FIN 419 - Week 3 - Problems - Instructor's Feedback

FIN 419 - Week 3 - Problems - Instructor's Feedback -...

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Assignment from Readings Stephanie Boyd Finance for Decision Making Jon Payne February 14, 2011 Grade: 96% = 5.76/6.00
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12 pts. P2–1 Reviewing basic financial statements The income statement provides a summary of all revenues and expenses incurred by Technica, Inc. during the period from January 1, 2009 till December 31, 2009. We can see that the firm had sales revenue of $600,000 and a net income of $42,900, indicating a profit margin of 7.15%. The balance sheet provides an economic snapshot of the firm as on the dates December 31 for 2008 and 2009. Comparing the numbers, it appears that Technica Inc. is facing problems in managing its inventories as the figure has increased by $32,000 in one year. Also, the firm is falling behind in paying its creditors as evident from the sharp increase in Accounts payable. The firm has also raised long-term debt, possibly to refinance the reduction in notes payable due to near-term maturity. The firm has also repurchased 500 common shares in 2009. Finally, the Statement of Retained earnings shows that the dividend payout ratio is $20,000 / $42,900 = 46.62% 12 pts. P2-2 Financial statement account identification (1) (2) Account name Statement Type of account Accounts payable BS CL Accounts receivable BS CA Accruals BS CL Accumulated depreciation BS FA Administrative expense IS E Buildings BS FA Cash BS CA Common stock (at par) BS SE Cost of goods sold IS E Depreciation IS E Equipment BS FA General expense IS E Interest expense IS E Inventories BS CA Land BS FA
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Long-term debts BS LTD Machinery BS FA Marketable securities BS CA Notes payable BS CL /LTD Operating expense IS E Paid-in capital in excess of par BS SE Preferred stock BS SE Preferred stock dividends IS E Retained earnings BS SE Sales revenue IS R Selling expense IS E Taxes IS E Vehicles BS FA 8 pts. P4-23 Funding your retirement a. How large a fund will you need when you retire in 20 years to provide the 30-year, $20,000 retirement annuity? Amount of fund required at the time of retirement
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This note was uploaded on 02/26/2012 for the course FIN 419 taught by Professor Abdul during the Fall '11 term at University of Phoenix.

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FIN 419 - Week 3 - Problems - Instructor's Feedback -...

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