In: Accounting
CORPORATE FINANCE
1. Jason's opportunity cost rate is 8 percent compounded annually. How much must he deposit in an account today if he wants to receive $5,400 at the end of each of the next 10 years? Nper = 10, Rate= 8, FV = 0, PMT = –5,400
2. If Emma purchased a 5 year annuity and she pays $5000 in year 1, $300 in year 2, $2000 in year 3, $1500 in year 4, and $1000 in year 5, at a 5% rate, what is the worth of the investment today?
Complete the balance sheet and sales information in the table that follows for Isberg Industries using the following financial data:
Debt ratio: 50%
Quick ratio: 0.80x
Total assets turnover: 1.5x
Days sales outstanding: 36.0 days
Gross profit margin on sales: (Sales – Cost of goods sold)/Sales = 25%
Inventory turnover ratio: 5.0x
Balance Sheet:
3. Cash Accounts payable
4. Accounts receivable Long-term debt $ 60,000
5. Inventories Common stock
6. Fixed assets Retained earnings $ 97,500
7. Total assets $300,000 Total liabilities and equity
8. Sales Cost of goods sold
Campsey Computer Company: Balance Sheet as of December 31
Cash $ 77,500 Accounts payable $129,000
Receivables 336,000 Notes payable 84,000
Inventories 241,500 Other current liabilities 117,000
Total current assets $655,000 Total current liabilities $330,000
Net fixed assets 292,500 Long-term debt 256,500
Common equity 361,000
Total assets $947,500 Total liabilities and equity $947,500
Campsey Computer Company: Income Statement for Year Ended December 31
Sales $1,607,500
Cost of goods sold (1,353,000)
Gross profit $ 254,500
Fixed operating expenses except depreciation ( 143,000)
Earnings before interest, taxes, depreciation,
and amortization (EBITDA) $ 111,500
Depreciation ( 41,500) Earnings before interest and taxes (EBIT) $ 70,000
Interest ( 24,500) Earnings before taxes (EBT) $ 45,500
Taxes (40%) ( 18,200)
Net income $ 27,300
Using the information above, calculate the following ratios:
9. Current ratio
10. Days sales outstanding
11. Inventory turnover
12. Total assets turnover
13. Net profit margin
14. Return on assets (ROA)
15. Return on equity (ROE)
Debt ratio
Campsey Computer Company
9.Current Ratio = Current Assets / Current Laibilities = 655000 / 117000 = 5.59
10.Days sales outstanding = (Accounts Receivables / Net Credit Sales ) x 365
= (336000 / 1607500 ) x 365 = 76.29 days
11.Inventory turnover = Cost of goods sold / Average Inventory
= 1353000 / 241500 = 5.60
12.Total assets turnover = Sales / Total Assets
= 1607500 / 947500 = 1.70
13.Net profit margin = Net Profit / Sales
= 27300 / 1607500 = 1.6982%
14.Return on assets (ROA) = Net Income / Total Assets
= 27300 / 947500 = 2.88%
15.Return on equity (ROE) = Net income / Common Equity
= 27300 / 361000 = 7.56%
16.Debt Ratio = Total Liabilities / Total Assets
= ( 330000 + 256500 ) / 947500 = 0.6189
Isberg Industries