FIN 534 Week 2 Homework set #1 | Documents and Forms | Research Papers

FIN 534 Week 2 Homework set #1

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FIN 534 – Homework Set #1

Use the following information for Questions 1 through 8:

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

Cash

$9,000

$7,282

Short-term investments

48,600

20,000

Accounts receivable

351,200

632,160

Inventories

715,200

1,287,360

Total current assets

$1,124,000

$1,946,802

Gross fixed assets

491,000

1,202,950

Less: Accumulated depreciation

146,200

263,160

Net fixed assets

$344,800

$939,790

Total assets

$1,468,800

$2,886,592

Liabilities and Equity

Accounts payable

$145,600

$324,000

Notes payable

200,000

720,000

Accruals

136,000

284,960

Total current liabilities

$481,600

$1,328,960

Long-term debt

323,432

1,000,000

Common stock (100,000 shares)

460,000

460,000

Retained earnings

203,768

97,632

Total equity

$663,768

$557,632

Total liabilities and equity

$1,468,800

$2,886,592

 

Statements

2012

2013

Sales

$3,432,000

$5,834,400

Cost of goods sold except depr.

2,864,000

4,980,000

Depreciation and amortization

18,900

116,960

Other expenses

340,000

720,000

Total operating costs

$3,222,900

$5,816,960

EBIT

$209,100

$17,440

Interest expense

62,500

176,000

EBT

$146,600

($158,560)

Taxes (40%)

58,640

-63,424

Net income

$87,960

($95,136)

 

Other Data

2012

2013

Stock price

$8.50

$6.00

Shares outstanding

100,000

100,000

EPS

$0.88

($0.95)

DPS

$0.22

 

Tax rate

40%

40%

Book value per share

$6.64

$5.58

Lease payments

$40,000

$40,000

 

Ratio Analysis

2012

2013

Current

   

Quick

   

Inventory turnover

4

4

Days sales outstanding

   

Fixed assets turnover

10

 

Total assets turnover

 

2

Debt ratio

   

Liabilities-to-assets ratio

   

TIE

   

EBITDA coverage

   

Profit margin

 

−1.6%

Basic earning power

   

ROA

 

−3.3%

ROE

 

−17.1%

Price/Earnings (P/E)

 

−6.3

Price/Cash flow

8

 

Market/Book

   

 

What is the free cash flow for 2013?

 

 

 

 

 

 

 

 

FIN 534 – Homework Set #1 Use the following information for Questions 1 through 8: 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
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