Columbia Construction Company earned $451,888 during the year ended June 30, 2017. After paying out $225,794 in dividends, the balance went into retained earnings. If the firm’s total retained earnings were $846,972 at the end of fiscal year 2017, what were the retained earnings on its balance sheet on July 1, 2016?
> Tracy Chapman is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. If Tracy can invest in a fund that pays 9.25 percent annual interest, compounded quarte
> Your brother has asked you for a loan and has promised to pay you $7,750 at the end of three years. If you normally invest to earn 6 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction
> Maria Addai has been offered a future payment of $750 two years from now. If she can earn an annual rate of 6.5 percent, compounded daily, on her investment, what should she pay for this investment today?
> Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in 10 years?
> Lemmon Enterprises has a total asset turnover of 2.1 and a net profit margin of 7.5%. If its equity multiplier is 1.90, what is the ROE for Lemmon Enterprises?
> The Rangoon Timber Company has the following ratios: Net sales/Total assets = 2.23; …………………. ROA = 9.69%; …………………. ROE = 16.4% What are Rangoon’s profit margin and debt ratios?
> Hindenberg, Inc., has a 10-year bond that is priced at $1,100.00. It has a coupon of 8 percent paid semiannually. What is the yield to maturity on this bond?
> Norton Company has a debt-to-equity ratio of 1.65, ROA of 11.3 percent, and total equity of $1,322,796. What are the company’s equity multiplier, debt ratio, and ROE?
> Breckenridge Ski Company has total assets of $422,235,811 and a debt ratio of 29.5 percent. Calculate the company’s debt-to-equity ratio and equity multiplier?
> Sorenson Inc. has sales of $3,112,489, a gross profit margin of 23.1 percent, and inventory of $833,145. What are the company’s inventory turnover ratio and days’ sales in inventory?
> If a company’s net profit margin is –5 percent, its total asset turnover is 1.5 times, and its equity multiplier is 1.2 times, its return on equity is closest to a. –9.0 percent. b. –7.5 percent. c. –3.2 percent. d. 1.8 percent.
> Bummel and Strand Corp. has a gross profit margin of 33.7 percent, sales of $47,112,365, and inventory of $14,595,435. What is its inventory turnover ratio?
> The TBI Company has a number of days of inventory of 50. Therefore, the TBI Company’s inventory turnover is closest to: a. 4.8 times. b. 7.3 times. c. 8.4 times. d. 9.6 times.
> Modern Appliances Corporation has reported its financial results for the year ended December 31, 2017? Modern Appliances Corporation Income Statement for the Fiscal Year Ended December 31, 2017 Net Sales ……â&
> Nutmeg Houseware, Inc., has an operating profit margin of 10.3 percent on revenues of $24,547,125 and total assets of $8,652,352. a. Calculate the company’s total asset turnover ratio and its operating profit (EBIT). b. The company’s management has set
> Recreational Supplies Co. has net sales of $11,655,000, an ROE of 17.64 percent, and a total asset turnover of 2.89 times. If the firm has a debt-to-equity ratio of 1.43, what is the company’s net income?
> Nugent, Inc., has a gross profit margin of 31.7 percent on net sales of $9,865,214 and total assets of $7,125,852. The company has a current ratio of 2.7 times, accounts receivable of $1,715,363, cash and marketable securities of $315,488, and current li
> Rockwell Industries has a three-year bond outstanding that pays a 7.25 percent coupon and is currently priced at $913.88. What is the yield to maturity of this bond? Assume annual coupon payments?
> Refer to the earlier information for Nederland Consumer Products Company. Using the DuPont identity, calculate the return on equity for Nederland, after calculating the ratios that make up the DuPont identity? Refer to the information for Nederland Cons
> Refer to the preceding information for Nederland Consumer Products Company. Compute the firm’s ratios for the following categories and briefly evaluate the company’s performance using these numbers. Refer to the infor
> The following are the financial statements for Nederland Consumer Products Company for the fiscal year ended September 30, 2017. Nederland Consumer Products Company Income Statement for the Fiscal Year Ended September 30, 2017 Net sales â€&brv
> Blackwell Automotive’s balance sheet at the end of its most recent fiscal year shows the following information? In addition, it was reported that the firm had a net income of $156,042 on net sales of $4,063,589. a. What are the firm&ac
> If Newton Manufacturers has an accounts receivable turnover of 4.8 times and net sales of $7,812,379, what would its receivables be?
> For the year ended June 30, 2017, Northern Clothing Company has total assets of $87,631,181, ROA of 11.67 percent, ROE of 21.19 percent, and a net profit margin of 11.59 percent. What are the company’s net income and net sales? Calculate the firm’s debt-
> Complete the balance sheet of Flying Roos Corporation. You have the following information: Debt ratio = 40% ………..………â€&brv
> Grossman Enterprises has an equity multiplier of 2.6 times, total assets of $2,312,000, an ROE of 14.8 percent, and a total asset turnover ratio of 2.8 times. Calculate the firm’s sales and ROA?
> Carter, Inc., a manufacturer of electrical supplies, has an ROE of 23.1 percent, a profit margin of 4.9 percent, and a total asset turnover ratio of 2.6 times. Its peer group also has an ROE of 23.1 percent, but has outperformed Carter with a net profit
> Use the information for Cisco Systems in Problem 4.24. In addition, the company’s EBITDA was $6.834 billion and its share price was $22.36. Compute the firm’s price-earnings ratio and the price-EBITDA ratio?
> Bigbie Corp. issued a five-year bond a year ago with a coupon of 8 percent. The bond pays interest semiannually. If the yield to maturity on this bond is 9 percent, what is the price of the bond?
> Cisco Systems had net income of $4.401 billion and at year end 6.735 billion shares outstanding. Calculate the earnings per share for the company?
> Xtreme Sports Innovations has disclosed the following information: EBIT = $25,664,300 ……………………………. Net income = $13,054,000 …………………………………….…………………….…… Net sales = $83,125,336 Total debt = $20,885,753 …….……………….. Total assets = $71,244,863 Compute the fo
> Wal-Mart, Inc., has net income of $9,054,000 on net sales of $256,329,812. The company has total assets of $104,912,112 and stockholders’ equity of $43,623,445. Use the extended DuPont identity to find the return on assets and return on equity for the fi
> Procter & Gamble reported the following information for its fiscal year end: On net sales of $51.407 billion, the company earned net income after taxes of $6.481 billion. It had cost of goods sold of $25.076 billion and EBIT of $9.827 billion. What are t
> Cisco Systems has total assets of $35.594 billion, total debt of $9.678 billion, and net sales of $22.045 billion. Its net profit margin for the year is 20 percent, while the operating profit margin is 30 percent. What are Cisco’s net income, EBIT ROA, R
> Flying Penguins Corp. has total current assets of $11,845,175, current liabilities of $5,311,020, and a quick ratio of 0.89. How much inventory does it have?
> Conseco, Inc., has a debt ratio of 0.56. What are the company’s debt-to-equity ratio and equity multiplier?
> Nimitz Rental Company had depreciation expenses of $108,905, interest expenses of $78,112, and an EBIT of $1,254,338 for the year ended June 30, 2017. What are the times interest earned and cash coverage ratios for this company?
> If Norwood Corp.’s management wants to reduce the DSO from that calculated in Problem 4.16 to an industry average of 56.3 days and its net sales are expected to decline by about 12 percent, what would be the new level of receivables?
> Norwood Corp. currently has accounts receivable of $1,223,675 on net sales of $6,216,900. What are its accounts receivable turnover and days’ sales outstanding (DSO)?
> Calculate the price of a five-year bond that has a coupon of 6.5 percent paid annually. The current market rate is 5.75 percent?
> Lambda Corporation has current liabilities of $450,000, a quick ratio of 1.8, inventory turnover of 5.0, and a current ratio of 3.5. What is the cost of goods sold for Lambda Corporation?
> Laurel Electronics has a quick ratio of 1.15, current liabilities of $5,311,020, and inventories of $7,121,599. What is the firm’s current ratio?
> Chisel Corporation has 3 million shares outstanding at a price per share of $3.25. If the debt-to-equity ratio is 1.7 and total book value of debt equals $12,400,000, what is the market-to-book ratio for Chisel Corporation?
> Rockwell Jewelers management announced that the company had net earnings of $6,481,778 for this year. The company has 2,543,800 shares outstanding, and the year-end stock price is $54.21. What are Rockwell’s earnings per share and P/E ratio?
> Trademark Corp.’s financial manager collected the following information for its peer group to compare its performance against that of its peers. a. Explain how Trademark is performing relative to its peers. b. How do the industry rati
> Explain why the quick ratio or acid-test ratio is a better measure of a firm’s liquidity than the current ratio?
> Eau Claire Paper Mill, Inc., had, at the beginning of the current fiscal year, April 1, 2016, retained earnings of $323,325. During the year ended March 31, 2017, the company produced net income after taxes of $713,445 and paid out 45 percent of its net
> The Centennial Chemical Corporation announced that, for the period ending March 31, 2017, it had earned income after taxes of $2,768,028.25 on revenues of $13,144,680. The company’s costs (excluding depreciation and amortization) amounted to 61 percent o
> Mount Hebron Electrical Company’s financial statements indicated that the company had earnings before interest and taxes of $718,323. The interest rate on its $850,000 debt was 8.95 percent. Calculate the taxes the company is likely to owe. What are the
> You must choose between investing in stock A and stock B. You have already used CAPM to calculate the rate of return you should expect to receive for each stock given their systematic risk and decided that the expected return for both exceeds that predic
> Sosa Corporation recently reported an EBITDA of $31.3 million and net income of $9.7 million. The company had $6.8 million in interest expense, and its average corporate tax rate was 35 percent. What was its depreciation and amortization expense?
> Nimitz Rental Company provided the following information to its auditors. For the year ended March 31, 2017, the company had revenues of $878,412, general and administrative expenses of $352,666, depreciation expenses of $131,455, leasing expenses of $10
> Reservoir Bottling Co. reported the following information at the end of the year. Total current assets are worth $237,513 at book value and $219,344 at market value. In addition, plant and equipment have a market value of $343,222, and a book value of $3
> Mukhopadhya Network Associates has a current ratio of 1.60, where the current ratio is defined as follows: current ratio = current assets/current liabilities. The firm’s current assets are equal to $1,233,265, its accounts payables are $419,357, and its
> Based on the financial statements for Tomkovick Golf Company in Problem 3.32, compute the cash flow invested in net working capital and the cash flow invested in long-term assets that you would use in a calculation of the cash flows to investors for 2017
> Analysts following the Tomkovick Golf Company were given the following balance sheet information for the years ended June 30, 2017 and June 30 2016: In addition, it was reported that the company had a net income of $ 3,155,848 and that depreciation exp
> Vanderheiden Hog Products Corp. provided the following financial information for the quarter ending June 30, 2017: Net income: …………………….…….………. $189,425 Depreciation and amortization: ….……... $63,114 Increase in receivables: ……………………. $ 62,154 Increase
> Menomonie Casino Company earned $23,458,933 before interest and taxes for the fiscal year ending March 31, 2017. If the casino had interest expenses of $1,645,123, calculate its tax obligation using Exhibit 3.6. What are the marginal and the average tax
> Your parents have given you $1,000 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 6.75 percent interest. You know that the trip costs $1,025 right now and that the
> Imagine you borrow $500 from your roommate, agreeing to pay her back $500 plus 7 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 4.25 percent. What is the total dollar amount you will have to pay her
> During the period from 2011 through 2015 the annual returns on small U.S. stocks were -3.26 percent, 18.23 percent, 45.07 percent, 2.92 percent, and -3.60 percent, respectively. What would a $1 investment, made at the beginning of 2011, have been worth
> What is the Fisher equation, and how is it used?
> How does the nominal rate of interest vary over time?
> What is the real rate of interest, and how is it determined?
> For its most recent fiscal year, Carmichael Hobby Shop recorded EBITDA of $512,725.20, EBIT of $362,450.20, zero interest expense, and cash flow to investors from operating activity of $348,461.25. Assuming there are no non-cash revenues recorded on the
> Fraser Corporation has announced that its net income for the year ended June 30, 2017, was $1,353,412. The company had EBITDA of $ 4,967,855, and its depreciation and amortization expense was equal to $1,112,685. The company’s average tax rate is 34 perc
> If the market is strong-form efficient, then trading on tips you hear from Jim Cramer (the host of Mad Money on CNBC) will generate no excess returns (i.e., returns in excess of fair compensation for the risk you are bearing). True or false?
> In problem 2.20, if the market is efficient, would it have been possible for Zippy’s stock price to go down on the day that the firm announced the strong fourth quarter results?
> Zippy Computers announced strong fourth quarter results. Sales and earnings were both above analysts’ expectations. You notice in the newspaper that Zippy’s stock price went up sharply on the day of the announcement. If no other information about Zippy b
> Describe the informational differences that distinguish the three forms of market efficiency?
> Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this year’s financial statements. He has gathered the following balance sheet information. The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $313,299,
> The expected value of a normal distribution of prices for a stock is $50. If you are 90 percent sure that the price of the stock will be between $40 and $60, then what is the variance of the prices for the stock?
> Manz Property Management Company announced that in the year ended June 30, 2017, its earnings before taxes amounted to $1,478,936. Calculate its taxes using Exhibit 3.6?
> What is the primary role of money markets? Explain how the money markets work?
> The Oakland Mills Company has disclosed the following financial information in its annual reports for the period ending March 31, 2017: sales of $1.45 million, cost of goods sold of $812,500, depreciation expenses of $175,000, and interest expenses of $8
> Laurel Electronics reported the following information at its annual meetings: The company had cash and marketable securities worth $1,235,455, accounts payables worth $4,159,357, inventory of $7,121,599, accounts receivables of $3,488,121, short-term not
> Explain how the choice of FIFO versus LIFO can affect a firm’s balance sheet and income statement?
> Caustic Chemicals management identified the following cash flows as significant in its year-end meeting with analysts. During the year Caustic had repaid existing debt of $312,080 and raised additional debt capital of $650,000. It also repurchased stock
> Identify and describe the noncash expenses that a firm may incur?
> What does it mean to “underwrite” a new security issue? What compensation does an investment banker get from underwriting a security issue?
> During 2017, Towson Recording Company increased its investment in marketable securities by $36,845, funded fixed-assets acquisitions of $109,455, and had marketable securities of $14,215 mature. What is the net cash used in investing activities?
> Describe the organization of the statement of cash flows?
> You know that the price of CFI, Inc., stock will be $12 exactly one year from today. Today the price of the stock is $11. Describe what must happen to the price of CFI, Inc., today in order for an investor to generate a 20 percent return over the next ye
> Trader Inc. is a $300 million company, as measured by asset value, and Horst Corp. is a $35 million company. Both are privately held corporations. Explain which firm more likely to go public and register with the SEC, and why?
> The financial information for Laurel Electronics referred to in Problem 3.5 is all at book value. Suppose marking to market reveals that the market value of the firm’s inventory is 20 percent below its book value, its receivables are 25 percent below the
> Suppose you own a security that you know can be easily sold in the secondary market, but the security will sell at a lower price than you paid for it. What does this imply for the security’s marketability and liquidity?
> How does the use of market-value accounting help managers?
> What is the difference between saver–lenders and borrower–spenders, and who are the major representatives of each group?
> Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she expect to earn?
> Northrop Real Estate Company management is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is
> Ten-year zero coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interest is compounded semiannually. If similar bonds in the market yield 10.5 percent, what is the value of these bonds?
> Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?
> You are interested in investing in a five-year bond that pays a 7.8 percent coupon rate with interest to be received semiannually. Your required rate of return is 8.4 percent. What is the most you would be willing to pay for this bond?
> Kaaran made a friendly wager with a colleague that involves the result from flipping a coin. If heads comes up, Kaaran must pay her colleague $15; otherwise, her colleague will pay Kaaran $15. What is Kaaran’s expected cash flow, and what is the variance
> Regatta, Inc., has seven-year bonds outstanding that pay a 12 percent coupon rate. Investors buying these bonds today can expect to earn a yield to maturity of 8.875 percent. What is the current value of these bonds? Assume annual coupon payments.
> Zippy Corporation just sold $30 million of convertible bonds with a conversion ratio of 40. Each $1,000 bond is convertible into 25 shares of Zippy’s stock. a. What is the conversion price of Zippy’s stock? b. If the current price of Zippy’s stock is $15
> Rachette Corp. has18-year bonds outstanding. These bonds, which pay interest semiannually, have a coupon rate of 9.735 percent and a yield to maturity of 7.95 percent. a. Compute the current price of these bonds. b. If the bonds can be called in five yea
> Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond?
> The Maryland Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 9.875 percent. The current market rate for similar securities is 11 percent. a. What is the current market value of one of these bonds?
> Peabody Corp. has seven-year bonds outstanding. The bonds pay a coupon of 8.375 percent semiannually and are currently worth $1,063.49. The bonds can be called in three years at price of $1,075. a. What is the yield to maturity of these bonds? b. What is
