Introduction to Finance Numerical Exercises In Tutorial Library

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TITLE: Introduction to Finance Numerical Exercises

CLASS / COURSE: Finance

QUESTION DESCRIPTION:

 

S. No.

Problems

1

Given the following data  for Gary and Co    (Millions of Dollars):
 

  Balance Sheet  Dec 31 200X
 

 Cash                                  $45    

 Accounts Payables            $45
 Marketable  Securities         33   

 Notes Payables                   45
 Receivables                         66      

Other Current liabilities         21
  Inventory                           159    

Total  Current liabilities      $111
Total Current Assets            303  

 Long term debt                     24
Total liabilities                    $135  

 Net Fixed Assets                 147   

 Common  Stock                   114
 Total Assets                       $450

 Retained Earnings               201
 Total stockholders’ equity    315

  Total liabilities and equity    450

 Income Statement   Year 200X

 

 Net sales                            $795

 Cost  of  goods  sold             660
 Gross profit                           135
 Selling expenses                    73.5
 Depreciation                           12
 EBIT                                       49.5
 Interest expense                      4.5
 EBT                                        45
 Taxes (40%                            18
 Net Income                             27

 Calculate the following ratios:  

 

Ratio                                          Industry Average
Current ratio                                
Times interest earned            

DSO                                
Inventory Turnover 

Sales/Total Assets                
Profit margin on sales           
Return on Total Assets         

Return on Common Equity     

 

2

Given the compressed version of balance sheet and income statement, estimate the amount of external financing needed to increase sales by 20% next year. (use percentage of sales method)

(Dividend payout is 50%)      

Balance Sheet (End of the Year)                   

Assets     $2,000     Debt      $1000        

Equity       $1000                                                         

Total          $2000                  $2000              

 

 Income Statement                           

Sales             $1000                                               

Costs                 800                                                 

Net Income       200          

3

A firm has outstanding receivables of $125,000. Its credit terms are net 30. If during the past three months credit sales are $100,000, $105,000, and $60,000, how many days of sales are outstanding as receivables?
 

4

Given the following data, develop weekly cash budget. Minimum cash required is $50 and the beginning cash balance is $100.

                             

                                      Week 1                Week 2                Week 3

Cash Receipts               $1,000                 $1,100                    $900

Cash Disbursements      (850)                   (1450)                    (1000)

 


 

5

Given the following data:

 Days inventory = 103 days, Days receivables = 41 days, and Days payables   = 81 days
Calculate the cash conversion cycle and operating cycle.

 

6

Calculate the cost of trade credit   given terms of 3/20 net 60.

 

7

A firm issues $1,000,000 of commercial paper with a maturity of 60 days and a discount rate of 5%.  The paper is sold through a dealer who charges 0.25%. What is the effective cost of issuing the commercial paper?

 

 

Thanks

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SUBJECTS / CATEGORIES:
1. Finance
2. Financial Management
3. Accounting
4. Corporate Finance
5. Business Economics
6. Economics

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