Reference no: EM132116089

Question:

1. Consider the following financial statement information for the Zamboni Icers Corporation:

Item Beginning Ending 

Inventory $ 11,200    $ 12,200 

Accounts receivable  6,200      6,500 

Accounts payable 8,400     8,800

Net sales   $ 92,000    

Cost of goods sold     72,000      

All sales are on credit.

Calculate the operating and cash cycles. (Using 365 days a year. not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Operating cycle ____ days

Cash cycle _______days

2. The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:

 Stock price $ 74 

Number of shares  30,000 

Total assets $ 9,800,000 

Total liabilities $ 4,700,000 

Net income $ 420,000

Company is considering an investment that has the same PE ratio as the firm. The cost of the investment is $640,000, and it will be financed with a new equity issue. The return on the investment will equal the company's current ROE.

Tell me the current book value per share and the book value per share with the investment? (not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Book value per share

Current  $ _____ 

New  $ _______

Tell me the current market-to-book ratio and the market-to-book ratio with the investment? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Market-To-Book

Current _____

New _____ 

What is the current EPS and the EPS with the investment? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Earnings per share

Current $ ____

New $ ____

What is the NPV of this investment? ( answer should be indicated by a minus sign. Not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)

NPV         $ ______