Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Use the following information for Questions 1 through 4:
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
2014
Cash
$9,000
$7,282
$14,000
Short-term investments
48,600
20,000
71,632
Accounts receivable
351,200
632,160
878,000
Inventories
715,200
1,287,360
1,716,480
Total current assets
$1,124,000
$1,946,802
$2,680,112
Gross fixed assets
491,000
1,202,950
1,220,000
Less: Accumulated depreciation
146,200
263,160
383,160
Net fixed assets
$344,800
$939,790
$836,840
Total assets
$1,468,800
$2,886,592
$3,516,952
Liabilities and Equity
Accounts payable
$145,600
$324,000
$359,800
Notes payable
200,000
720,000
300,000
Accruals
136,000
284,960
380,000
Total current liabilities
$481,600
$1,328,960
$1,039,800
Long-term debt
323,432
1,000,000
500,000
Common stock (100,000 shares)
460,000
1,680,936
Retained earnings
203,768
97,632
296,216
Total equity
$663,768
$557,632
$1,977,152
Total liabilities and equity
Income Statements
Sales
$3,432,000
$5,834,400
$7,035,600
Cost of goods sold except depr.
2,864,000
4,980,000
5,800,000
Depreciation and amortization
18,900
116,960
120,000
Other expenses
340,000
612,960
Total operating costs
$3,222,900
$5,816,960
$6,532,960
EBIT
$209,100
$17,440
$502,640
Interest expense
62,500
176,000
80,000
EBT
$146,600
($158,560)
$422,640
Taxes (40%)
58,640
-63,424
169,056
Net income
$87,960
($95,136)
$253,584
Other Data
Stock price
$8.50
$6.00
$12.17
Shares outstanding
100,000
250,000
EPS
$0.88
($0.95)
$1.104
DPS
$0.22
0.11
0.22
Tax rate
40%
Book value per share
$6.64
$5.58
$7.909
Lease payments
$40,000
Ratio Analysis
Industry Average
Current
2.3
1.5
2.7
Quick
0.8
0.5
1.0
Inventory turnover
4
6.1
Days sales outstanding
37.3
39.6
32.0
Fixed assets turnover
10
6.2
7.0
Total assets turnover
2
2.5
Debt ratio
35.60%
59.60%
32.0%
Liabilities-to-assets ratio
54.80%
80.70%
50.0%
TIE
3.3
0.1
EBITDA coverage
2.6
8.0
Profit margin
2.60%
-1.6%
3.6%
Basic earning power
14.20%
0.60%
17.8%
ROA
6.00%
-3.3%
9.0%
ROE
13.30%
-17.1%
17.9%
Price/Earnings (P/E)
9.7
-6.3
16.2
Price/Cash flow
8
27.5
7.6
Market/Book
1.3
1.1
2.9
1. What is the free cash flow for 2014?
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 2014 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. Use the extended DuPont equation to provide a summary and overview of company's financial condition as projected for 2014. What are the firm's major strengths and weaknesses?
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. 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?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd