6 given the following information current assets 400

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Fundamentals of Financial Management, Concise Edition
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Chapter 16 / Exercise 16-12
Fundamentals of Financial Management, Concise Edition
Brigham/Houston
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6. Given the following information: current assets = $400; fixed assets = $500; accounts payable = $100; notes payable = $45; long-term debt = $455; equity = $300; sales = $450; costs = $400; tax rate = 34%. Suppose that current assets, costs, and accounts payable maintain a constant ratio to sales. If the firm is producing at 80% capacity,
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Fundamentals of Financial Management, Concise Edition
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Chapter 16 / Exercise 16-12
Fundamentals of Financial Management, Concise Edition
Brigham/Houston
Expert Verified
what is the total external financing needed if sales increase 25%? Assume the firm pays no dividends.
7. You invest $500 in an account that pays 6 percent simple interest per year. How much more could you have earned over a thirty year period if the interest had compounded annually?
8. You have decided to help your younger sister pay for university. Your sister will go to university 12 years from today. You have $3,500 in an investment account. When your sister starts university you want the account to contain $35,000. What is the effective annual rate of return you must earn?
9. You have decided to start a retirement savings account. You invest $11,000 today. Your
retirement savings account earns an effective annual rate of return of 3%. You wish to have $1,500,000 when you retire. How many years will it be until you can retire? A) 166.3 years B) 100.7 years C) 84.4 years D) 72.6 years E) 125.3 years
10. A common-size balance sheet expresses all balance sheet items as a percentage of:
11. Which of the following are considered a source of cash?
12. If a firm produces a 10 percent return on assets and also a 10 percent return on equity, then the firm:
Use the following to answer question 13: ICU Security Systems Statement of Comprehensi ve Income Year Ending December 31, 2012 ICU Security Systems Statement of Financial Position as of December 31, 2011 and 2012 2011 2012 Sales $19,000 Assets Cost of goods sold 12,000 Cash $2,000 $2,200 Depreciation expense 1,500 Accounts receivable 3,000 3,500 General expense 1,000 Inventory 4,000 4,200 Interest expense 1,200 Total current assets 9,000 9,900 Taxable income 3,300 Fixed assets 13,000 13,800 Taxes 1,440 Total $22,000 23,700
assets Net income $1,860 Liabilities and Equity Dividends $564 Accruals $1,600 $1,760 Addition to retained earnings $1,296 Accounts payable 2,400 2,640 Total current liabilities 4,000 4,400 Long-term debt 15,000 15,004 Shareholder 's equity 3,000 4,296 Total

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