Inventory turnover 56,534,254 / 8,517,203 = 6.6 * Profitability ratios 5. Asset turnover $56,534,254 / 34,825,498 = 1.6 times 6. Profit margin $2,430,872 / 56,534,254 = 4.3 7. Return on assets $2,430,872 / 34,825,498 = 6.9 8. Return on common stockholders’ equity $29,946,992 - (2430872-15801332) / 200,000 = 82.9% * Solvency ratios 9.
The formula S = C (1 + r)^t models inflation, where C = the value today r = the annual inflation rate S = the inflated value t years from now Use this formula to solve the following problem: If the inflation rate is 3%, how much will a house now worth $510,000 be worth in 5 years? 510000(1ⓜ┤+ⓜ0.03)^5 =591229.777893 591229.77789300005 Write 6 = log2 64 in its equivalent exponential form. 26=64 Write 8y = 300 in its equivalent logarithmic form. log 300 = log 8y log(3*100)=log 8y log 3+log100=log 8+log y log 3+2=log 8+log y log 8-log 3=log y-2 By log(A/B)=log A-log B, log (8/3)=log y-2 Hurricanes are some of the largest storms on earth. They are very low pressure areas with diameters of over 500 miles.
Net working capital | Year 1 | Year 2 | Year 3 | Year 4 | | Inventory | 1,5 | 1,5 | 1,5 | | All in millions | receivables | 16,5 | 12,45 | 8,25 | | | payables | 1,6 | 1,6 | 1 | | | NWC(=Inventory+receivables-payables) | 16,4 | 12,35 | 8,75 | | | Change in NWC | 16,4 | -4,05 | -3,6 | -8,75 | | Q6. FCF = (Revenue – Costs – Depreciation) x (1 – tax rate) + Depreciation – Capital Expenditure – change in working capital. Free cash flows | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | | Unl Net income | -59,3439 | 70,1337 | 49,3248 | 30,828 | 0 | All in millions | Depreciation | 0 | 8 | 8 | 8 | 0 | | Capital expenditures | 24 | 0 | 0 | 0 | 0 | | Change in NWC | 0 | 16,4 | -4,05 | -3,6 | -8,75 | | Free cash flows | -83,34 | 61,73 | 61,37 | 42,43 | 8,75 | | Q7. | | Year 1 | Year 2 | Year 3 | Year 4 | | NPV per year | -83,34 | 55,12 | 48,93 | 30,20 | 5,56 | All in millions | Total NPV | 56,46 | | | | | | Q8. Rate | NPV(million) | 5% | 74,97 | 10% | 61,35 | 15% | 49,65 | 20% | 39,5 | 25% | 30,63 | 30% | 22,84 | 35% | 15,94 | 40% | 9,81 | 45% | 4,32 | 50% | -0,61 | 55% | -2,89 | 60% | -5,06
FI 515 Homework week 2. 3-1 Days Sales Outstanding Days sales outstanding= receivables/ave sales per day= receivables/annual sales/365) 20 days x $20,000= $400,000 3-2 Debt Ratio Debt ratio formula=Debt ratio +equity ratio=1 Equity ratio = 1/EM….the equity multiplier is 2.5 1 / 2.5 = .40 equity ratio Debt ratio= debt ratio +equity ratio=1 1-equity ratio=debt ratio 1-.40=.60%=debt ratio 3-3 Market/Book Ratio Market value per share =$75 Common equity =6 billion Number of shares outstanding =800M Market value per share/ (common equity/# of shares outstanding)= market/book ratio $75/(6,000,000/800,000,000) = $75/7.5 10 billion= market to book ratio 3-4 PE Ratio Price per share/earnings per share= P/E Price per share/cash flow per share= Price/cash flow
Total liabilities ÷ Total stockholders' equity 283,800÷292,200=97.1% 248,000÷268,000 = 92.5% j. (Income before taxes+ Interest) Interest (55,000 + 8,000) ÷ 8,000 = 7.9 times (54,800 + 7,200) ÷ 7,200 = 8.6 times k. Plant assets ÷ Long-term debt 270,000 ÷ 132,000 = 2.05 : 1 255,000 ÷ 127,000 = 2.01 : 1 l. Net income ÷ Net sales 32,000 ÷ 230,000 = 13.9% 32,800 ÷ 210,000 = 15.6% m. Net sales ÷ Avg. total assets 230,000 ÷ 546,000=0.42 210,000 ÷ 516,000=0.41* n. Net income ÷ Avg. total assets OR (l.) x (m.) 32,000 ÷ 546,000 = 5.9% 32,800 ÷ 516,000 = 6.4%* o. Net income ÷ Avg.
Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted. Margin of Safety (Dollars) 137500-58929= 78571 (Units) 78571/275= 286 4. Compute the increase or decrease in profit assuming the proposal is accepted, show the contribution Income Statement for current and proposed. Present Proposed Sales 100,000 137500 Variable expense 64000 80000 CM 36000 57500 Fixed cost 22500 244750 Net income 13500 32750 difference: 19250 4a. What is the operating leverage for the current and proposed?
BRIEF EXERCISE 19-8 Income before income taxes $195,000 Income tax expense Current $48,000 Deferred 30,000 78,000 Net income $117,000 BRIEF EXERCISE 19-10 Year | Future taxable amount | X | Tax Rate | = | Deferred tax liability | 2013 | $ 42,000 | 34% | $ 14,280 | 2014 | 244,000 | 34% | 82,960 | 2015 | 294,000 | 40% | 117,600 | | | | $214,840 | BRIEF EXERCISE 19-14 Income Tax Refund Receivable ($350,000 X. 40) 140,000 Benefit Due to Loss Carryback 140,000 Deferred Tax Asset ($500,000 – $350,000) X .40 60,000 Benefit Due to Loss Carryforward 60,000 Benefit Due to Loss Carryforward 60,000 Allowance to Reduce Deferred
Valuation Questions Question 1 Union Pacific Railroad reported net income of $770 million in 1993, after interest expenses of $320 million. (The corporate tax rate was 36%.) It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. The firm also had $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8%), trading at par (up from $3.8 billion at the end of 1992). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion.
Discount = 3,000,000 – 2,783,724 = 216,276 Effective interest rate = 300000/2,783,724 =approx. 12% Carrying amount = 2,783,724 Number of periods | $ 5.00 | | | Present value | $ (2,783,724.00) | | | Interest Payment | $ 300,000.00 | | | Future value | | $ 3,000,000.00 | | | | | | | | 12.000% | | | | | Date | Cash Paid |
Use a format similar to the illustrations in Exhibits 9–4, 9–5, and 9–6. In each case, assume that a full year of depreciation was taken in 2005. 1. Straight-line. Cost – Residual Value $40,000 - $5,000 Years of Life 5 Depreciation $7,000 Annually Depreciation Schedule: Straight - Line Method Year Computation Depreciation Expense Accumulated Depreciation Book Value $ 40,000 First 35,000 x 1/5 $7,000 $ 7,000 $ 33,000 Second 35,000 x 1/5 $7,000 $ 14,000 $ 26,000 Third 35,000 x 1/5 $7,000 $ 21,000 $ 19,000 Fourth 35,000 x 1/5 $7,000 $ 28,000 $ 12,000 Fifth 35,000 x 1/5 $7,000 $ 35,000 $ 5,000 Total $35,000 2.