Calculate the 2014 curent and quick ratios

Assignment Help Financial Management
Reference no: EM13740068

Assume that you recently graduated and have just reported to work as an investment advisor at one of the firms on Wall Street. You have been presented and asked to review the following income Statement and Balance Sheet of one of the firm's clients. Your boss has developed the following set of questions you must answer.

Please see the attached Income Statements and Balance Sheet and answer the following:

1) What is the free cash flow for 2014?

2) Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?

3) Calculate the 2014 curent and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position in 2013?

4) Calculate the 2014 inventory turnover, days sales outstanding (DSO), fixed assets turnoever, and total assets turnover.

5) Calculate the 2014 debt ratio, liabilities to asset ratio, times interest earned, and EBITDA coverage ratios. What can you conclude from these ratios?

6) Calculate the 2014 profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios?

7) Calculate the 2014 price/earnings ratio, price/cash flow ratio, and market/book ratio.

8) Use the extended DuPont equation to provide a summary and overview of company's financial condition as projected for 2014. What are the firm's major strengths and weaknesses?

Please make sure ALL of the answers to the questions are there and that the wording is formatted properly.

Balance Sheet 2012 2013 2014
CASH $ 9,000.00 $ 7,282.00 $ 14,000.00
SHORT TERM INVEST $ 48,600.00 $ 20,000.00 $ 71,632.00
A/R $ 351,200.00 $ 632,160.00 $ 878,000.00
INVENTORY $ 715,200.00 $ 1,287,360.00 $ 1,716,480.00
TOTAL CURRENT ASSET $ 1,124,000.00 $ 1,946,802.00 $ 2,680,112.00
GROSS FIXED ASSET $ 491,000.00 $ 1,202,950.00 $ 1,220,000.00
LESS ACCUM DEPREC $ 146,200.00 $ 263,160.00 $ 383,160.00
NET FIXED ASSET $ 344,800.00 $ 939,790.00 $ 836,840.00
TOTAL ASSETS $ 1,468,800.00 $ 2,886,592.00 $ 3,516,952.00
       
Liabilities and Equity      
A/P $ 145,600.00 $ 324,000.00 $ 359,800.00
NOTES PAYABLE $ 200,000.00 $ 720,000.00 $ 300,000.00
ACCRUALS $ 136,000.00 $ 284,960.00 $ 380,000.00
TOTAL CURRENT LIAB $ 481,600.00 $ 1,328,960.00 $ 1,039,800.00
LONG TERM DEBT $ 323,432.00 $ 1,000,000.00 $ 500,000.00
COMMON STOCK (100000 SHARES) $ 460,000.00 $ 460,000.00 $ 1,539,800.00
RETAINED EARNINGS $ 663,768.00 $ 557,632.00 $ 296,216.00
TOTAL LIAB AND EQUITY $ 1,468,800.00 $ 2,886,592.00 $ 1,977,152.00
       
Income Statements      
SALES $ 3,432,000.00 $ 5,834,400.00 $ 7,035,600.00
COST GOODS SOLD EXCEPT DEPR $ 2,864,000.00 $ 4,980,000.00 $ 5,800,000.00
DEPREC AND AMORTIZATION $ 18,900.00 $ 116,960.00 $ 120,000.00
OTHER EXPENSES $ 340,000.00 $ 720,000.00 $ 612,960.00
TOTAL OPERATING COSTS $ 3,222,900.00 $ 5,816,960.00 $ 6,532,960.00
EBIT $ 209,100.00 $ 17,440.00 $ 502,640.00
INTEREST EXPENSE $ 62,500.00 $ 176,500.00 $ 80,000.00
EBT $ 146,600.00 $ (158,560.00) $ 422,640.00
TAXES (40%) $ 58,640.00 -63424 $ 169,056.00
NET INCOME $ 87,960.00 $ (95,136.00) $ 253,584.00
       
OTHER DATA      
STOCK PRICE $ 8.50 $ 6.00 $12.17
SHARES OUTSTANDING 100000 100000 250000
EPS $ 0.88 $ (0.95) 1.104
DPS $ 0.22 $ 0.11 $ 0.22
TAX RATE 40% 40% 40%
BOOK VALUE PER SHARE $ 6.64 $ 5.58 7.909
LEASE PAYMENTS $ 40,000.00 $ 40,000.00 $ 40,000.00

Reference no: EM13740068

Questions Cloud

Webster university graduation ceremony in the spring : Planning is critical for successful project management. Describe the various strategies you would use if you were responsible for managing the Webster University graduation ceremony in the spring.
Structural and cultural strengths and weaknesses : In what ways may a corporation's structure and culture be internal strengths or weaknesses? Look at your organization, and analyze its structural and cultural strengths and weaknesses. How can the weaknesses be improved?
Characterize the output level for each firm : Consider the second stage of competition between Samsung, HTC and Sony. Once Apply has chosen some output level q1, Samsung, HTC and Sony will compete simultaneoulsy over their product quantities. Write down the best response functions for Samsung, H..
Achievement of course outcomes : Since we are at the end of this class, this is the perfect time to reflect upon the achievement of Course Outcomes.
Calculate the 2014 curent and quick ratios : Calculate the 2014 curent and quick ratios based on the projected balance sheet and income statement data. What can you say about the company's liquidity position in 2013
Because of economic mismanagement and un sanctions : The current inflation rate in Iran is roughly 23% per year (because of economic mismanagement and UN sanctions). How should a prudent Iranian invest a large sum of rials today to preserve/grow its future value?
Riding the emotional roller coaster : To what extent do the three people featured in this case study manage their own emotions on the job? How would  they accomplish this? To what extent do you think they effectively manage emotions under these circumstances?
Calculate price elasticity of demand between given points : The data are real US Gross Domestic Product (in billions of dollars) and Domestic Revenue Passenger Miles (in millions) for the years 1996 through 2012 - Will you accept and forward her recommendation to your boss?
What marr does the investment represent : A college graduate with a B.S. in Mechanical Engineering expects to earn, on average, $20,000 per year more than an engineer without a B.S. degree. If the graduate expects to work for 35 years, and the cost of the college education is $100,000, what ..

Reviews

Write a Review

 

Financial Management Questions & Answers

  What is the value of rolens preferred stock

Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 11% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually. What is the value of Rolen's preferred stock? Rou..

  Two companies are considering the acquisition of defenseless

Two companies are considering the acquisition of Defenseless, Inc. Buyer A is a strategic buyer and Buyer B is a financial buyer. The following information pertains to Defenseless, Inc.

  Expected return and standard deviation of market portfolio

Imagine an economy that is only made of two stocks and a risk-free security, with the following data. Number of Shares Share Price Expected Return Standard Deviation. What are the expected return and standard deviation of the market portfolio?

  What are the monthly payments home mortgage

What are the monthly payments (principal and interest) on a 15-year home mortgage for an $180,000 loan when interest rates are fixed at 8 percent?

  What net present value means to your future

Write a 500-1,000 word essay describing Net Present Value, and what Net Present Value means to your future.

  Compute the black-scholes price for a call

Compute the Black-Scholes price for a call option with a strike price of $120, ?rst for a maturity of one year, and then for a variety of very long times to maturity.

  What is the average direct labor cost rate

What is the average direct labor cost rate and What is the overhead rate.

  What would be the potential implications for delta

When is it appropriate to use the firm's weighted average cost of capital (WACC) to evaluate a proposed investment and what would be the potential implications for Delta if WACC is used to evaluate the pet supply project?

  Steve would like to buy a new car but should complete

1 steve would like to buy a new car but must complete a two-year commitment to the peace corp before he will drive the

  Assume these are zero-coupon bonds

Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)

  Were the same business drivers discussed

Present a brief side-by-side comparison of MacDonald’s MD&A of 2013 to that of 2012. Were the same business drivers discussed? Were they assigned the same importance by management? Discuss any variations you observed, and the possible reasons for man..

  Cumulative nonvoting preferred stock

what if in L receives $220 worth of P non-voting preferred stock (rather than P bonds) in exchange for his T bonds?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd