gross profits Less: Operating expenses $4,200,000 3,570,000 $630,000 210,000 Operating profits Less: Interest expense $420,000 105,000 Net profits before taxes $315,000 Less: Taxes (40%) 126,000 Net profits after taxes $189,000 Less: Cash dividends 120,000 To: Retained earnings $69,000 4 If accounts receivable increase by $1,000,000, inventory decreases by $500,000, and accou (a) decrease by $500,000. (b) increase by $1,500,000. (c) increase by $2,000,000. (d) experience no change. Net Working Capital = Current Assets - Current Liabilities Both current assets and current liabilities increased ($500,000) equally, thus the net change eq 5 A firm must choose from six capital budgeting proposals outlined below. The firm is subject to capi Table 9.2 Project Initial Investment 1 $200,000 2 400,000 3 250,000 4 200,000 5 150,000 6 400,000 Using the internal rate of return approach to ranking projects, which projects should the firm a (a) 1, 2, 3, 4, and 5 (b) 1, 2, 3, and 5 (c) 2, 3, 4, and 6 (d) 1, 3, 4, and 6 Using the net present value approach to ranking projects, which projects should the firm acce (a) 1, 2, 3, 4, and 5 (b) 1, 2, 3, 5, and 6 (c) 2, 3, 4, and 5 (d) 1, 3, 5, and 6 inance320 26 a 27 e 28 a 29 a 30 d 31 a 32 b 33 d 34 e 35 d 36 e 37 d 38 b 39 a 40 c 41 c 42 a 43 a 44 b 45 d 46 b 47 TRUE 48 d 26 A 27 E 28 A 29 C 30 D 31 E 32 A 33 D 34 B 35 D 36 C 37 C 38 B 39 A 40 C 41 C 42 A 43 A 44 B 45 A 46 D 47 48 D TRUE 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 Name FALSE FALSE TRUE FALSE TRUE FALSE TRUE TRUE TRUE TRUE TRUE FALSE FALSE FALSE TRUE Three points each, added to your grade for the final $354,000. The company’s total retained earnings were $338,000 for 2004 year end and $389,000 for 2005 year end he cash dividend declared by Colonial Furniture in 2005? Jim realized that he was missing the company’s net profits after taxes for the current year. I a e rt to a a z Co k o C m a yfi a c s Jimr a e th n n ffo n ly e l c w rk o p n nne, e liz d a llowing information. p fits a r ta e f r th c r n y a F d th c m a y n t p ro fte xs o e u re t e r. in e o p n ’s e in r a n fo m tio . R tu o to l a s ts =2 e rn n ta s e % T ta A e T rn v r =0 o l ss t u o e .5 C s o G o s S l =$ 0 ,0 0 o t f o d od 15 0 G ss P fit M r i =0 0 ro ro a gn .3 5,000 + 1.30 = $136,500 A s e : S le =C S n wr as G /(1 – G M =1 5 0 /( – 0 0 =$ 5 P) 0 ,0 0 1 .3 ) 10 T ta A e =S le /( o l A s t T r o e o l ss ts a s T ta s e u n v r) =1 0 0 /0 0 =$ 0 ,0 0 5 ,0 0 .5 30 0 N t P o its A r T x s =(R A ×(T ta A s ts e rf fte a e O) o l se ) =( .0 ) ×( 0 ,0 0 =$ ,0 0 02 30 0) 60 L v l o Dffic lty 4 ee f i u: L a n gG a 6 e r in o l: T p : R tio a d Fn n ia S te e t A a sis o ic a n i a c l ta m n n ly ma income statement for the year ended December 31, 2004, for Hennesaw Lumber, Inc. 0 will be $4,500,000. Interest expense is to remain unchanged at $105,000 during 2004. Hennesaw Lumber, Inc.’s income statement for the year ended December 31, 2003 is shown below. ent, answer the following multiple choice questions. Pro Forma 2004 Workings Sales Revenue Less: Cost of goods sold Gross profits Less: Operating expenses 5% Operating profits 16% Less: Interest expense 2% Net profits before taxes 105,000 720,000 210,000 100% 79% 21% $4,500,000 3,570,000 930,000 Table 3.3 Income Statement Hennesaw Lumber, Inc. For the Year Ended December 31, 2003 Sales Revenue Less: Cost of goods Gross sold profits Less: Operating expenses Operating profits Less: Interest expense Net profits before taxes 14% 615,000 Less: Taxes (40%) 5% 246,000 Less: Taxes (40%) Net profits after taxes Net profits after taxes 8% 369,000 Less: Cash dividends 3% To: Retained earnings 5% 219,000 150,000 Less: Cash dividends To: Retained earnings ry decreases by $500,000, and accounts payable increase by $500,000, net working capital would Must show work for credit! √ 0,000) equally, thus the net change equals 0. tlined below. The firm is subject to capital rationing and has a capital budget of $1,000,000; the firm’s cost of capital is IRR NPV $38,000 × 19% 17 68,000 16 40,000 12 24,000 20 30,000 15 60,000 rojects, which projects should the firm accept? (See Table 9.2) B cts, which projects should the firm accept? (See Table 9.2) B : Daphane Morgan 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 FALSE FALSE TRUE FALSE TRUE FALSE FALSE TRUE TRUE TRUE TRUE TRUE FALSE FALSE TRUE 150 - ( 14 x2) +( 4x3) = 134 nd and $389,000 for 2005 year end. rk C m a yfi a c s Jimr a e th t h w s m si g th c m a y n t o pn nne, e liz d a e a is n e o p n ’s e c r n y a F d th c m a y n t p fits a te ta e u n th fo wn u re t e r. in e o p n ’s e ro f r x s si g e llo i g % .5 50 ,0 0 0 – G M =1 5 0 /( – 0 0 =$ 5 ,0 0 P) 0 ,0 0 1 .3 ) 10 0 S le /( o l A s t T r o e a s T ta s e u n v r) 5 ,0 0 .5 =$ 0 ,0 0 0 0 /0 0 30 0 r T x s =(R A ×(T ta A s ts ae O) o l se ) =( .0 ) ×( 0 ,0 0 =$ ,0 0 02 30 0) 60 ent year. l S te e t A a sis ta m n n ly ember 31, 2003 is shown below. Income Statement nnesaw Lumber, Inc. ar Ended December 31, 2003 $4,200,000 3,570,000 $630,000 210,000 225000 4500000 3825000 675000 $420,000 450000 105,000 105000 $315,000 345000 126,000 138000 $189,000 207000 120,000 150000 $69,000 57000 rking capital would ,000,000; the firm’s cost of capital is 15 percent. ...
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