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Question;2.Corporate Tax Liability;To complete the assignments listed below, refer;to theTable 2-1.;The Talley Corporation had a taxable income of;$300,000 from operations after all operating costs but before (1) interest;charges of $30,000, (2) dividends received of $18,000, (3) dividends paid of;$18,000, and (4) income taxes.;What are the firm's income tax liability and its;after-tax income? Round your answers to two decimal places.;Income tax liability;$;After-tax income;$;3.Balance Sheet Analysis;Complete the balance sheet and sales;information in the table that follows for J. White Industries using the;following financial data;Total assets turnover: 2.1;Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 24%;Total liabilities-to-assets ratio: 35%;Quick ratio: 1.05;Days sales outstanding (based on 365-day year): 36 days;Inventory turnover ratio: 3.0;Round your answers to the nearest whole;dollar.;Partial Income;Statement;Information;Sales;$;Cost of goods sold;$;Balance Sheet;Cash;$;Accounts payable;$;Accounts receivable;$;Long-term debt;$ 50,000;Inventories;$;Common stock;$;Fixed assets;$;Retained earnings;$ 100,000;Total assets;$ 400,000;Total liabilities and equity;$;4. PV and Effective Annual Rate;Assume that you inherited some money.;A friend of yours is working as an unpaid intern at a local brokerage firm, and;her boss is selling securities that call for 4 payments of $50 (1 payment at;the end of each of the next 4 years) plus an extra payment of $1,000 at the end;of Year 4. Your friend says she can get you some of these securities at a cost;of $950 each. Your money is now invested in a bank that pays an 12% nominal;(quoted) interest rate but with quarterly compounding. You regard the;securities as being just as safe, and as liquid, as your bank deposit, so your;required effective annual rate of return on the securities is the same as that;on your bank deposit. You must calculate the value of the securities to decide;whether they are a good investment. What is their present value to you? Round;your answer to the nearest cent.;$;5.Amortization Schedule;a.;Set up an amortization schedule;for a $15,000 loan to be repaid in equal installments at the end of each of the;next 5 years. The interest rate is 12%. Round your answers to the nearest cent.;Enter "0" if required;Year;Payment;Repayment Interest;Repayment of Principal;Balance;1;$;$;$;$;2;$;$;$;$;3;$;$;$;$;4;$;$;$;$;5;$;$;$;$;Total;$;$;$;b. How large must each annual payment be if the loan is for $30,000?;Assume that the interest rate remains at 12% and that the loan is paid off over;5 years. Round your answer to the nearest cent.;$;c.;How large must each payment;be if the loan is for $30,000, the interest rate is 12%, and the loan is paid;off in equal installments at the end of each of the next 10 years? This loan is;for the same amount as the loan in part b, but the payments are spread out over;twice as many periods. Round your answer to the nearest cent.;$;6. Free Cash Flows;Rhodes Corporation: Income;Statements for Year Ending December 31 (Millions of Dollars);2013;2012;Sales;$8,450.0;$6,500.0;Operating costs excluding depreciation;6,971.0;5,525.0;Depreciation and amortization;203.0;163.0;Earnings before interest and taxes;$1,276.0;$812.0;Less: Interest;182.0;140.0;Pre-tax income;$1,094.0;$672.0;Taxes (40%);437.6;268.8;Net income available to common stockholders;$656.4;$403.2;Common dividends;$591.0;$323.0;Rhodes Corporation: Balance;Sheets as of December 31 (Millions of Dollars);2013;2012;Assets;Cash;$86.0;$78.0;Short-term investments;43.0;33.0;Accounts receivable;894.0;715.0;Inventories;2,028.0;1,560.0;Total current assets;$3,051.0;$2,386.0;Net plant and equipment;2,031.0;1,625.0;Total assets;$5,082.0;$4,011.0;Liabilities and Equity;Accounts payable;$468.0;$390.0;Accruals;215.0;195.0;Notes payable;169.0;130.0;Total current liabilities;$852.0;$715.0;Long-term bonds;1,690.0;1,300.0;Total liabilities;$2,542.0;$2,015.0;Common stock;2,354.6;1,876.0;Retained earnings;185.4;120.0;Total common equity;$2,540.0;$1,996.0;Total liabilities and equity;$5,082.0;$4,011.0;Using Rhodes Corporation's financial statements;(shown above), answer the following questions.;a. What is the net operating profit after taxes (NOPAT) for 2013?;Enter your answer in millions. For example, an answer of $1.2 million should be;entered as 1.2, not 1,200,000. Round your answer to one decimal place.;$ million;b. What are the amounts of net operating working capital for both;years? Enter your answer in millions. For example, an answer of $1.2 million;should be entered as 1.2, not 1,200,000. Round your answers to one decimal;place.;2013 $ million;2012 $ million;c. What are the amounts of total net operating capital for both;years? Enter your answer in millions. For example, an answer of $1.2 million;should be entered as 1.2, not 1,200,000. Round your answers to one decimal;place.;2013 $ million;2012 $ million;d. What is the free cash flow for 2013? Enter your answer in;millions. For example, an answer of $1.2 million should be entered as 1.2, not;1,200,000. Round your answer to one decimal place.;$ million;e. What is the ROIC for 2013? Round your answer to two decimal;places.%;f.;How much of the FCF did;Rhodes use for each of the following purposes: after-tax interest, net debt;repayments, dividends, net stock repurchases, and net purchases of short-term;investments? (Hint:Remember that a net use can be negative.) Enter your answer in;millions. For example, an answer of $1.2 million should be entered as 1.2, not;1,200,000. Round your answers to one decimal place.;After-tax interest payment;$ million;Reduction (increase) in debt;$ million;Payment of dividends;$ million;Repurchase (Issue) stock;$ million;Purchase (Sale) of short-term investments;$ million;7.Future Value of an Annuity for Various;Compounding Periods;Find the future values of the following ordinary;annuities;a. FV of $600 paid each 6 months for 5 years at a nominal rate of;16%, compounded semiannually. Round your answer to the nearest cent.;$;b. FV of $300 paid each 3 months for 5 years at a nominal rate of;16%, compounded quarterly. Round your answer to the nearest cent.;$;9.Comprehensive Ratio Analysis;Data for Lozano Chip Company and its industry averages;follow.;Lozano Chip Company: Balance Sheet as of December 31, 2013;(Thousands of Dollars);Cash;$ 225,000;Accounts payable;$601,866;Receivables;1,575,000;Notes payable;326,634;Inventories;1,125,000;Other current liabilities;525,000;Total current assets;$2,925,000;Total current liabilities;$1,453,500;Net fixed assets;1,350,000;Long-term debt;1,068,750;Common equity;1,752,750;Total assets;$4,275,000;Total liabilities and equity;$4,275,000;Lozano Chip Company: Income Statement for Year Ended;December 31, 2013 (Thousands of Dollars);Sales;$7,500,000;Cost of goods sold;6,375,000;Selling general and administrative expenses;825,000;Earnings before interest and taxes (EBIT);$ 300,000;Interest expense;111,631;Earnings before taxes (EBT);$ 188,369;Federal and state income taxes (40%);75,348;Net income;$ 113,022;a.;Calculate the indicated ratios for;Lozano. Round your answers to two decimal places.;Ratio;Lozano;Industry Average;Current assets/Current liabilities;2.0;Days sales outstanding*;days;35.0 days;COGS/Inventory;6.7;Sales/Fixed assets;12.1;Sales/Total assets;3.0;Net income/Sales;%;1.2%;Net income/Total assets;%;3.6%;Net income/Common equity;%;9.0%;Total debt/Total assets;%;30.0%;Total liabilities/Total assets;%;60.0%;*Calculation is based on a 365-day year.;b.;Construct the extended Du Pont;equation for both Lozano and the industry. Round your answers to two decimal;places.;For the firm, ROE is;%;For the industry, ROE is;%;c. Outline Lozano's strengths and weaknesses as revealed by your;analysis

 

Paper#40206 | Written in 18-Jul-2015

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