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1.A firm has the following information at December...




1.A firm has the following information at December 31, 2007: Cash 10,000 A/R 80,000 Inventory 90,000 A/P 160,000 Bonds Payable (long term) 400,000 Common Stock (Outstanding Shares 1,000) 20,000 Retained Earnings 180,000 Fixed Assets 580,000 Net Income $25,000 Dividends Paid $10,000 Market Per Share Price $50 a. Prepare a balance sheet for December 31, 2007 based on the above information: b. Calculate the current ratio: How would you interpret this ratio? c. Calculate the quick ratio: How would you interpret this ratio? d. Would you extend credit to this company on a short term basis? Why or why not? e. Calculate the earnings per share. f. Calculate the Price to Earnings Ratio: How would you interpret this ratio? g. What was the balance of retained earnings at the beginning of the year? 2.Use the following tax rates to work the problem and assume the business has taxable income of $126,000. Taxable Income Tax Rate $ 0 - 50,000 15% 50,001 - 75,000 25% 75,001 - 100,000 34% 100,001 - 335,000 39% a. How much does the business owe in taxes? b. What is the average tax rate paid? c. What is the marginal tax rate for the business? d. How much additional tax would the business owe on $5,000 more of income? 3. Use the following information to answer the questions that follow: Bayside Inc. 2005 Income Statement ($ in thousands) Net sales $5,680 Less: Cost of goods sold 4,060 Less: Depreciation 420 Earnings before interest and taxes 1,200 Less: Interest paid 30 Taxable Income $1,170 Less: Taxes 410 Net income $ 760 Bayside, Inc. 2004 and 2005 Balance Sheets ($ in thousands) 2004 2005 2004 2005 Cash $ 70 $ 180 Accounts payable $1,350 $1,170 Accounts rec. 980 840 Long-term debt 720 500 Inventory 1,560 1,990 Common stock 3,200 3,500 Total $2,610 $3,010 Retained earnings 940 1,200 Net fixed assets 3,600 3,360 Total assets $6,210 $6,370 Total liabilities & equity $6,210 $6,370 Calculate the following: for 2005 only (Show your work). Give a short assessment of why you think the calculated ratio is good or bad. Sometimes you may have a hard time making that determination. Phrase your answer then to show that you understand the calculation. a. Current Ratio (3 points) b. Quick Ratio (3 points) c. Total Asset Turnover (3 points) d. Inventory Turnover and Average Days (3 points) e. Receivables Turnover and Days Sales in Receivables (3 points) f. Total Debt Ratio (3 points) g. Debt to Equity Ratio (3 points) h. Profit Margin (3 points) i. Return on Assets (3 points) j. Return on Equity (3 points) Additional Information at the end of 2005: Fair Market Value of the Stock $190 per share Number of Common Shares Outstanding 100,000 Dividends paid during 2005 - $4 per share k. Calculate the earnings per share (3 points) l. What is the Price to Earnings ratio? (3 points) 4. XYZ company has the following information in the liability and equity section of the balance sheet: Total Liabilities $ 500,000,000 Common Stock $ 10,000,000 Retained Earnings $1,000,000,000 Total Shareholder Equity $1,010,000,000 Total Liab and Equity $1,510,000,000 Additional Information: Total Common Shares Outstanding 500,000 Dividends per share for the year $1 Net Income for the year 20,000,000 Fair market value per share $210 Based on the information provided, should the shareholders be happy? Explain and substantiate your answer in detail. Hint: Calculating the ROA, ROE, Debt to Equity, and PE ratios as well as Earnings Per Share will help you come up with an answer. Make sure you look closely at Retained Earnings. 5. Find the most recent balance sheet and income statement for a Gorman Rupp Company (12-31-2010). You should use the balance sheet contained in the companies annual report. Answer the following questions: Balance Sheet Date: a. What is the amount of retained earnings at 12-31-10? (2 points) b. How many common shares are outstanding at the end of 2010? (2 Points) c. What is the total maket value of the company at 12-31-10? (2 Points) d. How leveraged is the company in terms of debt at 12-31-10? Explain your answer. (4 Points) e. What is the Price to Earnings ratio at 12-31-10? Is this a good ratio for the company? Explain. (4 points)


Paper#3717 | Written in 18-Jul-2015

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