Reference no: EM131336846
Chapter 4 -
1. Introduction to Analysis of Financial Statements Part 1
What two main components make up a firm's capital structure?
2. Introduction to Analysis of Financial Statements Part 2
Calculate book value per share given the following information.
Total Assets: $4,000
Total Liabilities: $1,000
Shares outstanding: 250
3. Ratio Analysis
Why is using ratio analysis important?
4. Liquidity Ratios
A firm's assets and liabilities are listed below:
Land purchased five years ago for $1,000
Inventory properly recorded at lower of cost or market for $2,000
Accounts payable of $3,000
What is the firm's current ratio?
5. Asset Management Ratios
If a firm's inventory turnover ratio is low, what might that mean about the firm's level of sales, its average level of inventory, or both?
6. Days Sales Outstanding
Calculate the days sales outstanding given the following information
Day Sales (on credit) A/R
0 $5,000
1 $4000
2 $2,000
3* $3,000
*On day 3, $1,000 of the sales made on day 1 are collected in cash.
A/R at end of day 3 before collection: 14,000
A/R at end of day 3 after collection: 13,000
7. Debt Management Ratios
A firm's times-interest-earned was 4.20. Its earnings before interest and taxes was $9,000. What was its interest expense?
8. Profitability Ratios-Margin
Calculate the profit margin for a company given the following information:
Net Sales: $5,000
Total Operating Costs $2,000
Interest Expense $200
Tax Rate: 35%
9. Profitability Ratios -- ROA, ROE, ROIC
A firm's return on invested capital (ROIC) is 15%. Its EBIT is $1,000, while its total invested capital is $4,000. What tax rate was the firm subject to?
10. Market Value Ratios
In your own words, what does a P/E ratio of 12.5 mean?
11. The DuPont Equation
A company's profit margin (on sales) is 7%, its total assets turnover is 1.1, and its assets to equity is 1.5. Furthermore, the company's debt-to-equity is 0.5. What is the company's return on equity?
12. Effect of Reducing Receivables
What is the reduction in outstanding accounts receivable given the following information? As the A/R decreases, what account increases as a result?
Annual sales of $5,000,000 with a DSO of 18. A new collection incentive has reduced DSO from 18 to 12.
Chapter 5 -
(Please show your work and describe what values you put into the TVM registers, e.g., N, I/Y, PV, PMT, and FV-tell me what values you put into each)
1. Time Lines
What does Year 0 represent in a cash flow timeline?
2. Future Values
Calculate the future value given the following information below:
Amount invested at year 0: $80
Number of years invested: 4
Interested rate with annual compounding: 3%
3. Present Values
Calculate the present value given the following information below:
Amount at end of year 6 $1,000
Interested rate with annual compounding: 3%
4. Present Values
As a follow up to the last question, if we're in agreement that the correct interest rate is 3%, which do you prefer: (1) $1,000 at the end of year 6 or (2) the PV you found in the last part?
5. Finding I and N
An investor wants to invest a lump sum of $1,000 and have $2,000 at the end of ten years. Assuming annual compounding, what interest rate is required to reach this goal?
6. Annuities
An annuity is a stream of _____ payments either at the ______ or the _______ of a period. This is like paying rent at the beginning of each month for 12 months or paying a mortgage payment at the end of each month for 12 months.
An annuity is a stream of _____ payments either at the ______ or the _______ of a period.
7. Future Value of an Ordinary Annuity
Calculate the future value of an ordinary annuity given the following information:
N: 5
I (annual): 7%
Payments of $100 made at the end of each period.
8. Future Value of an Annuity Due
Calculate the future value of an annuity due given the following information:
Number of periods: 4
Interest rate: 9%
Payments of $100 made at the beginning of each period.
9. Present Value of an Ordinary Annuity
Calculate the present value of an ordinary annuity given the following information:
Number of periods: 7
Interest rate: 3%
Future value: $10,000
Payments: $500
10. Finding PMT, N, and I
A worker wants to have $1,000,000 by the time he retires. The worker puts $10,000 into a savings account at the end of every year that earns 5% compounded annually. How many years of working will it take until the worker can retire?
11. Finding Annuity Payment, PMT
A worker wants to have $2,000,000 by the time they retire. The worker plans on working 40 years until he retires. What yearly payment must be put into a savings account at the end of each year if the savings account yields 8% annually?
12. Finding the Interest Rate, I
A student beginning their career has $10,000 in savings. They plan to retire in 45 years while investing $6,000 every year at the end of the year compounded annually in the hopes of having $1,000,000 at retirement. What is the required rate of interest to achieve this goal?
13. Perpetuities
A lottery winner wins a $50,000/year prize ends upon the death of the winner. However, the lottery winner, who is a scientist, discovers a drug that makes him immortal, meaning the payments will continue to perpetuity. What is the present value of the lottery prize if the discount rate is 10%?
14. Uneven Cash Flows
Calculate the net present value of the following cash flows with an annual interest rate of 2%.
Year 0: -300
Year 1: +200
Year 2: +200
Year 3: +700
Year 4: -100
15. Future Value of an Uneven Cash Flow Stream
Calculate the future value of the following cash flows with an annual interest rate of 3%.
Year 0: 0
Year 1: 300
Year 2: 50
Year 3: 100
Year 4: 500
16. Extra Video: Continuous Compounding
How many times per year is a principle compounded in one year with continuous compounding?
Chapter 6 -
1. Cost of Money
What does the interest rate represent?
2. Cost of Money
How would a period of high inflation affect interest rates?
3. Determinants of Interest Rates
In your own words, what does the "real rate of interest" mean?
4. Term Structure
Explain the shape of the normal yield curve.
Term Structure
What are the three pieces that make up the returns on Treasury securities? The first term you explained above. Why is an investor compensated for the second and third terms?
Term Structure
Fill in the blanks for the following with either "higher" or "lower":
Bonds with higher levels of risk result in ______ interest rates.
Bonds with lower levels of risk result in ______ interest rates.
5. Future Interest Rates
For the pure expectations theory, what is the big assumption made?
6. Future Interest Rates
Based on the pure expectations theory, if I lock in at 4% on a two-year security, how much return do I expect on a one-year security in the third year if the other option is to lock in a yield of 3.5% for the next three years?
Future Interest Rates
Suppose that you can lock into a five-year security with a yield of 4%. If the three year rate is 3.5%, what is the expected two-year rate in three years (for years four and five) based on the pure expectations theory?
7. Macro Factors
The Federal Reserve decides to greatly increase the money supply. What is the expected effect on interest rates?
Attachment:- Assignment.rar