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Strayer FIn534 weke 2 homework set (Summer 2014)

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Question;Directions;Answer the following questions on a separate document. Explain how you reached;the answer or show your work if a mathematical calculation is needed, or both.;Submit your assignment using the assignment link in the course shell. This;homework assignment is worth 100 points.;Use;the following information for Questions 1 through 8;Assume;that you recently graduated and have just reported to work as an investment;advisor at the one of the firms on Wall Street. You have been presented and;asked to review the following Income;Statement;and Balance Sheets of one of the firm?s clients. Your boss has developed the;following set of questions you must answer.;Income Statements and;Balance Sheet;Balance;Sheet;2012;2013;Cash;$9,000;$7,282;Short-term;investments;48,600;20,000;Accounts;receivable;351,200;632,160;Inventories;715,200;1,287,360;Total;current assets;$1,124,000;$1,946,802;Gross;fixed assets;491,000;1,202,950;Less;Accumulated depreciation;146,200;263,160;Net;fixed assets;$344,800;$939,790;Total;assets;$1,468,800;$2,886,592;Liabilities;and Equity;Accounts;payable;$145,600;$324,000;Notes;payable;200,000;720,000;Accruals;136,000;284,960;Total;current liabilities;$481,600;$1,328,960;Long-term;debt;323,432;1,000,000;Common;stock (100,000;460,000;460,000;shares);Retained;earnings;203,768;97,632;Total equity;$663,768;$557,632;Total;liabilities and equity;$1,468,800;$2,886,592;Income;Statements;2012;2013;Sales;$3,432,000;$5,834,400;Cost of;goods sold except depr.;2,864,000;4,980,000;Depreciation;and amortization;18,900;116,960;Other;expenses;340,000;720,000;Total;operating costs;$3,222,900;$5,816,960;EBIT;$209,100;$17,440;Interest;expense;62,500;176,000;EBT;$146,600;($158,560);Taxes;(40%);58,640;-63,424;Net;income;$87,960;($95,136);Other;Data;2012;2013;Stock;price;$8.50;$6.00;Shares;outstanding;100,000;100,000;EPS;$0.88;($0.95);DPS;$0.22;0.11;Tax rate;40%;40%;Book;value per share;$6.64;$5.58;Lease;payments;$40,000;$40,000;Ratio;Analysis;2012;2013;Current;2.3;1.5;Quick;0.8;0.5;Inventory;turnover;4;4;Days;sales outstanding;37.3;39.6;Fixed;assets turnover;10;6.2;Total;assets turnover;2.3;2;Debt;ratio;35.60%;59.60%;Liabilities-to-assets;ratio;54.80%;80.70%;TIE;3.3;0.1;EBITDA coverage;2.6;0.8;Profit;margin;2.60%;?1.6%;Basic;earning power;14.20%;0.60%;ROA;6.00%;?3.3%;ROE;13.30%;?17.1%;Price/Earnings;(P/E);9.7;?6.3;Price/Cash;flow;8;27.5;Market/Book;1.3;1.1;1. What;is the free cash flow for 2013?;2.;Suppose Congress changed the;tax laws so that Berndt?s depreciation expenses doubled. No changes in;operations occurred. What would happen to reported profit and to net cash flow?;3.;Calculate the 2013 current;and quick ratios based on the projected balance sheet and income statement;data. What can you say about the company?s liquidity position in 2013?;4. Calculate;the 2013 inventory turnover, days sales outstanding (DSO), fixed assets;turnover, and total assets turnover.;5.;Calculate the 2013 debt;ratio, liabilities-to-assets ratio, times-interest-earned, and EBITDA coverage;ratios. What can you conclude from these ratios?;6. Calculate;the 2013 profit margin, basic earning power (BEP), return on assets (ROA), and;return on equity (ROE). What can you say about these ratios?;7. Calculate;the 2013 price / earnings ratio, price / cash flow ratio, and market / book;ratio.;8.;Use the extended DuPont;equation to provide a summary and overview of company?s financial condition as;projected for 2013. What are the firm?s major strengths and weaknesses?

 

Paper#48978 | Written in 18-Jul-2015

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