CHAPTER 3- - CHAPTER 3 ST­2 A. B. Net working capital =...

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Unformatted text preview: CHAPTER 3 ST­2 A. B. Net working capital = Current assets – ( payables + accruals ) = $14,000,000 – ( $3,000,000 + $1,000,000) = $10,000,000 C. Fee Cash Flow (FCF) = [EBIT (1­T) + Depreciation] – [Capital Expenditure + Increase in Net Working Capital] = [$5,000,000 (1­0.4) + $1,000,000] – [ ($3,000,000 – 0) = $1,000,000 D. 3­7 a. Net working capital = Current assets – ( payables + accruals ) Net working capital (2007) = $47,000 – $20,150 = $26,850 Net working capital (2008) = $50,000 – $25,100 = $24,900 b. Fee Cash Flow (FCF) = [EBIT (1­T) + Depreciation] – [Capital Expenditure + Increase in Net Working Capital] = [$39,000 (0.6) + $5,000] – [$ 3,000 + ( $72,125 ­ $ 59,000) – ( $25,000­ $20,150)] = 23400 + 5000 – 3000 +13125­4850 = $33,675 Chapter 4 4­18 Current Ratio = current assets/current liabilities Current assets / 2= Current liabilities = $ 131,250 It can increase by $ 131,250 4­21 Cash 165000 Account payable Account receivable 45000 Long term debt Inventories 90000 Common stock Fixed assets Retained earnings Total assists 300000 Total Liabilities and equity Sales 450000 Cost of goods sold 90000 60000 97500 150000 337500 4­23 ROE = 3% X 3.0 times X 1.43 times= 12.86% Industry = 5% X 1.8 times X 1.67 times = 15.0% Comparing to the industry average they have butter total assets turnover but there profit margin m Equity multiplier and ROE are below average ...
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CHAPTER 3- - CHAPTER 3 ST­2 A. B. Net working capital =...

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