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Finance Four Problems Set

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Question;Question 1.;a. Prepare a cash flow statement for the;following information.;b. Include a cash reconciliation statement.;Balance Sheet;Jan 1 Dec 31;ASSETS;Current Assets;Cash 310,000 600,000;Marketable;Securities 1,200,000 1,000,000;Accounts;Receivable, net 290,000 330,000;Inventory 3,000,000 4,000,000;Prepaid;Expenses 200,000 300,000;Total Current Assets 5,000,000 6,230,000;Total Fixed Assets, net 2,500,000 2,000,000;Total Assets 7,500,000 8,230,000;LIABILITIES & EQUITIES;Current Liabilities;Accounts;Payable 1,500,000 1,000,000;Notes;Payable 1,000,000 1,000,000;Accrued;Expenses 500,000 800,000;Total Current Liabilities 3,000,000 2,800,000;Total Long-term Liabilities 1,000,000 1,500,000;Total Liabilities 4,000,000 4,300,000;Preferred Stock 500,000;500,000;Common Stock 500,000;500,000;Capital in Excess of Par 1,000,000 1,000,000;Retained Earnings 1,500,000 1,930,000;Total Stockholders Equity 3,500,000 3,930,000;Total Liabilities and Equity 7,500,000 8,230,000;Income Statement (for ques;1);Sales 10,000,000;COGS;6,000,000;Gross Profit;4,000,000;Administrative expenses 1,200,000;Depreciation;500,000;EBIT;2,300,000;Interest Expense 500,000;EBT;1,800,000;Taxes (40%) 720,000;Net Income;1,080,000;Question 2;Table 5-1;Income Statement Balance Sheet;Sales $20,000,000 Assets;Cost of Goods Sold 8,000,000 Cash $ 5,000,000;12,000,000 Marketable;Securities 12,500,000;Selling and Administrative 1,600,000 Accounts;Receivable, net 2,500,000;Depreciation 3,000,000 Inventory 30,000,000;7,400,000 Prepaid;Expenses 5,000,000;Interest 2.000,000 Plant & Equipment;30,000,000;5,400,000;Taxes (40%) 2,160,000 Total;Assets 85,000,000;3,240,000;Common Stock Div. 600,000 Liabilities and Equity;$2,640,000 Accounts;Payable;$20,000,000;Notes;Payable 5,000,000;Accrued;Expenses 5,000,000;Bonds;25,000,000;Common;Stock 5,000,000;Capital;in Excess of Par 10,000,000;Retained;Earnings 15,000,000;Total Liabilities and;Equity $85,000,000;Shares outstanding of common stock =;1,000,000;Market price of common stock = $18.;Use Table 5-1 for the;following 15 questions.;2-1. The Current Ratio is;2-2. The Net Profit margin;is;2-3. The Quick Ratio is;2-4. The Times Interest;Earned ratio is;2-5. The Earnings Per Share;is;2-6. The Gross Profit Margin;is;2-7. The Total Debt to Total;Asset ratio is;2-8. Return on Assets ratio;is;2-9. The Total Asset Turnover;ratio is;2-10. The Operating Profit;Margin is;2-11. The Average Collection;Period (365 day year) is;2-12. The Market to Book ratio;is;2-13. The Debt to Equity ratio;is;2-14. The Inventory Turnover;ratio is;2-15. The Return on Equity is;Question 3;Oleans;Inc. projects sales to be $100,000, $90,000, $95,000 during the months of;August;September, and October respectively.;Salaries are projected to be $12,000 plus;5%;of sales. Purchases are 50% of sales for;the month and paid in the month of purchase.;A;tax payment of $60,000 and an equipment purchase of $20,000 will be made in;September. Transactions are for cash, and a ($20,000);cash balance starts the month;of;August. The firm maintains a minimum;target end of month balance of $6,000.;There;is;no limit as to how high the cash balance can be.;Calculate;the ending cash balance after any deficit is financed to achieve the target;level;for;each of the three months.;Question 4;Following;is the balance sheet for the end of the year 2013 for Silver Spurs, Inc.;2013 2014;Current Assets $15,000;Net Fixed Assets;20,000;Total Assets $35,000;Accounts Payable $ 2,000;Notes Payable 1,000;Long-Term Debt 10,000;Common Equity 22,000;Total Liabilities/Equity $35,000;They have generated sales for 2013;of $35,000 resulting in net income of $15,000.;Due to the difficulty associated with acquiring raw materials, Silver;Spurs has experienced sluggish business that has caused fixed assets to be;underutilized.Management thinks it can;double sales in 2014 through the introduction of a new product. No new fixed assets will be required and the;dividend payout ratio will be 100%.;Assume no additional deprecation expense will be taken in 2014. Project next year?s balance sheet in the;space provided above to determine the additional funding needed (AFN) for this;new product. Assume notes payable at the;end of 2013 are paid off in 2014.

 

Paper#49574 | Written in 18-Jul-2015

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