Cash-based income: Revenues Received $6,000 Less expenses paid $5,000 = Income $1,000 3. Question 3: Please refer to Q2. What was Brady Brothers accrual basis income? Accrual-based income: Revenues Earned $12,000 Less expenses incurred $8,000 =Income $4,000 4. Question 4: Anderson Company’s balance sheet at the end of the year revealed the following information: Clients owe Anderson Company $35,300 for completed projects.
Secured bonds - is secured by a specific collateral of the company. 3. Convertible bond- or convertible note is a bond that can convert into a specified number of shares of common stock. 4. Callable bond- bonds which can be redeemed at the option of the issuing company before the bond reaches its date of maturity.
In 2008, for every dollar of assets owned by Berry‟s Bug Blasters, they sold $1.68 worth of goods and services. Profit margin: By dividing net income by sales revenue we can determined that the profit margin for Berry‟s Bug Blasters is 6.58% Return on Assets: Asset ratio multiplied by Profit Margin. ROA can help us determine how profitable Berry‟s Bug Blasters is compared to total assets. To analyze ROA, divide Net Income by Total Assets. Berry‟s Bug Blasters had a 25.52% Return on assets.
Additionally, there are horizontal and vertical analyses for Riordan’s balance sheet and income statement. Profitability Ratios Profitability Ratios | | 2011 | 2010 | | | | | | | | Asset Turnover | | | | | | (Net Sales/Avg. Total Assets) | 1.62 | | 66,608,660 ÷ (47,409,137 + 34,825,498 = 82,234,635 ÷ 2) 41,117,317.5 = 1.6199 or 1.62 | | | | | 1.66 | 56,534,254 ÷(34,825,498 + 33,1004,430 = 67,299,928 ÷2) 33,964,964 = 1.6644 or 1.66 | | | | | | | Profit Margin | | | 4.97% | | 3,310,662 ÷66,608,660 = 0.497 or 4.97 | (Net Income/Net Sales) | | | 4.30% | 2,430,872 ÷ 56,534,254 = 0.429 or 4.30 | | | | | | | Return on Assets | | | 8.05% | | 3,310,662 ÷ (47,409,137 + 34,825,498 = 82,234,635 ÷ 2) 41,117,317.5 = 0.805 or 8.05 | (Net Income/Avg. Total Assets) | | 7.17% | 2,430,872 ÷ (34,825,498 + 33,1004,430 = 67,299,928 ÷2) 33,964,964 = 0.071569986 or 7.17 | | | | | | | Return on Common Stockholder's Equity | | | 10.44% | | 3,310,662 ÷ (33,477,982 + 29,946,92 ÷ 2) 31,712,487 = 0.104396164 or 10.44 | (Net Income/Avg. Common Stockholder's Equity) | | | | 8.46% | 2,430,872 ÷ (29,946,92 + 27,517,328 ÷ 2) 28,732,160 = 0.84604568 or 8.46 | Solvency Ratios A formulation used to measure a company's financial risk by determining how much of the company's assets have been financed by debt.
Berkshireis offering $5.1 billion in cash for PacifiCorp’s equity, for a per-share price of $16.34; altogether, this is a per-share expected value for PacifiCorp’s shares of $23.29. This a fair estimate of PacifiCorp’s intrinsic value, as is shown below. D. Summary of PacifiCorp valuation estimates | Enterprise Value as Multiple of: Net Rev EBIT
The Weighted Average Cost of Capital is the average of the costs of a company's sources of financing-debt and equity, each of which is weighted by its respective use in the given situation. By taking a weighted average, it shows how much interest the company has to pay for every marginal dollar it finances. A firm's WACC is the overall required return on the firm as a whole and, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. Also, WACC is the appropriate discount rate to use in stock valuation. No, I don’t agree with Cohen’s WACC calculation.
The estimate of bad debts expense was .5% (which equals .005) of sales on account. Sales on account totaled 925,000 925,000 X .005 = 4,625 This is the uncollectible accounts expense for 2012 The entries would be Debit Bad Debt expense 4,625 Credit Allowance for Doubtful Accounts 4,625 The credit balance in Allowance for Doubtful Accounts would be: Allowance for doubtful accounts 4,725 Minus the amount wrote off 3,100 Plus the Credit Allowance of Doubtful accounts 4,625 The credit balance for Doubtful Accounts is now 6,250 2. Net realizable value of receivable at the end of 2012. Take the Beginning Accounts Receivable Balance 52,500 Add Sales on Account 925,000 Minus Collections of Account Receivables 835,000 Minus Account written off 3,100 Equals Gross Value of Accounts Receivables 139,400 Minus Credit Balance in Allowance for Doubtful Acct. 6,250 Net Realizable Balance of Accounts Receivable of 2012 133,150 B.
Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%. Initial outlay = $450 Cash flows: Year 1 = $325 Year 2 = $65 Year 3 = $100 • 3.17 years • 2.6 years • 2.88 years • 3.43 years Want help? Click to download FIN 370 7. Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects? • Cash flows have a greater present value than accounting profits.
Explain why the yield on a convertible bond is lower than the yield on an otherwise identical bond without a conversion feature. The option to convert the bond into stock is valuable, hence its price will be higher and its yield lower. 4. You own a bond with a face value of $10,000 and a conversion ratio of 450. What is the conversion price?
$20,000*20 days outstanding= AR $400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Equity Multiplier= 2.5 Asset/Equity = 2.5/1 1+1.5= 2.5 Debt/Asset= 1.5/2.5= .6 3-3 Market/Book Ratio Winston Washer’s stock price is $75 per share. Winston has $10 billion in total assets.