=2.02 = 1.36 Acid-Test / Quick Ratio Quick Ratio = ! "##$%& ! "#$"%"&"'( Quick Assets = Total Current Assets – Inventories – Prepaid Expenses BOSCH INDIA LIMITED Quick Assets = 4236.30 – 1183.06 – 0 = 3053.24 3053.24 Quick Ratio = 2095.40 Quick Ratio = 1.45 FEDERAL MOGUL GOETZE LIMITED Quick Assets = 372.58 – 139.20 - 0 = 233.38 233.38 Quick Ratio = 227.71 Quick Ratio = 0.85 ! "#$% ! ""#$" Financial Ratio Analysis – Compiled By: Arpit Kapoor 1 Turnover Ratio Inventory Turnover Ratios !
Financial and business techniques Adopted ............................................................. 9 3.1 Ration analysis .......................................................................................................... 9 3.2 SWOT analysis ......................................................................................................... 10 3.3 PESTEL analysis ...................................................................................................... 11 4. Sector and company overview.................................................................................... 12 4.1 Sector overview
Falk asks you, as an accounting major, to explain (a) the bases for comparison in analyzing Ventura financial statements and (b) the limitations, if any, in financial statement analysis. Instructions Write a memo to R.J. Falk that explains the basis for comparison and the factors affecting quality of earnings.” BYP 13- 7: Assigned to Shelley. • Ch. 23: Exercises 23.10 & 23.12 of Managerial Accounting: The Basis for Business Decisions Exercise 23.10 – Assigned to Elizabeth 70,000 Units 80,000 Units 90,000 Units Sales $1,400,000 $1,600,000 $1,800,000 Cost of goods sold 840,000 960,000 1,080,000 Gross profit on sales $ 560,000 $ 640,000 $ 720,000 Operating expenses ($90,000 fixed) 370,000 410,000 450,000 Operating income $ 190,000 $ 230,000 $ 270,000 Income taxes (30% of operating income) 57,000 69,000 81,000 Net Income $ 133,000 $ 161,000 $ 189,000 Exercise 23.12 a. Assigned to Andy b.
$35,000 0.8 1st Investment, 40,000 1.4 2nd Investment Total $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 Required Rate of Return Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? rRF = 6%; rM = 13%; b = 0.7; Solve for : rs = ? rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% 6-7 Required Rate of Return Suppose rRF = 9%, rM = 14%, and bi = 1.3. a. What is ri, the required rate of return on Stock i?
Support your answer with appropriate statistics. Satcom Division Capital Budgeting Analysis | | | Install Cost | $750 | Work. Cap. | $75 | Initial Outlay | $825 | | WACC = | 14% | Tax Rate = | 35% | Sensitivity | 0.00% | | | | | | | | | | | Table 1 | | | | | DEPRECIATION SCHEDULE FOR NEW MACHINE | | | YEAR | MACRS | COST | ADC | ACDEP | BV | | | 1 | 0.2000 | 750 | 150.00 | 150.00 | 600.00 | | | 2 | 0.3200 | 750 | 240.00 | 390.00 | 360.00 | | | 3 | 0.1920 | 750 | 144.00 | 534.00 | 216.00 | | | 4 | 0.1152 | 750 | 86.40 | 620.40 | 129.60 | | | 5 | 0.1152 | 750 | 86.40 | 706.81 | 43.19 | | | 6 | 0.0576 | 750 | 43.20 | 750.00 | - | | | | | | | | | | | | | | | | | | | | | | | | | | | Table2 | AFTER-TAX CASH FLOW TABLE | YEAR | 1 | 2 | 3 | 4 | 5 | 6 | 7 | EBDT | 121.00 | 132.00 | 192.50 | 275.00 | 412.50 | 495.00 | 605.00 | DEPR | 150.00 | 240.00 | 144.00 | 86.40 | 86.40 | 43.20 | 0.00 | EBT | -29.00 | -108.00 | 48.50 | 188.60 | 326.10 | 451.80 | 605.00 | TAX | -10.15 | -37.80 | 16.98 | 66.01 | 114.14 | 158.13 | 211.75 | EAT | -18.85 | -70.20 | 31.53 | 122.59 | 211.97 | 293.67 | 393.25 | DEPR | 150.00 | 240.00 | 144.00 | 86.40 | 86.40 | 43.20 | - | ATCF | 131.15 | 169.80 | 175.53 | 208.99 | 298.37 | 336.87 | 393.25 | WC recoup | | | | | | | 25.0 | Sale | | | | | | |
1991 = (280,000 – 150,000) / 290,000 = .448 C. Average Collection Period i. 1991 = 120,000 / (1,200,000 * .6 / 360) = 60,000 days D. Inventory Turnover i. 1991 = 900,000 / 150,000 = 6.00 E. Fixed Asset Turnover i. 1991 = 1,200,000 / 920,000 = 1.304 F. Total Asset Turnover i. 1991 = 1,2000,000 / 1,200,000 = 1.00 G. Debt Ratio i.
The key elements of the Apple financial statements: Balance sheet & Stockholders’ equity: All the following numbers are in thousands and in US dollars. Period Ending | Sep 25, 2010 | Sep 26, 2009 | Sep 27, 2008 | | Assets | Current Assets | | Cash And Cash Equivalents | 11,261,000 | 5,263,000 | 11,875,000 | | Short Term Investments | 14,359,000 | 18,201,000 | 12,615,000 | | Net Receivables | 11,560,000 | 6,192,000 | 6,151,000 | | Inventory | 1,051,000 | 455,000 | 509,000 | | Other Current Assets | 3,447,000 | 1,444,000 | 3,540,000 | | Total Current Assets | 41,678,000 | 31,555,000 | 34,690,000 | Long Term Investments | 25,391,000 | 10,528,000 | - | Property Plant and Equipment | 4,768,000 | 2,954,000 | 2,455,000 | Goodwill | 741,000 | 206,000 | 207,000 | Intangible Assets | 342,000 | 247,000 | 352,000 | Accumulated Amortization | - | - | - | Other Assets | 2,263,000 | 2,011,000 | 641,000 | Deferred Long Term Asset Charges | - | 1,727,000 | 1,227,000 | | Total Assets | 75,183,000 | 47,501,000 | 39,572,000 | | Liabilities | Current Liabilities | | Accounts Payable | 17,738,000 | 9,453,000 | 8,558,000 | | Short/Current Long Term Debt | - | - | - | | Other Current Liabilities | 2,984,000 | 2,053,000 | 5,534,000 | | Total Current Liabilities | 20,722,000 | 11,506,000 | 14,092,000 | Long Term Debt | - | - | - | Other Liabilities | 5,531,000 | 3,502,000
The difference between coupon rate and required return are equal only if the bond sells for exactly par. Questions and problems Problem # 3 Bond prices: Zevon Inc., has 7 percent coupon bonds on the market that have 8 percent left to maturity. The bonds make annual payments. If the YTM on these bonds is 9 percent, what is the current bond price? Bond value= C*[1-1(1+r)^t]/r + F/(1+r)^t = 70*[1-1(1+0.09)^8]/0.09 + 1000/(1+0.09)^8 = 889.30 Problem # 13 Using Treasury quotes: locate the treasury issue in figure 6.3 maturing in June 2023.
(Individual or Component Costs of Capital) Compute the cost for the following sources of financing: a. A bond selling to yield 9% after flotation costs, but prior to adjusting for the marginal corporate tax rate of 34%. In other words, 9% is the rate that equates the net proceeds from the bond with the present value of the future flows (principal and interest). b. A new common stock issue that
Marriott Corporation: The Cost of Capital 1. WACC for Marriott = (1– t) *Kd *(D/V) + Ke (E/V) Tax Rate is 34%; D=0.60 (from Table A as a target value) and E =0.40 V=1 Cost of Debt: U.S. government fixed-rates in the case which Marriott would be paying on debt are 8.95% for long-term and 8.72% for short-term. Marriot has three divisions: one (lodging) uses long-term debt and two (restaurant and contract services) use short-term debt. Lodging brings 51% of profit, contract service and restaurant – 49%. Thus, weighted average the interest rates for debt is: (8.95*0.51 + 8.72 * 0.49) = 8.84% Full cost of debt will be government fixed rates plus debt rate premium.