Reference no: EM132490207

Question 1: National Telecom Corp provides the following information:

Income statement 2016                                            Balance Sheet End 2016

$ million Average over period $ million

Credit sales 1050                                 Cash 90                                         Accounts payable 50

COGS (780)                                     Account Receivables 170                    Accrued expenses 125

Gross profit 270                                Inventory 200                                 Long-term debt 300

SGA expenses (150)                         Property, P&E 375

Op. profit 120                                Depreciation (85)                            Common stock 140

Interest expense (45)                    Retained earnings 65

Tax (25)

Net Income 50                               Total assets 500                      Total Liabilities and Equity 500

Dividends Paid 12

Inventory level unchanged from 2015 level

National Telecom Corp's operating cycle in 2016 is closest to:

a.58 days

b.130 days.

c.153 days

Question 2: Which of the following statements will most likely be true of the annual yield-to-maturity of the following two bonds?

Bond A: 4% semiannual bond

Bond B: 4% quarterly compounding bond

a. The 4% semiannual bond will have a higher annual yield-to-maturity compared to a 4% quarterly compounding bond

b. The 4% quarterly compounding bond will have a higher annual yield-to-maturity compared to a 4% semiannual bond

c. Both the bonds will have equal annual yield-to-maturity