Nah, Ambik…

This is for ATC students only. Assignment for Financial Management.

QUESTIONS 1

From the scrambled list of items presented in Table 1, prepare an income statement and a balance sheet for Dooley Sportswear Company.

Table 1

Financial Data for Dooley Sportswear, December 31, 1996

Inventory                                    $206,250

Long-term debt                             300,000

Interest expense                                5,000

Accumulated depreciation         442,500

Cash                                              180,000

Net sales (all credit)                   1,500,000

Common stock                              800,000

Accounts receivable                      225,000

Operating expenses                       525,000

Notes payable-current                   187,500

Cost of goods sold                         937,500

Plant and equipment                   1,312,500

Accounts payable                          168,750

Marketable securities                      95,000

Prepaid insurance                            80,000

Accrued wages                                65,000

Retained earnings-current-year                ?

Federal income taxes                         5,750

QUESTIONS 2

Frank Zanca is considering three different investments that his broker has offered to him. The different cash flows are as follows:

End of Year A B C
1 300 400
2 300
3 300
4 300 300 600
5 300
6 300
7 300
8 300 600

Because Frank has enough savings for only one investment, his broker has proposed the third alternative to be, according to his expertise, the best in town. However, Frank questions his broker and wants to eliminate the present value of each investment. Assuming a 15% discount rate, what is Frank’s best alternative?

QUESTIONS 3

Frog Hollow Bakery is a new firm specializing in all-natural-ingredient pastry products. In attempting to determine what the financial position of the firm should be, the financial manager obtained the following average ratios for the baking industry for 2004:

Common equity to total assets = 60%

Total asset turnover = 3 times

Long-term debt to total capitalization = 25%

Current ratio = 1.2

Quick ratio = .75

Average collection period (360-day year) = 10 days

Complete the accompanying pro forma balance sheet for Frog Hollow Bakery assuming 2005 sales (all credit) are $450,000.

Frog Hollow Bakery

Pro Forma Balance Sheet

December 31, 2005

Cash $                                    Current debt    $

Accounts receivable        Long-term debt

Inventory

Total current assets       Common equity

Fixed assets                   Total liabilities and equity $

Total assets

QUESTIONS 4

Calculate the following financial ratios for the Hokie Corporation using the information given in Table 2 and 1996 information.

current ratio

acid test ratio

debt ratio

long-term debt to total capitalization

return on total assets

return on common equity

Table 2

Hokie Corporation Comparative Balance Sheet

For the Years Ending March 31, 1995 and 1996

(Millions of Dollars)

Assets 1995          1996

Current assets:

Cash                                                      $ 2           $ 10

Accounts receivable                              16              10

Inventory                                            22              26

Total current assets                             $ 40          $ 46

Gross fixed assets:                             $120          $124

Less accumulated depreciation              60             64

Net fixed assets                                  60             60

Total assets                                         $100         $106

Liabilities and Owners’ Equity

Current liabilities:

Accounts payable                                $ 16          $ 18

Notes payable                                         10             10

Total current liabilities                        $ 26          $ 28

Long-term debt                                      20              18

Owners’ equity:

Common stock                                       40              40

Retained earnings                                   14              20

Total liabilities and owners’ equity    $100          $106

Hokie had net income of $26 million for 1996 and paid total cash dividends of $20 million to their   common stockholders.

QUESTIONS 5

What is the NPV of a $45,000 project that is expected to have an after-tax cash flow of $14,000 for the first two years, $10,000 for the next two years, and $8,000 for the fifth year? Use a 10% discount rate. Would you accept the project?

5 questions cukupla kot, kan?

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3 responses to “Nah, Ambik…

  1. Terima kasih en Fulim – Omar

  2. Dah lebih dari cukup cikgu, nanti kene refer juga . .. dia punya jawapan .

  3. harap-harap dapat “UP” carry marks nanti .Islam & Managment sebagai semangat sebelum masuk dewan peperiksaan next week Kalau Malaysian Economy cikgu yang jadik tutor kan best – fm Omar Budin (Obie)

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