Use the following information to answer questions # 7 through 16
for the year ending 12/31/XX
(in thousands of dollars)
Net sales $ 2,700
Operating Costs (2,350)
Depreciation ( 150)
Interest Expense ( 70)
Income Tax (40%) ( 52)
Net Income $ 78
Dividends to Common Stock = $ 58
(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
13. Net Profit Margin
14. Market to Book Ratio
15. Total Assets Turnover Ratio
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:
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.
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.