Reference no: EM132189993
1) Sow Tire, Inc., has sales of $1,453,000 and cost of goods sold of $983,000. The firm had a beginning inventory of $97,300 and an ending inventory of $83,500.
What is the length of the days' sales in inventory?
2) Dandee Lions, Inc., has a cash balance of $95,000, accounts payable of $210,000, inventory of $193,000, accounts receivable of $309,000, notes payable of $55,000, and accrued wages and taxes of $70,000.
How much net working capital does the firm need to fund?
3) Assume a firm has a cash cycle of 47 days and an operating cycle of 63 days.
What is its payables turnover?
4) Assume a firm has a cash cycle of 61 days and an operating cycle of 92 days.
What is its average payment period?
5) Dabble, Inc., has sales of $984,000 and cost of goods sold of $644,000. The firm had a beginning inventory of $38,000 and an ending inventory of $48,000.
What is the length of the days sales in inventory? (use 365 days a year. Use ending inventory rather than average inventory. Round you answer to 2 decimal places)
Sales $ 984,000
Cost of goods sold $ 644,000
Beginning inventory $ 38,000
Ending Inventory $ 48,000
Complete the following analysis. Do not hard code values in your calculation, and do not round intermediate calculations.
6) Suppose that Wall-E Corp. currently has the balance sheet shown below, and that sales for the year just ended were $7.8 million. The firm also has a profit margin of 30 percent, a retention ratio of 20 percent, and expects sales of $9.8 million next year. Fixed assets are currently fully utilized, and the nature of Wall-E's fixed assets is such that they must be added in $1 million increments.
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Assets
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Liabilities and Equity
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Current assets
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$
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2,730,000
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Current liabilities
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$
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2,184,000
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Fixed assets
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5,070,000
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Long-term debt
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1,900,000
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Equity
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3,716,000
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Total assets
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$
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7,800,000
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Total liabilities and equity
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$
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7,800,000
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If current assets and current liabilities are expected to grow with sales, what amount of additional funds will Wall-E need from external sources to fund the expected growth?
7) Suppose a firm has had the following historic sales figures.
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Year:
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2009
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2010
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2011
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2012
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2013
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Sales
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$
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2,550,000
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$
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3,670,000
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$
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4,320,000
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$
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4,920,000
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$
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5,600,000
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What would be the forecast for next year's sales using regression to estimate a trend?
8) Suppose a firm has had the following historic sales figures.
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Year:
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2009
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|
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2010
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|
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2011
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2012
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2013
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Sales
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$
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4,400,000
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$
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5,650,000
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$
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4,300,000
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$
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3,900,000
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$
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4,500,000
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What would be the forecast for next year's sales using the average approach?
9) Suppose a firm has had the following historic sales figures.
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Year:
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2009
|
|
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2010
|
|
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2011
|
|
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2012
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|
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2013
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Sales
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$
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1,400,000
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$
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1,730,000
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$
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1,570,000
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$
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2,030,000
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$
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1,870,000
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What would be the forecast for next year's sales using regression to estimate a trend?
10) Suppose a firm has had the following historic sales figures
Year 2009 2010 2011 2012 2013
Sales $1,410,000 $1,670,000 $1,580,000 $2,170,000 $1,810,000
What would be the forecast for next year's sales using regression to estimate a trend?
Year Sales
2009 $ 1,410,000
2010 $ 1,670,000
2011 $ 1,580,000
2012 $ 2,170,000
2013 $ 1,810,000
Complete the following analysis. Do not hard code values in your calculations, and do ntor round intermediate calculations.
11) Suppose that Lil John Industries' equity is currently selling for $36 per share and that 1.9 million shares are outstanding. Assume the firm also has 29,000 bonds outstanding, and they are selling at 104 percent of par.
What are the firm's current capital structure weights?
12) Suppose that Papa Bell, Inc.'s, equity is currently selling for $45 per share, with 3.0 million shares outstanding. Assume the firm also has 7,000 bonds outstanding, and they are selling at 93 percent of par.
What are the firm's current capital structure weights?
13) Suppose that Papa Bell, Inc.'s, equity is currently selling for $39 per share, with 3.4 million shares outstanding. The firm also has 7,000 bonds outstanding, which are selling at 94 percent of par. Assume Papa Bell was considering an active change to its capital structure so as to have a D/E of 0.4.
Which type of security (stocks or bonds) would the firm need to sell to accomplish this?
Sell bonds and buy back stock
Sell stock and buy back bonds
How much would it have to sell?
14) Suppose that Papa Bell. Inc's equity is currently selling for $41 per share, with 3.6 million shares outstand. The firm also has 8,000 bonds outstanding, which are selling at 95 percent of par. Assume Papa Bell was considering an active change to its capital structure so as to have a D/E of 0.5.
Which type of security (stocks or bonds) would the firm need to sell to accomplish this?
How much would it have to sell? (Enter your answer in dollars not in millions. Do not round intermediate calculations and round your final answer to 2 decimal places)
Share Price $ 41.00
Shares Outstanding 3,600,000
Bond Outstanding 8,000
Bond Price (% of par) 95.00%
Proposed new D/E ratio 0.50
Complete the following analysis. Do not hard code values in your calculations, and do not round intermediate calculations.
15) If a firm has retained earnings of $3.1 million, a common shares account of $5.1 million, and additional paid-in capital of $10.2 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.
16) Suppose a firm has a retention ratio of 61 percent and net income of $9.5 million. How much does it pay out in dividends?
17) If a firm has retained earnings of $23.3 million, a common shares account of $275.3 million, and additional paid-in capital of $100.3 million, how would these accounts change in response to a 20 percent stock dividend? Assume market value of equity is equal to book value of equity.
18) Suppose a firm has a retention ratio of 60 percent, net income of $36.5 million, and 215 million shares outstanding. What would be the dividend per share paid out on the firm's stock? (Round your answer to 2 decimal places)
Complete the following analysis. Do not hard code values in your calculations, and do not round intermediate calculations.
19) You have approached your local bank for a start-up loan commitment for $260,000 needed to open a computer repair store. You have requested that the term of the loan be one year. Your bank has offered you the following terms: size of loan commitment = $260,000, term = one year, up-front fee = 75 basis points, back-end fee = 80 basis points, and rate on the loan = 9 percent. Assume you immediately take down $151,000 and no more during the year.
Calculate the total interest and fees you will pay on this loan commitment.
20) Don's Captain Morgan, Inc., needs to raise $12.80 million to finance plant expansion. In discussions with its investment bank, Don's learns that the bankers recommend an offer price (or gross proceeds) of $20.70 per share and Don's will receive $18.15 per share.
Calculate the underwriter's spread per share on the issue.
How many shares of stock will Don's need to sell in order to receive the $12.80 million it needs?
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