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Finance questions

1. A company's ability to pay its suppliers on time is best measured by its
a. Current ratio
b. Operating margin
c. Asset turnover ratio

2. A company's profitability on shareholders' investment is measured by its
a. Quick ratio
b. Return on equity
c. Debt/equity ratio
d. Asset turnover ratio

3. For the year 2002, a corporation earns $20,000 in revenues, incurs $8,000 in operating costs excluding depreciation, has $3,000 in depreciation, and invests $5,000 in a new factory. The corporate income tax rate is 35%. What is after-tax income for 2002?

4. Monsters and Mazes Comic Books, Inc. had net income after taxes of $256,000. The company had $32,000 in depreciation expenses and $35,000 in interest expenses. Assuming a tax rate of 37%, what was the operating cash flow for Monsters and Mazes?
5. Food Inc. had an outstanding year. Their year-end total capital was $60,000,000; they earned a net income of $5,100,000, paid $2,400,000 in taxes, and $900,000 in interest expense. Assuming an after-tax cost of capital of 8%, calculate Food Inc.'s EVA.
6. Help Rutgers Pride Corporation find their cash flow from assets using the data below:
OCF= $230,000
Depreciation expense= $20,000 Assets: 1/1/2004 12/31/2004
Quick Assets $80,000 $95,000
Inventory $120,000 $145,000
Fixed Assets $200,000 $250,000
Total Assets $400,000 $490,000
Current Liabilities $180,000 $210,000

(Question 7-8) In 2004, Sundance Inc. had 2,000,000 in sales, 600,000 cost of goods sold, and the following current assets information.(to get a denominator of financial ratios please use average of two ending balance)
Current Assets
December 31, 2004 December 31, 2003
Cash 800000 600000
Accounts Receivables 180000 160000
Inventory 100000 80000
Total Current Assets 1,080,000 840,000

7. Find the accounts receivables turnover and average collection period for 2004. What do these ratios tell us about Sundance Inc?

8. Find the inventory turnover and days in inventory for 2004. What do these ratios tell us about Sundance Inc?

(Question 9-12) Given below is financial information for Rutgers Ice Cream
Rutgers Ice Cream
2008 Income Statement
Sales $11,000
Cost of goods sold 5,800
Depreciation 900
EBIT 4,300
Interest paid 800
Taxable income 3,500
Taxes (34%) 1,190
Net income $ 2,310
Addition to retained earnings $ 1,700
Dividends 610

Rutgers Ice Cream
Balance Sheets ending December 31, 2007 and 2008
2007 2008 2007 2008
Asset Liabilities and Owners Equity
Current Assets Current Liabilities
Cash $500 $315 Accounts payable $800 $710
Receivables 905 1,827 Notes payable 250 410
Inventory 3,015 4,718 Other 310 318
Total 1,360 1,438
Fixed Assets Long-term debt 4,325 4,000
Net Plant & Equip. 9318 8998 Owner's equity

TOTAL

13738

15858 Common Stock
Capital Surplus
Retained Earnings
TOTAL 800
1100
6153
13738 1467
1100
7853
15858

9. What is the ROE for 2008 (to get a denominator please do not use average but use the number at the end of year)?
10. What is the average collection period for 2008 (to get a denominator please do not use average but use the number at the end of year)?
11. What is the debt ratio for 2007 (to get a denominator please do not use average but use the number at the end of year)?
12. What was the cash flow to creditors for 2008?

(Question 13-16) Given below is financial information for Sullivan's Slushie Incorporated.

Sullivan's Slushy Incorporated
Income Statement For the Years Ended December 31, 2005 and 2004
. 2005 2004
Sales $3,550,000 $3,340,000
Cost of Goods Sold 1,750,000 1,662,000
Other Expenses 276,500 220,000
Depreciation 80,000 66,000
EBIT $1,443,500 $1,392,000
Interest Expense 243,000 306,500
EBT $1,200,500 $1,085,500
Taxes (35%) 420,175 379,925
Net Income $780,325 $705,575
Dividends $108,000 $74,000

Calculate the following using the information given in Sullivan's Slushies Incorporated's financial statements. Also, give a brief 1 to 2-sentence explanation of what each value tells us about the company. Remember to show all work.
13. Operating Cash flow for the year 2005:

14. Net Capital Spending (Change in Fixed Assets) for the year 2005:

15. Change in NWC for the year 2005:

16. Cash flow from assets for the year 2005:
(Question 17-18) Joe Scavone's brewery had operating revenue of $150,000,000 this year. Their total expenses were 73% of sales, and they are in the 35% tax-bracket. Scavone brewery had $342,000,000 in total assets at year-end last year but increased this amount 14% throughout this current year. To finance the purchase of these assets, Scavone brewery issued $50,000,000 in debt and pays 10% interest on that debt each year. They expect to maintain a debt-to-equity ratio of .32.
17. Construct an income statement for Scavone breweries.

18. What is Joe Scavone's ROE?

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