|Review Problems for Exams

Topics: Cash flow, Net present value, Stock Pages: 22 (4677 words) Published: September 13, 2013
|Review Problems for Exams -- FINA 6301 – Dr. Park |

Chapters 2 and 3
[i].In 2004, TimeNow Corporation had fixed assets of $1,345, current assets of $260, current liabilities of $180 and shareholders' equity of $775. What was the net working capital for TimeNow in 2004?

[ii].During 2004, the Abel Co. had gross sales of $1 million. The firm’s cost of goods sold and selling expenses were $300,000 and $200,000, respectively. These figures do not include depreciation. Abel also had notes payable of $1 million. These notes carried an interest rate of 10 percent. Depreciation was $100,000. Abel’s tax rate in 2004 was 35%. What was Abel’s net income?

[iii].In the above question, what was Abel’s operating cash flow?

For the next 7 questions suppose the following data for MBM Co. for 2007 holds: |Sales |45000 | |COGS |25000 | |Depreciation |3000 | |Earnings Before Interest and Taxes (EBIT) |17000 | |Interest |1000 | |Taxable Income |16000 | |Taxes (34%) |5440 | |Net Income |10560 |

| |Beginning |Ending | |Current Assets |6000 |8500 | |Current Liabilities |5500 |6000 | |Net Working Capital |500 |2500 | |Net Fixed Assets |32000 |40000 |

Assume that MBM Co. issued $1000 new debt and paid off no old debt in 2007. It paid $2000 dividends in 2007. It did not repurchase any of its common stock in 2007. [iv].What is the operating cash flow of the firm for 2007?

[v].What is the change in net working capital of the firm for 2007?

[vi].What is the capital spending of the firm for 2007?

[vii].What is the cash flows from the firm’s assets for 2007?

[viii].What is the cash flow paid to debt-holders in 2007?

[ix].What is the cash flow paid to stockholders in 2007?

[x].How much new common stock was issued in 2007?

[xi].ABC Corp. had an ROA of 8%. ABC’s profit margin was 4% on sales of $150. What were total assets?

[xii].ACD has a profit margin on sales of 4% and ROE of 18%. If ACD’s debt-to-equity ratio is 0.8, what is the total asset turnover ratio?

[xiii].Dell Inc. has a days in inventory (based on 365 days) of 5. Costs of goods sold were $4,526. Net working capital was $70 and total current assets were $400. What is Dell’s quick ratio? [xiv].Lory Company stock sells for $28.00 per share. The total market value of the equity is $40 million. The market-to-book ratio is 7. What is the book value per share?

[xv].Tan Co. had total operating revenues of $720 over the past year. During that time, average receivables were $90. What was the average collection period (ACP) given a 365-day year?

[xvi].Microtronic Co. has an average collection period of 91.25 days. Sales are $20,000. What is the average investment in receivables? What is the receivables turnover?

For the next 2 questions suppose the following relationships for the ABC Corporation: |Sales/total assets |2.5x | |Return on assets |10% | |Return on equity |15% |

[xvii].What is ABC's profit margin?

[xviii].What is ABC's debt ratio?

Chapter 4
[xix].What is the future value of $80,000...
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