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    Estimate the amount of external financing

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    Introduction to Finance
    Week 5 - Numerical Exercises

    S. No. Problems
    1 Given the following data for Gary and Co (Millions of Dollars):

    Balance Sheet Dec 31 200X

    Cash $45
    Accounts Payables $45
    Marketable Securities 33
    Notes Payables 45
    Receivables 66
    Other Current liabilities 21
    Inventory 159
    Total Current liabilities $111
    Total Current Assets 303
    Long term debt 24
    Total liabilities $135
    Net Fixed Assets 147
    Common Stock 114
    Total Assets $450
    Retained Earnings 201
    Total stockholders' equity 315
    Total liabilities and equity 450

    Income Statement Year 200X

    Net sales $795
    Cost of goods sold 660
    Gross profit 135
    Selling expenses 73.5
    Depreciation 12
    EBIT 49.5
    Interest expense 4.5
    EBT 45
    Taxes (40% 18
    Net Income 27

    Calculate the following ratios:

    Ratio Industry Average
    Current ratio
    Times interest earned
    DSO
    Inventory Turnover
    Sales/Total Assets
    Profit margin on sales
    Return on Total Assets
    Return on Common Equity

    2 Given the compressed version of balance sheet and income statement; estimate the amount of external financing needed to increase sales by 20% next year. (use percentage of sales method)
    (Dividend payout is 50%) $2,000

    3 A firm has outstanding receivables of $125,000. Its credit terms are net 30. If during the past three months credit sales are $100,000, $105,000 and $60,000 how many days of sales are outstanding as receivables?

    4 Given the following data develop weekly cash budget Minimum cash required is $50 and the beginning cash balance is $100.

    5 Given the following data :
    Days inventory = 103 days; Days receivables = 41 days and Days payables = 81 days
    Calculate the cash conversion cycle and operating cycle

    6 Calculate the cost of trade credit given terms of 3/20 net 60

    7 A firm issues $1,000,000 of commercial paper with a maturity of 60 days and a discount rate of 5%. The paper is sold through a dealer who charges 0.25% What is the effective cost of issuing the commercial paper?

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    Introduction to Finance
    Week 5 - Numerical Exercises

    S. No. Problems
    1 Given the following data for Gary and Co (Millions of Dollars):

    Balance Sheet Dec 31 200X

    Cash $45
    Accounts Payables $45
    Marketable Securities 33
    Notes Payables 45
    Receivables 66
    Other Current liabilities 21
    Inventory 159
    Total Current liabilities $111
    Total Current Assets 303
    Long term debt 24
    Total liabilities $135
    Net Fixed Assets 147
    Common Stock ...

    Solution Summary

    This discuss the steps to estimate the amount of external financing

    $2.19