Finance Exam
ujlefeunek
ej_lejeune_finance_assignment_ii.xlsx3-13
| Problem 3-13 | ||||
| Warner Company Balance Sheet | Warner Company Income Statement | |||
| Current Assets | Sales | $ 573,000.00 | ||
| Cash | 225,000 | Cost of goods sold | 297,000.00 | |
| Accounts Receivable | 167,500 | 276,000.00 | ||
| Inventory | 99,300 | |||
| Total Current Assets | 491,800 | General and administrative expense | 79,000.00 | |
| Long Term (fixed) assets | interest expense | 4,750.00 | ||
| Buildings and Equipment | 895,000 | Accrued expense | 7,900.00 | |
| Accumulated depreciation | -263,000 | Depreciation expense | 66,000.00 | |
| Total Long term debt | 632,000 | Operating Income | 157,650.00 | |
| Total Assets | 1,123,800 | |||
| Current Liabilities | Taxes | 50,500.00 | ||
| Accounts payable | 102,000 | Net income | $ 107,150.00 | |
| Notes payable | 75,000 | |||
| Taxes payable | 53,000 | |||
| Accrued expenses | 7,900 | |||
| 237,900 | ||||
| Long-term Liabilities | ||||
| Long term debt | 334,000 | |||
| Total Liabilities | 571,900 | |||
| Owners Equity | ||||
| Common Stock | 289,000 | |||
| Retained Earnings | 262,900 | |||
| 551,900 | ||||
| Total liabilities and equity | ||||
| 1,123,800 | ||||
| Q. What can you say about the firm’s financial condition based on these financial statements? | ||||
| The company is in a good financial condition. The company has good liquidity. The company also has good a good debt ratio that ensures that it has good leverage. The company also has very good profitability. | ||||
| Q. Using the CSU Online Library find one article that discuses financial statements, cash flow, or ratio analysis. Briefly summarize the key points of the article as it relates to this unit. You may use any of the databases, but Business Source Complete is a good starting place. | ||||
| The success of a business depend on its cash flow. Signs of poor cash flow include less cash in the bank than expenditure. The company gets problems when payaing its accounts payable and this can take even 90 days. Lack of a process that determines the credit worthiness of the company's customers. | ||||
3-15
| Problem 3-15 |
| Answer the following four questions using the information found in the statements. |
| a. Does BigBox generate positive cash flow from its operations? |
| Yes, the company generates positive cash flows from its operations. |
| b. How much did BigBox invest in new capital expenditures over the last four years? |
| 2013 2012 2011 2010 1 16,000 14,500 14,000 12,300 Total $56,800 |
| c. Describe BigBox’s sources of financing in the financial markets over the last four years. |
| The company has two sources of financing. The company is financed through debt and through equity. The company has been retiring its stock over the last years. The company has however issued debt for 3 of the 4 years. The company also pays interest and dividends. |
| d. Based solely on the cash flow statement for 2010 through 2013, write a brief narrative that describes the major activities of BigBox’s management team over the last four years. |
| The major activities for the two years are net income, capital expenditures , depreciation expense and retirement of stock. |
4-25
| Problem 4-25 | ||||||||||||
| Instructions to use the Solution Template | ||||||||||||
| Step 1 | Enter the given values from the textbook on page 116 in the yellow colored cells below. | |||||||||||
| Step 2 | In Cell E52, Calculate Current ratio using formula "Current Assets / Current Liabilities" | |||||||||||
| Step 3 | In Cell E53, Calculate Times interest earned using formula "Net Operating Income/ Interest Expense" | |||||||||||
| Step 4 | In Cell E54, Calculate Inventory Turnover using formula "Cost of goods sold/ Inventory" | |||||||||||
| Step 5 | In Cell E55, Calculate Total Asset turn Over using formula "Net Sales / Total Assets" | |||||||||||
| Step 6 | In Cell E56, Calculate Operating Profit Margin using formula "Net Operating Income / Net Sales" | |||||||||||
| Step 7 | In Cell E57, Calculate Operating Return on Assets using formula "Net Operating Income / Total Assets" | |||||||||||
| Step 8 | In Cell E58, Calculate Debt Ratio using formula "( Current Liabilities + Long-term debt) / Total Assets" | |||||||||||
| Step 9 | In Cell E59, Calculate Average Collection Period using formula "( Accounts Receivable * 365 ) / Credit Sales " | |||||||||||
| Step 10 | In Cell E60, Calculate Fixed Asset Turnover using formula "Net Sales / Net Fixed Assets " | |||||||||||
| Step 11 | In Cell E61, Calculate Return on Equity using formula "Net Income / Owner's Equity" | |||||||||||
| Given | ||||||||||||
| J. P. Robard Mfg., Inc. | ||||||||||||
| Balance Sheet ($000) | ||||||||||||
| Cash | $500.00 Author: Enter the given values from the text book here |
|||||||||||
| Accounts receivable | $2,000.00 | |||||||||||
| Inventories | $1,000.00 | |||||||||||
| Current assets | $3,500.00 | |||||||||||
| Net fixed assets | $4,500.00 | |||||||||||
| Total assets | $8,000.00 | |||||||||||
| Accounts payable | $1,100.00 | |||||||||||
| Accrued expenses | $600.00 | |||||||||||
| Short-term notes payable | $300.00 | |||||||||||
| Current liabilities | $2,000.00 | |||||||||||
| Long-term debt | $2,000.00 | |||||||||||
| Owners’ equity | $4,000.00 | |||||||||||
| Total liabilities and owners’ equity | $8,000.00 | |||||||||||
| J. P. Robard Mfg., Inc. | ||||||||||||
| Income Statement ($000) | ||||||||||||
| Net sales (all credit) | $8,000.00 | |||||||||||
| Cost of goods sold | $3,300.00 | |||||||||||
| Gross profit | $4,700.00 | |||||||||||
| Operating expenses (includes $500 depreciation) | ($3,000.00) | |||||||||||
| Net operating income | $1,700.00 | |||||||||||
| Interest expense | ($367.00) | |||||||||||
| Earnings before taxes | $1,333.00 | |||||||||||
| Income taxes (40%) | ($533.00) | |||||||||||
| Net income | $800.00 | |||||||||||
| Solution | ||||||||||||
| Current ratio | 1.75 Author: Current Ratio = Current Assets / Current Liabilities |
|||||||||||
| Times interest earned | 21.80 Author: Times interest Earned= Net Operating Income/ Interest Expense | * | ||||||||||
| Inventory turnover | 3.30 Author: Inventory Turnover= Cost of goods sold/ Inventory |
|||||||||||
| Total asset turnover | 1.00 Author: Total Asset turn Over = Net Sales / Total Assets |
|||||||||||
| Operating profit margin | 0.21 Author: Operating Profit Margin = Net Operating Income / Net Sales |
|||||||||||
| Operating return on assets | 0.10 Author: Operating Return on Assets = Net Operating Income / Total Assets |
|||||||||||
| Debt ratio | 0.50 Author: Debt Ratio = ( Current Liabilities + Long-term debt) / Total Assets |
|||||||||||
| Average collection period | 91.25 Author: Average Collection Period =( Accounts Receivable * 365 ) / Credit Sales |
|||||||||||
| Fixed asset turnover | 1.78 Author: Fixed Asset Turnover = Net Sales / Net Fixed Assets |
|||||||||||
| Return on equity | 0.20 Author: Return on Equity = Net Income / Owner's Equity |
|||||||||||
|
Author: Current Ratio = Current Assets / Current Liabilities |
Author: Times interest Earned= Net Operating Income/ Interest Expense |
Author: Enter the given values from the text book here |
Author: Inventory Turnover= Cost of goods sold/ Inventory |
Author: Total Asset turn Over = Net Sales / Total Assets |
Author: Operating Profit Margin = Net Operating Income / Net Sales |
Author: Operating Return on Assets = Net Operating Income / Total Assets |
Author: Debt Ratio = ( Current Liabilities + Long-term debt) / Total Assets |
Author: Average Collection Period =( Accounts Receivable * 365 ) / Credit Sales |
Author: Fixed Asset Turnover = Net Sales / Net Fixed Assets |
