Copy of IFM10 Ch08 Mini Case

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Solution Guide Chapter 8 Mini Case Input Data: 2008 2009 2010E Year-end common stock price $8.50 $6.00 $12.17 Year-end shares outstanding 100,000 100,000 250,000 Tax rate 40% 40% 40% Lease payments $40,000 $40,000 $40,000 Balance Sheets As ets 2008 2009 2010E Cash and equivalents $9,000 $7,282 $14,000 Short-term investments $48,600 $20,000 $71,632 Accounts receivable $351,200 $632,160 $878,000 Inventories $715,200 $1,287,360 $1,716,480 Total current as ets $1,124,000 $1,946,802 $2,680,112 Gros Fixed As ets $491,000 $1,202,950 $1,220,000 Les Accumulated Dep. $146,200 $263,160 $383,160 Net Fixed As ets $344,800 $939,790 $836,840 Total As ets $1,468,800 $2,886,592 $3,516,952 Liabilities and equity Accounts payable $145,600 $324,000 $359,800 Notes payable $200,000 $720,000 $300,000 Accruals $136,000 $284,960 $380,000 Total current liabilities $481,600 $1,328,960 $1,039,800 Long-term bonds $323,432 $1,000,000 $500,000 Total liabilities $805,032 $2,328,960 $1,539,800 Common stock (100,000 shares) $460,000 $460,000 $1,680,936 Retained earnings $203,768 $97,632 $296,216 Total common equity $663,768 $557,632 $1,977,152 Total liabilities and equity $1,468,800 $2,886,592 $3,516,952 Income Statements 2008 2009 2010E Net sales $3,432,000 $5,834,400 $7,035,600 Costs of Goods Sold $2,864,000 $4,980,000 $5,800,000 Other Expenses $340,000 $720,000 $612,960 Depreciation $18,900 $116,960 $120,000 Total Operating Cost $3,222,900 $5,816,960 $6,532,960 Earnings before interest and taxes (EBIT $209,100 $17,440 $502,640 Les interest $62,500 $176,000 $80,000 Earnings before taxes (EBT) $146,600 ($158,560) $422,640 Taxes (40%) $58,640 ($63,424) $169,056 Net Income before preferred dividends $87,960 ($95,136) $253,584 EPS $0.880 ($0.951) $1.014 DPS $0.220 $0.110 $0.220 Book Value Per Share $6.638 $5.576 $7.909 b. (1.) Calculate the current and quick ratios based on the projected balance sheet Calculated Data: Ratios Industry 2008 2009 2010E Average Liquidity ratios Current Ratio 2.33 1.46 2.58 2.70 Quick Ratio 0.85 0.50 0.93 1.00 Industry As et Management ratios 2008 2009 2010E Average Inventory Turnover 4.80 4.53 4.10 6.10 Days Sales Outstanding 37.4 39.5 45.5 32.00 Fixed As et Turnover 9.95 6.21 8.41 7.00 Total As et Turnover 2.34 2.02 2.00 2.50 Industry Debt Management ratios
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This note was uploaded on 02/27/2012 for the course BUS 510 taught by Professor Mehdi during the Spring '11 term at University of La Verne.

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Copy of IFM10 Ch08 Mini Case - 1 2 3 4 5 6 7 8 9 10 11 12...

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