ࡱ> ikh` "bjbj 4Z*7777$8*? 88888888??A?A?A?A?A?A?$@hHCe?88888e?88z?h;h;h;8R88??h;8??h;h;==88 @,@7(9=[>?0?=,C:HC=C=|88h;88888e?e?^; 888?8888***27$***7*** Chapter 2 1. To find owners equity, we must construct a balance sheet as follows: Balance Sheet CA $5,000 CL $4,300 NFA 23,000 LTD 13,000 OE ?? TA $28,000 TL & OE $28,000 We know that total liabilities and owners equity (TL & OE) must equal total assets of $28,000. We also know that TL & OE is equal to current liabilities plus long-term debt plus owners equity, so owners equity is: 2. The income statement for the company is: Income Statement Sales $527,000 Costs 280,000 Depreciation 38,000 EBIT $209,000 Interest 15,000 EBT $194,000 Taxes(35%) 67,900 Net income $126,100 One equation for net income is: Net income = Dividends + Addition to retained earnings Rearranging, we get: Addition to retained earnings = Net income Dividends = 4. EPS = Net income / Shares = DPS = Dividends / Shares = 5. Balance Sheet as on Assets NFA 4,000,000 CA *** 3,100,000 Total Assets(BV) 7,100,000 *** Net working capital = CA CL 6. The average tax rate is the total tax paid divided by net income, so: Average tax rate = The marginal tax rate is the tax rate on the next $1 of earnings, so the marginal tax rate = To calculate OCF, we first need the income statement: Income Statement Sales $13,500 Costs 5,400 Depreciation 1,200 EBIT $6,900 Interest 680 Taxable income $6,220 Taxes (35%) 2,177 Net income $4,043 OCF = EBIT + Depreciation Taxes = Chapter 3 problems 1. Using the formula for NWC, we get: NWC = CA CL So, the current ratio is: Current ratio = CA / CL = And the quick ratio is: Quick ratio = (CA Inventory) / CL = 2. We need to find net income first. So: Profit margin = Net income / Sales Net income = Sales(Profit margin) Net income = ROA = Net income / TA = To find ROE, we need to find total equity. TA = TD +CE ROE = Net income / TE = 3. Receivables turnover = Sales / Receivables Receivables turnover = Days sales in receivables = 365 days / Receivables turnover = The average collection period for an outstanding accounts receivable balance was 4. Inventory turnover = COGS / Inventory Inventory turnover = Days sales in inventory = 365 days / Inventory turnover = 365 / 6.55 = 55.71 days On average, a unit of inventory sat on the shelf 5. Total debt ratio = TE/TA = Debt/Equity ratio =(= 1 + Debt/Equity ratio) 6. ROE = (PM)(TAT)(EM) ROE = 7. Increase in inventory is a use of cash Increase in accounts payable is a source of cash Decrease in notes payable is a use of cash Increase in accounts receivable is a use of cash Changes in cash = 8. Payables turnover = COGS / Accounts payable Payables turnover = Days sales in payables = 365 days / Payables turnover Days sales in payables = The company left its bills to suppliers outstanding for 82.19 days on average. A large value for this ratio could imply that either (1) the company is having liquidity problems, making it difficult to pay off its short-term obligations, or (2) that the company has successfully negotiated lenient credit terms from its suppliers. 9. New investment in fixed assets is found by: Net investment in FA = (NFAend NFAbeg) + Depreciation Net investment in FA = . Chapter 4 Homework problems 1. Proforma Balance Sheet Assets = 9,790 Debt = 5610 Equity = 4180 Total 9,790 9790 If sales increases by 10%, NI will also increase by 10% NI = Equity = Additions to RE = 2. NI = Dividends paid = Addition to RE = Proforma balance sheet Asset 9790 Debt = 5,100 Equity=(Beg Equity +RE) 5,725 Total 9790 10,825 EFN = Increase in assets Increase in liabilities = 3. Proforma Income statement Profoma Balance Sheet *Sales 23,040 Assets 111,600 Debt 20400 Costs 18,660 Equity 74335 Taxable Inc. 4380 Tax(34%) 1489 Total 111,600 94735 NI 2,891 EFN = Dividend payout ratio is = and the retention ratio is 60% Addition to RE= *Growth in sales = ( 4. To calculate the internal growth rate, we first need to calculate the ROA, which is: ROA = NI / TA ROA = ROA = The plowback ratio, b, is one minus the payout ratio, so: b = b = Now we can use the internal growth rate equation to get: Internal growth rate = (ROA b) / [1 (ROA b)] Internal growth rate = 5. To calculate the sustainable growth rate, we first need to calculate the ROE, which is: ROE = NI / TE ROE = The plowback ratio, b, is one minus the payout ratio, so: b = Now we can use the sustainable growth rate equation to get: Sustainable growth rate = (ROE b) / [1 (ROE b)] Sustainable growth rate = 6. Assuming costs vary with sales and a 20 percent increase in sales, the pro forma income statement will look like this: HEIR JORDAN CORPORATION Pro Forma Income Statement Sales$34,800.00Costs 13,440.00Taxable income$21,360.00Taxes (34%) 7,262.40Net income$ 14,097.60 The payout ratio is constant, so the dividends paid this year is the payout ratio from last year times net income, or: Dividends = And the addition to retained earnings will be: Addition to retained earnings = 7. We need to calculate the retention ratio to calculate the internal growth rate. The retention ratio is: b= Now we can use the internal growth rate equation to get: Internal growth rate = (ROA b) / [1 (ROA b)] Internal growth rate = 8. We need to calculate the retention ratio to calculate the sustainable growth rate. The retention ratio is: b= Now we can use the sustainable growth rate equation to get: Sustainable growth rate = (ROE b) / [1 (ROE b)] Sustainable growth rate = 9. We first must calculate the ROE to calculate the sustainable growth rate. To do this we must realize two other relationships. The total asset turnover is the inverse of the capital intensity ratio, and the equity multiplier is 1 + D/E. Using these relationships, we get: ROE = (PM)(TAT)(EM) ROE= The plowback ratio is one minus the dividend payout ratio, so: b= Now we can use the sustainable growth rate equation to get: Sustainable growth rate = (ROE b) / [1 (ROE b)] Sustainable growth rate = 10. We must first calculate the ROE using the DuPont ratio to calculate the sustainable growth rate. The ROE is: ROE = (PM)(TAT)(EM) ROE = The plowback ratio is one minus the dividend payout ratio, so: b= Now we can use the sustainable growth rate equation to get: Sustainable growth rate = (ROE b) / [1 (ROE b)] Sustainable growth rate = Xe   5 ? Z d q y  ' ( ) + J K l    h%+5OJQJh45OJQJh%+OJQJ h9hzh9hRzh4OJQJhzhz>*OJQJh%[hzOJQJhKS'hz>*OJQJhKS'hz>*OJQJhz>*OJQJhzOJQJhz5OJQJ1  UVf| $  a$gdz H^`Hgdz$ $ h^a$gdz$ $ ha$gdz$ $ h^ !a$gdz$ D a$gdz"   + @ N e z { ' ( ) $`a$gdz $^a$gdz$0^`0a$gdz$a$gdz $ a$gdz $  a$gdz) J K L j k l    $ @ \ 0^`0a$gdz`gd9`gdz ^`gdz^gdzgdz$ @ \ a$gdz T U i j    & 6 L Y k $ a$gd%+$ a$gd%+$^`a$gd%+ $`a$gd4 $`a$gd%+$a$gd%+  D K c j  prt;<=?QRST]t%&rv̵̼̼ hWqahNQ hNQH* hLhNQh4hNQ hNQ5hNQOJQJh4OJQJh%+>*OJQJh%+OJQJh%+>*OJQJD !"=Y[t$ T@a$gdNQ $ a$gdNQ$a$gdNQ $`a$gd%+ $ a$gd%+ :;gtvwpqrgdNQ$ ^a$gdNQ $ a$gdNQ;<=STU^_$  @@a$gdNQ $ a$gd4 8h^8`hgdNQh^hgd4h^hgdNQ$ M^`Ma$gdNQ $ a$gdNQ?q %&'rs$ @a$gdNQ$ H^`Ha$gdNQ $ a$gdNQ9:Wjk^gd4^gdNQ ^`gdNQ ^`gdNQ^gdNQ $^a$gdNQgdNQ $ a$gdNQ:W\krHIOTVW-.0<@贯ԯ hNQ5 hNQCJhXhNQCJaJhXhNQ\ hXh4h4hNQhXhNQ5CJaJ hXhNQhXhNQ5hWqahNQ5E12Or ]^gdNQ^gdNQ ^`gdNQ`gd4gdNQ^gdNQ5]s,-.^gdNQ ^`gdNQ ^`gdNQ^gdNQgdNQ.45i$ $ H^`Ha$gdNQ;<ABCFH$ $ H^`Ha$gdNQ@AEXY`bcebeghm/ 3 4 7 { } ~ !!!!!!!!!!!!""h%+OJQJh(#_ hmhNQ hNQ>* hNQ>* hhNQ hNQ5h4hNQBYZsGlkd$$IflF ^X 6    2 2 2 4 la$ $Ifa$gdNQ $IfgdNQ$ H^`Ha$gdNQ HgdNQ HB^`BgdNQulkd$$IflF ^X 6    2 2 2 4 la$ $Ifa$gdNQ $IfgdNQu$ $Ifa$gdNQ $IfgdNQlkd0$$IflF ^X 6    2 2 2 4 lau$ $Ifa$gdNQ $IfgdNQlkd$$IflF ^X 6    2 2 2 4 laqXCCC$ $ H^`Ha$gdNQ$ v  a$gdNQ$B^`Ba$gdNQ H^`HgdNQlkd`$$IflF ^X 6    2 2 2 4 la^_cdefh^hgdNQ$ $ H^`Ha$gdNQcdhijklmn h^hgdNQ$ $ H^`Ha$gdNQ  . 4 5 6 7 8 y z ~  !!!!!! $ H^`Hgd(#_ $ H^`HgdNQ$ $ H^`Ha$gdNQ!!!!!!!!!!!!!2"3"j"""" $`a$gd%+ $ H^`HgdNQ$ $ H^`Ha$gdNQ21h:ps-/ =!"#$% $$If$!vh5 55#v #v#v:V l65 552 2 2 4a$$If$!vh5 55#v #v#v:V l65 552 2 2 4a$$If$!vh5 55#v #v#v:V l65 552 2 2 4a$$If$!vh5 55#v #v#v:V l65 552 2 2 4a$$If$!vh5 55#v #v#v:V l65 552 2 2 4aD@D zNormalCJOJQJ_HmH sH tH J@J NQ Heading 1$@&5CJOJQJ\aJR@R NQ Heading 2$h@&^h5CJOJQJ\aJR@R NQ Heading 4$<@&5CJOJQJ\aJDAD Default Paragraph FontRi@R  Table Normal4 l4a (k(No List4 @4 %+Footer  !HH NQ Balloon TextCJOJQJ^JaJZ UVf|+@Nez{'()JKLjkl   TUij&6LYk!"=Y[t :;gtvwpqr  ; < = S T U ^ _  ? q % & ' r s   9 : W j k 12Or5]s,-.45i;<ABCFHYZs^_cdefcdhijklmn.45678yz~23j000000000000000000000000000000000000000000000000000000000000000000000000000000000P000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 0 0 0 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0: 0000000Y0Y0Y0Y0Y0Y0Y000Y00000Y0Y00008000000000000000000000000000000000000000000000000000000000000000000000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000008M @"# ) . !" !"$%&'()*+," ! ) "OUr t ! 2 Z\(tx"$j333333333333333333 Mir= S j=@DI`geg/4{}"i6;hh^h`o(.88^8`.L^`L.  ^ `.  ^ `.xLx^x`L.HH^H`.^`.L^`L."i>$ @bU8&&%+s-NQ#:],t](#_NyRz4tZ9j| f"\zw9( =Zs!Y @1V`@UnknownGz Times New Roman5Symbol3& z Arial3z Times5& zaTahoma"qẖ̱̱ 0 0!24|| 2QHX)?"\2Chapter 2  Book ProblemspremHP Authorized Customer Oh+'0 (4 T ` l xChapter 2 Book ProblemspremNormalHP Authorized Customer2Microsoft Office Word@@D@@@@@՜.+,0 hp|   0 | Chapter 2 Book Problems Title  !"#$%&'()*+,-/012345789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWYZ[\]^_abcdefgjRoot Entry F @lData .1Table6CWordDocument4ZSummaryInformation(XDocumentSummaryInformation8`CompObjq  FMicrosoft Office Word Document MSWordDocWord.Document.89q