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Tucker Electronic System's current balance sheet shows total

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1. Tucker Electronic System's current balance sheet shows total common equity of $3,125,000. The company has 125,000 shares of stock outstanding, and they sell at a price of $52.50 per share. By how much do the firm's market and book values per share differ?;a $27.50;b. $28.88;c. $30.32;d. $31.83;e. $33.43;2. Hunter Manufacturing Inc.'s December 31, 2007 balance sheet showed total common equity of $2,050,000 and 100,000 shares of stock outstanding. During 2008, Hunter had $250,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/08, assuming that Hunter neither issued nor retired any common stock during 2008?;a. $20.90;b. $22.00;c. $23.10;d. $24.26;e. $25.47;3. Over the years, Janjigian Corporation's stockholders have provided $15,250 of capital, part when they purchased new issues of stock and part when they allowed management to retain some of the firm's earnings. The firm now has 1,000 shares of common stock outstanding, and it sells at a price of $42.00 per share. How much value has Janjigian's management added to stockholder wealth over the years, i.e., what is Janjigian's MVA?;a. $21,788;b. $22,935;c. $24,142;d. $25,413;e. $26,750;4. Meric Mining Inc. recently reported $15,000 of sales, $7,500 of operating costs other than depreciation, and $1,200 of depreciation. The company had no amortization charges, it had outstanding $6,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was the firm's net income after taxes? Meric uses the same depreciation expense for tax and stockholder reporting purposes.;a. $3,284.55;b. $3,457.42;c. $3,639.39;d. $3,830.94;e. $4,022.48;5. Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 35%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $750. By how much will net after-tax income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes.;a. -463.13;b -487.50;c. -511.88;d. -537.47;e. -564.34;6. TSW Inc. had the following data for last year: Net income = $800, Net operating profit after taxes (NOPAT) = $700, Total assets = $3,000, and Total operating capital = $2,000. Information for the just-completed year is as follows: Net income = $1,000, Net operating profit after taxes (NOPAT) = $925, Total assets = $2,600, and Total operating capital = $2,500. How much free cash flow did the firm generate during the just-completed year?;a. $383;b. $425;c. $468;d. $514;e. $566;7. Rao Corporation has the following balance sheet. How much net operating working capital does the firm have?;Cash $ 10 Accounts payable $ 20;Short-term investments Accruals 20;Accounts receivable 50 Notes payable 50;Inventory 40 Current liabilities $ 90;Current assets $130 Long-term debt 0;Net fixed assets 100 Common equity 30;Retained earnings 50;Total assets $230 Total liab. & equity $230;a. $54.00;b. $60.00;c. $66.00;d. $72.60;e. $79.86;8. Bae Inc. has the following income statement. How much net operating profit after taxes (NOPAT) does the firm have?;Sales $2,000.00;Costs 1,200.00;Depreciation 100.00;EBIT $ 700.00;Interest expense 200.00;EBT $ 500.00;Taxes (35%) 175.00;Net income $ 325.00;a. $370.60;b. $390.11;c. $410.64;d. $432.25;e. $455.00;9. Tibbs Inc. had the following data for the year ending 12/31/07: Net income = $300, Net operating profit after taxes (NOPAT) = $400, Total assets = $2,500, Short-term investments = $200, Stockholders' equity = $1,800, Total debt = $700, and Total operating capital = $2,300. What was its return on invested capital (ROIC)?;a. 14.91%;b. 15.70%;c. 16.52%;d. 17.39%;e. 18.26%;10. Zumbahlen Inc. has the following balance sheet. How much total operating capital does the firm have?;Cash $ 20.00 Accounts payable $ 30.00;Short-term investments 50.00 Accruals 50.00;Accounts receivable 20.00 Notes payable 30.00;Inventory 60.00 Current liabilities $110.00;Current assets $150.00 Long-term debt 70.00;Gross fixed assets $140.00 Common stock 30.00;Accumulated deprec. 40.00 Retained earnings 40.00;Net fixed assets $100.00 Total common equity $ 70.00;Total assets $250.00 Total liab. & equity $250.00;a. $114.00;b. $120.00;c. $126.00;d. $132.30;e. $138.92;11. Edwards Electronics recently reported $11,250 of sales, $5,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had no amortization charges, it had $3,500 of bonds that carry a 6.25% interest rate, and its federal-plus-state income tax rate was 35%. How much was its net cash flow?;a. $3,284.75;b. $3,457.63;c. $3,639.61;d. $3,831.17;e. $4,032.81;12. Wells Water Systems recently reported $8,250 of sales, $4,500 of operating costs other than depreciation, and $950 of depreciation. The company had no amortization charges, it had $3,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to spend $750 to buy new fixed assets and to invest $250 in net operating working capital. How much free cash flow did Wells generate?;a. $1,770.00;b. $1,858.50;c. $1,951.43;d. $2,049.00;e. $2,151.45;13. Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio?;a. 4.72;b. 4.97;c. 5.23;d. 5.51;e. 5.80;14. Branch Corp.'s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets?;a. 7.22%;b. 7.58%;c. 7.96%;d. 8.36%;e. 8.78%;15. Pace Corp.'s assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?;a. $158,750;b. $166,688;c. $175,022;d. $183,773;e. $192,962;16. Heaton Corp. sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $425,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day credit period, then customers are paying on time. Otherwise, they are paying late. By how much are customers paying early or late? Base your answer on this equation: DSO - Credit period = days early or late, and use a 365-day year when calculating the DSO. A positive answer indicates late payments, while a negative answer indicates early payments.;a. 6.20;b. 6.53;c. 6.86;d. 7.20;e. 7.56;17. A new firm is developing its business plan. It will require $565,000 of assets, and it projects $452,800 of sales and $354,300 of operating costs for the first year. Management is quite sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt ratio the firm can use? (Hint: Find the maximum dollars of interest, then the debt that produces that interest, and then the related debt ratio.);a. 47.33%;b. 49.82%;c. 52.45%;d. 55.21%;e. 58.11%;18. Stewart Inc.'s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt ratio was 46%. How much debt was outstanding?;a. $3,393,738;b. $3,572,356;c. $3,760,375;d. $3,958,289;e. $4,166,620;19. Last year Central Chemicals had sales of $205,000, assets of $127,500, a profit margin of 5.3%, and an equity multiplier of 1.2. The CFO believes that the company could reduce its assets by $21,000 without affecting either sales or costs. Had it reduced its assets in this amount, and had the debt ratio, sales, and costs remained constant, by how much would the ROE have changed?;a. 1.81%;b. 2.02%;c. 2.22%;d. 2.44%;e. 2.68%;20. Last year Altman Corp. had $205,000 of assets, $303,500 of sales, $18,250 of net income, and a debt-to-total-assets ratio of 41%. The new CFO believes the firm has excessive fixed assets and inventory that could be sold, enabling it to reduce its total assets to $152,500. Sales, costs, and net income would not be affected, and the firm would maintain the 41% debt ratio. By how much would the reduction in assets improve the ROE?;a. 4.69%;b. 4.93%;c. 5.19%;d. 5.45%;e. 5.73%

 

Paper#34033 | Written in 18-Jul-2015

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