Finance Assigment

Assignment #3 Name___________________________ FIN 4310 Spring 2018 Use the following to answer questions 1-15: The financial statements of Benedict Inc. are given below: Benedict Inc. Company Income Statement (2017) Sales $8,000,000 Cost of goods sold 5,260,000 Gross profit 2,740,000 Selling and administrative expenses Depreciation

1,350,000 150,000

Operating profit 1,240,000 Interest expenses 140,000 Income before tax 1,100,000 Tax expense 440,000 Net income $660,000

Balance Sheet 2017 2016 Cash $200,000 $50,000 Accounts receivable 1,200,000 950,000 Inventory 1,840,000 1,500,000 Total current assets 3,240,000 2,500,000 Fixed assets 3,200,000 3,000,000 Total assets $6,440,000 $5,500,000 Accounts payable 800,000 720,000 Bank loan 600,000 100,000 Total current liabilities 1,400,000 820,000 Bonds payable 900,000 1,000,000 Total liabilities 2,300,000 1,820,000 Common stock (130,000 shares) 300,000 300,000 Retained earnings 3,840,000 3,380,000 Total liabilities & equity $6,440,000 $5,500,000 Note: The common shares are trading in the stock market for $40 each.

1. The firm's current ratio for 2017 is _____. 2. The firm's quick ratio for 2017 is _____. 3. The firm’s gross margin for 2017 is _____. 4. The firm's interest coverage ratio for 2017 is _____.

5. The firm's average collection period for 2017 is _____. 6. The firm's inventory turnover ratio for 2017 is _____. 7. The firm's asset turnover ratio for 2017 is _____. 8. The firm’s financial leverage ratio for 2017 is_______. 9. The firm's profit margin ratio for 2017 is _____ percent. 10. The firm's return on equity ratio for 2017 is _____. 11. The firm’s return on assets ratio for 2017 is _____. 12. The firm's P/E ratio for 2017 is _____. 13. The firm's market to book value ratio for 2017 is _____. 14. The firm’s price to sales ratio for 2017 is_____. 15. The firm’s P/E to growth (PEG) ratio for 2017 is_____. (Analysts’ expect the firm’s EPS to grow at a 5% CAGR for the next five years. 16. The firm’s Enterprise value (EV)/EBITDA ratio for 2017 is _____.

17. Calculate the firm’s return on equity (ROE) using the DuPont identity.

18. The Zodiac Co. recently hired your firm to improve the company's performance. It

has been highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 365-day year, what is the firm's present cash conversion cycle?

Inventory = $75,000 Annual sales = $600,000 Annual cost of goods sold = $360,000 Accounts receivable = $160,000 Accounts payable = $25,000

19. Brooks Bros. has the following data, in thousands. Assuming a 365-day year, what

is the firm's cash conversion cycle? Annual sales = $45,000 Annual cost of goods sold = $31,500 Inventory = $4,000 Accounts receivable = $2,000 Accounts payable = $2,400

20. 7/11 Inc. has the following data, in thousands. Assuming a 365-day year, what is

the firm's cash conversion cycle? Annual sales = $45,000 Annual cost of goods sold = $30,000 Inventory = $4,500 Accounts receivable = $1,800 Accounts payable = $2,500