(2-4) Talbot Enterprises recently reported an EBITDA of $8 million and net income of $2.4million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. Whatwas its charge for depreciation and amortization?
(2-11) The Berndt Corporation expects to have sales of $12 million. Costs other thandepreciation are expected to be 75% of sales, and depreciation is expected to be $1.5million. All sales revenues will be collected in cash, and costs other than depreciation mustbe paid for during the year. Berndt's federal-plus-state tax rate is 40%. Berndt has no debt.
a. Set up an income statement. What is Berndt's expected net cash flow?
b. Suppose Congress changed the tax laws so that Berndt's depreciation expenses doubled. No changes in operations occurred. What would happen to reported profitand to net cash flow?
c. Now suppose that Congress changed the tax laws such that, instead of doublingBerndt's depreciation, it was reduced by 50%. How would profit and net cash flowbe affected?
d. If this were your company, would you prefer Congress to cause your depreciationexpense to be doubled or halved? Why?
(2-12) Using Rhodes Corporation's financial statements (shown below), answer the followingquestions.
a. What is the net operating profit after taxes (NOPAT) for 2013?
b. What are the amounts of net operating working capital for both years?
c. What are the amounts of total net operating capital for both years?
d. What is the free cash flow for 2013?
e. What is the ROIC for 2013?
f. How much of the FCF did Rhodes use for each of the following purposes: after-taxinterest, net debt repayments, dividends, net stock repurchases, and net purchases ofshort-term investments? (Hint: Remember that a net use can be negative.)
(3-1) Greene Sisters has a DSO of 20 days. The company's average daily sales are $20,000. Whatis the level of its accounts receivable? Assume there are 365 days in a year.
(3-6) Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on equity equal to20%. What is the company's total assets turnover? What is the firm's equity multiplier?
(3-7) Ace Industries has current assets equal to $3 million. The company's current ratio is 1.5,and its quick ratio is 1.0. What is the firm's level of current liabilities? What is the firm'slevel of inventories?
(3-8) Assume you are given the following relationships for the Haslam Corporation:
Sales/total assets 1.2
Return on assets (ROA) 4%
Return on equity (ROE) 7%
Calculate Haslam's profit margin and liabilities-to-assets ratio. Suppose half its liabilitiesare in the form of debt. Calculate the debt-to-assets ratio.
(3-12) The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days salesoutstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, andcash and marketable securities of $120,000. What were Kretovich's annual sales?
Attachment:- Readings.pdf