INVESTMENT & FINANCING

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NPV IRR

Period Cash Flow Required return 10% Period Cash Flow Required return 10%
0 -800 outflow Net Present Value $ 44.65 0 -600 outflow Net Present Value -$ 20.56
1 200 inflow breakeven? 1 400 inflow
2 500 inflow negative = no 2 50 inflow
3 200 inflow 0 or positive = yes 3 100 inflow
4 100 inflow 4 100 inflow
5 50 inflow 5 50 inflow
Internal Rate of Return 13% Internal Rate of Return 8%
Net Present Value $0.00 Net Present Value $0.00
Return on Investment 6% Return on Investment -3%

Ratio

Company A B C
Current Assets $ 200 $ 200 $ 700
Current Liabilities $ 500 $ 250 $ 500
Current Ratio 0.40 0.80 1.40
Company A B C
Current Assets $ 200 $ 200 $ 700
Inventory $ 60 $ 5 $ 400
Current Liabilities $ 300 $ 400 $ 500
Quick Ratio 0.47 0.49 0.60
Company A B C
COGS $ 200 $ 300 $ 400
Average Inventory $ 110 $ 210 $ 310
Inventory Turnover 1.82 1.43 1.29

FS

BALANCE SHEET INCOME STATEMENT
As of 28-Feb 31-Mar 30-Apr
CASH $ 1,100 $ 1,000 $ 900 For the period ended 31-Mar 30-Apr
AR $ 450 $ 550 $ 400 COGS $ 100 $ 200
INVENTORY $ 60 $ 100 $ 225
TOTAL CURRENT ASSETS $ 1,610 $ 1,650 $ 1,525
TOTAL CURRENT LIABILITIES $ 1,850 $ 2,100 $ 1,950
Ratio 28-Feb 31-Mar 30-Apr
Current Assets $ 1,610 $ 1,650 $ 1,525
Inventory $ 60 $ 100 $ 225
Current Liabilities $ 1,850 $ 2,100 $ 1,950
Quick Ratio 0.84 0.74 0.67
Ratio 28-Feb 31-Mar 30-Apr
Current Assets $ 1,610 $ 1,650 $ 1,525
Current Liabilities $ 1,850 $ 2,100 $ 1,950
Current Ratio 0.87 0.79 0.78
Ratio 31-Mar 30-Apr
COGS $ 100 $ 200
Average Inventory $ 80 $ 163
Inventory Turnover 1.25 1.23

FS (2)

BALANCE SHEET
Ratio 2019 2020
Cash $ 47,500 $ 24,300 As of 2019 2020
Current Liabilities $ 84,100 $ 75,500
Cash Ratio 0.56 0.32 Assets
Current Assets
Ratio 2019 2020 Cash $ 47,500 $ 24,300
Total Liabilities $ 104,100 $ 95,500 AR $ 21,500 $ 26,000
Total Assets $ 284,000 $ 226,500 Prepaid Insurance $ 2,500 $ 1,800
Debt Ratio 0.37 0.42 Inventory $ 48,000 $ 45,500
Total Current Assets $ 119,500 $ 97,600
Ratio 2019 2020 Land $ 20,000 $ 10,000
Total Liabilities $ 104,100 $ 95,500 Plant Assets $ 230,000 $ 190,000
Total Equity $ 179,900 $ 131,000 Accumulated Depreciation -$ 85,500 -$ 71,100
Debt to Equity Ratio 0.58 0.73 Total Assets $ 284,000 $ 226,500
Liabilities and Equity
Current Liabilities
AP $ 17,200 $ 19,000
Salaries Payable $ 1,900 $ 1,500
Notes Payable $ 65,000 $ 55,000
Total Current Liabilities $ 84,100 $ 75,500
Long-term debt $ 20,000 $ 20,000
Total Liabilities $ 104,100 $ 95,500
Shareholder's Equity
Common Stock $ 115,000 $ 70,000
Retained Earnings $ 64,900 $ 61,000
Total Equity $ 179,900 $ 131,000
Total Liabilities and Equity $ 284,000 $ 226,500

FS (3)

Company A B BALANCE SHEET INCOME STATEMENT
Ratio 2020 2020
Operating Income $ 4,900 $ 5,000 As of 2019 2020 For the year ended 2020
Interest Expense $ 3,500 $ 4,000
Interest Coverage Ratio 1.40 1.25 Assets Sales Revenue $ 238,000
COGS $ 153,000
Current Assets Gross Profit $ 85,000
Ratio 2020 2020 Cash $ 47,500 $ 24,300
Sales Revenue $ 238,000 $ 240,000 AR $ 21,500 $ 26,000 Operating Expenses:
Average Total Assets $ 255,250 $ 270,000 Prepaid Insurance $ 2,500 $ 1,800 Depreciation Expense $ 14,400
Asset Turnover Ratio 0.93 0.89 Inventory $ 48,000 $ 45,500 Insurance Expense $ 12,000
Total Current Assets $ 119,500 $ 97,600 Salaries Expense $ 42,600
Other Op Expenses $ 11,100
Ratio 2020 2020 Land $ 20,000 $ 10,000 Total Op Expenses $ 80,100
Net Credit Sales $ 214,200 $ 240,000 Plant Assets $ 230,000 $ 190,000 Operating Income $ 4,900
Average AR $ 23,750 $ 20,000 Accumulated Depreciation -$ 85,500 -$ 71,100 Other Revenus and (Exp.):
Receivable Turnover Ratio 9.02 12.00 Total Assets $ 284,000 $ 226,500 Gain on Sale of Land $ 4,800
Interest Expense -$ 3,500
Liabilities and Equity Total Other Rev & Exp $ 1,300
Ratio 2020 2020 Income Before Income Tax $ 6,200
Average Inventory $ 46,750 $ 50,000 Current Liabilities Income Tax Expense $ 1,860
COGS $ 153,000 $ 130,000 AP $ 17,200 $ 19,000 Net Income $ 4,340
Day Sales in Inventory Ratio 112 140 Salaries Payable $ 1,900 $ 1,500
Notes Payable $ 65,000 $ 55,000
Total Current Liabilities $ 84,100 $ 75,500
Ratio 2020 2020
Gross Profit $ 85,000 $ 90,000 Long-term debt $ 20,000 $ 20,000
Sales Revenue $ 238,000 $ 200,000 Total Liabilities $ 104,100 $ 95,500
Gross Margin Ratio 0.36 0.45
Shareholder's Equity
Common Stock $ 115,000 $ 70,000
Ratio 2020 2020 Retained Earnings $ 64,900 $ 61,000
Operating Income $ 4,900 $ 25,000 Total Equity $ 179,900 $ 131,000
Sales Revenue $ 238,000 $ 200,000 Total Liabilities and Equity $ 284,000 $ 226,500
Operating Margin Ratio 0.02 0.13
Ratio 2020 2020
Net Income $ 4,340 $ 6,000
Average Total Assets $ 255,250 $ 200,000
Return on Assets Ratio 0.02 0.03
Ratio 2020 2020
Net Income $ 4,340 $ 6,000
Average Equity $ 155,450 $ 100,000
Return on Equity Ratio 0.03 0.06
Ratio 2020 2020
Dividend per share $ 1.00 $ 0.25
Share price $ 4.00 $ 5.00
Dividend Yield Ratio 25% 5%
Invests $ 10.00 $ 50.00
Ratio 2020 2020
Net Income $ 5,000,000 $ 4,000,000
Total Shares O/S 4,000,000 1,000,000
EPS Ratio 1.25 4.00
has no preferred shares
Ratio 2020 2020
Share price $ 4.00 $ 5.00
EPS Ratio 1.25 4.00
Price-to-Earnings Ratio 3.20 1.25