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FIN - MN Co. uses current asset policy

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Question;1) MN Co. uses current asset policy Total fixed assets $500,000 Debt/asset ratio 40% Interest rate (on all debt) 8% The alternative current assets polisies as a percentage of sales are: 30% 40% 50%On the projected sales, earnings before interest and tax is 12% Projected sales $4,000,000 Effective tax rate is 40% Find E(ROE) based on each alternative. 2) Given the following information The exchange rate betweenThe US dollars and the Euros ? 1.25 = $ 1.00The US dollars and the Canadian dollars $ 1.00 =C$ 1.50Find the cross exchange rate between Euros and Canadian dollars 3)Assume the following The exchange rate betweenThe US dollars and the Frank fr. 1.00 = $ 0.60In the comparison to the $,Tomorrow the Swiss Frank is expected to appreciated by 10% How many Swiss Frank would a dollar buy tomorrow4) Assume the following The exchange rate betweenThe US dollars and the Frank fr. 1.00 = $ 0.60In the comparison to the $,Tomorrow the Swiss Frank is expected to appreciated by 10% How many Swiss Frank would a dollar buy tomorrow4) Assume the following with respect to US dollar an pound The dollar cost of a Swiss Frank is $ 0.60Because of US economic situation,the fr. will be appreciated to $ 0.66Or increased to 10.00%Before appreciation, how many pounds, one dollar can buy After appreciation, how many pounds, one dollar can buy5)Two companies have the following data for 20X1 Current assets policies Co1 Co2Current assets (% of sales) $1,200,000 $1,600,000Total fixed assets $500,000 $500,000Total assets Short Term Debt 80,000 140,000Long Term Debt $600,000 $700,000Equity $1,020,000 $1,260,000Total liabilities and equities Sales $4,000,000 $4,000,000EBIT $480,000 $480,000Interests (10% of Long Term Debt) Earnings before tax Tax (40%) Net income Find return on assets and return on equity for each company6) Two companies have the following data for 20X1 Current assets Co1 Co2Current assets (% of sales) $1,200,000 $1,600,000Total fixed assets $500,000 $500,000Total assets Short Term Debt 80,000 140,000Long Term Debt $600,000 $700,000Equity $1,020,000 $1,260,000Total liabilities and equities Sales EBIT (as a percentage of Sales) 12% 14%Interests (percentage of Long Term Debt) 10% 12%Earnings before tax Tax 40% 40%Net income (percentage of sales) 1% 1.5%ROA ? ?Find total sales and return on assets (ROA)

 

Paper#49580 | Written in 18-Jul-2015

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