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    Various Finance Questions & Ratio Analysis

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    Use the following information to answer questions # 7 through 16

    Enron Corporation
    Income Statement
    for the year ending 12/31/XX
    (in thousands of dollars)

    Net sales $ 2,700
    Operating Costs (2,350)
    Depreciation ( 150)
    Interest Expense ( 70)

    EBT 130
    Income Tax (40%) ( 52)

    Net Income $ 78
    Dividends to Common Stock = $ 58

    Enron Corporation
    Balance Sheet
    (in thousands of dollars)

    Cash $ 150 Accounts Payable $100
    Accounts Receivable 250 Notes Payable 250
    Inventory 600 Other Current Liabilities 50
    Total Current Assets $1,000 Total Current Liabilities $400

    Total Fixed Assets 1,500 Long Term Debt 1,100
    Common Stock 800
    Retained Earnings 200
    Total Assets $2,500 Total Liab. & Equity $2,500

    Number of shares outstanding = 10,000 shares
    Price per Share = $100

    Calculate each of the following ratios. Be sure to give the complete equation as well as the solution:

    6. Current ratio
    7. Quick ratio
    8. Total Debt/Total Asset Ratio
    9. Inventory Turnover Ratio
    10. ROE
    11. TIE
    12. EPS
    13. Net Profit Margin
    14. Market to Book Ratio
    15. Total Assets Turnover Ratio

    16. Calculate the present value of an annual payment of $3,000 per year for ten years at 8% (ordinary annuity)

    17. How much will you have at the end of the 6th year if you invest $5,000 annually for six years at 7% annual rate, if you start one year from today?

    Calculate the present value for # 19, 20, and 21, if the discount rate is 12%.

    19. $45,000 today in one lump sum.

    20. $70,000 paid to you in seven equal payments of $10,000 at the end of each of the
    next seven years.

    21. $80,000 paid in one lump sum 7 years from now.
    22. Your Aunt Matilda Mae makes you the following offer: $15,000 upon graduation in one year or $18,000 upon MBA graduation in 3 years. Which offer should you take if current rates are 14%

    Use the following information to answer questions # 23 through 28
    For each of the transactions listed below, indicate the effect it will have on the cash budget: P = Positive effect; N = Negative effect; 0 = No effect (Hint: how does the transaction below affect cash flow, in the current period, with only the amount of information provided?)

    23. current credit sales
    24. current cash sales
    25. stock repurchase
    26. sale of bonds
    27. collection of receivables
    28. repayment of debt

    29. Signal Florists (SF) operates a retail flower shop. Their sales for October total $5,000. They have projected revenue for the next three months as follows:

    November $12,000
    December $23,000
    January $8,000
    February $10,000

    SF allows its customers a 3% discount if they pay cash and otherwise allows 30 days credit. Only 10% of their customers take the discount and pay in the month of purchase. The remaining 90% pay in the month following purchase.

    Prepare a cash inflow budget for December, January, and February.

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    Solution Summary

    The solution answers various questions related to Enron Corporation, Aunt Matilda Mae, present value and other finance questions and also prepares cash inflow budget for Signal Florists.