CHAPTER 3 B 27 28 SMOLIRA GOLF CORP Statement of Cash Flows For 2009 Cash

Chapter 3 b 27 28 smolira golf corp statement of cash

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CHAPTER 3 B-27 28. SMOLIRA GOLF CORP. Statement of Cash Flows For 2009 Cash, beginning of the year $ 21,860 Operating activities Net income $ 36,475 Plus: Depreciation $ 26,850 Increase in accounts payable 3,530 Increase in other current liabilities 1,742 Less: Increase in accounts receivable $ (2,534) Increase in inventory (1,566) Net cash from operating activities $ 64,497 Investment activities Fixed asset acquisition $(53,307) Net cash from investment activities $(53,307) Financing activities Increase in notes payable $ (1,000) Dividends paid (20,000) Increase in long-term debt 10,000 Net cash from financing activities $(11,000) Net increase in cash $ 190 Cash, end of year $ 22,050 29. Earnings per share = Net income / Shares Earnings per share = $36,475 / 25,000 = $1.46 per share P/E ratio = Shares price / Earnings per share P/E ratio = $43 / $1.46 = 29.47 times Dividends per share = Dividends / Shares Dividends per share = $20,000 / 25,000 = $0.80 per share Book value per share = Total equity / Shares Book value per share = $192,840 / 25,000 shares = $7.71 per share
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B-28 SOLUTIONS Market-to-book ratio = Share price / Book value per share Market-to-book ratio = $43 / $7.71 = 5.57 times PEG ratio = P/E ratio / Growth rate PEG ratio = 29.47 / 9 = 3.27 times 30. First, we will find the market value of the company’s equity, which is: Market value of equity = Shares × Share price Market value of equity = 25,000($43) = $1,075,000 The total book value of the company’s debt is: Total debt = Current liabilities + Long-term debt Total debt = $43,235 + 85,000 = $128,235 Now we can calculate Tobin’s Q, which is: Tobin’s Q = (Market value of equity + Book value of debt) / Book value of assets Tobin’s Q = ($1,075,000 + 128,235) / $321,075 Tobin’s Q = 3.75
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  • Summer '06
  • Tapley
  • Finance, Interest, Ratio, Financial Ratio, Cash coverage ratio, Market Value

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