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finance practice problem exam 1

# finance practice problem exam 1 - Practice Problems for...

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Practice Problems for FIN3403 Exam I Income Statement for XYZ (December 31, 2009) 2009 2008 Revenues and other income 310,58 6 477,359 Cost of goods sold 263,34 4 380,910 Depreciation expense 11,917 12,379 Earnings before interest and taxes 35,325 84,070 Interest expense 548 673 Earnings before taxes 34,777 83,397 Income taxes (@ 43.5%) 15,128 36,278 Net Income 19,649 47,119 Balance Sheet for XYZ (December 31, 2009) 2009 2008 2009 2008 Current Assets Current Liabilities Cash 10,862 32,007 Accounts Payable 41,275 36,643 Accounts Receivable 27,645 24,702 Notes Payable 10,786 12,457 Inventory 16,728 15,557 Long-term Debt 65,870 61,429 Fixed Assets 178,088 155,786 Equity Total Assets 233,323 228,052 Common Stock 5,503 5,314 Retained Earnings 109,889 112,209 Total Liab. and Owner’s Eq. 233,323 228,052 1) What is the profit margin of XYZ in 2009? Are they more profitable in 2009 than they were in 2008? 2) How effectively is the management of XYZ using its assets in 2009? How does this compare to 2008? 3) What percentage of XYZ is financed with debt and what percentage is financed with equity? How many dollars of debt are there for each dollar of equity? How many dollars of

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total assets can be utilized for a \$1 investment in equity? Based on 2008 numbers are they increasing or decreasing leverage? (Do total debt ratio, debt/equity ratio, and equity multiplier and interpret each one) 4) Is this firm able to service its debt obligations (i.e. pay its interest expense) in 2009? Has its ability to pay its interest expenses increased or decreased since 2008? (Use TIE and cash
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finance practice problem exam 1 - Practice Problems for...

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