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1-A corporation with 800,000 shares of common stoc...




1-A corporation with 800,000 shares of common stock outstanding earned $1.6 million in operating income during 2008. It also paid $1.2 million in interest and $200,000 in taxes in 08. (a) Calculate its degree of financial leverage. (b) Use 08's DFL to forecast 2009 EPS if pro forma EBIT for 09 is $3.6 million. (assume interest paid and shares outstanding remain unchanged) Show your work. Explain and label your calculations. 2-Analyze the information below. Forecast April's labor cost. Explain your work. Sales projections or March, April, May, and June are 4,000; 10,000; 8,000; and 6,000 units respectively. Ending inventory for each month is maintained at 1.5 times next month's unit sales forecast. Labor costs $42 per hour. 10 labor hours are required to manufacture one unit of product. 8,000 units of product were acutally manufactured in February. 3-Solar Corporation earned a 4% profit margin on sales of $30 billion. Solar turned over its assets 6 times, had a current ratio of 3.4, an EPS of $4.25, and a return on equity of 15%. Is that good? Discuss.


Paper#11028 | Written in 18-Jul-2015

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