Question 1: Compute the following ratios for 2015.
|
Ratios
|
2015
|
Industry Average
|
|
Current ratio
|
|
1.23
|
|
Quick ratio
|
|
1.02
|
|
Inventory Turnover
|
|
16
|
|
Average Collection Period
|
|
42
|
|
Average payment period
|
|
100
|
|
Fixed Asset turnover
|
|
1.6
|
|
Total asset turnover
|
|
1.42
|
|
Debt ratio (Total liabilities/total assets)
|
|
38.65%
|
|
Assets/equity ratio (Equity Multiplier)
|
|
1.63
|
|
Long-term debt to stockholder equity
|
|
30.00%
|
|
Times Interest Earned Ratio
|
|
16.25
|
|
Gross profit margin
|
|
40.00%
|
|
Net profit margin
|
|
8.50%
|
|
Return on total assets
|
|
12.10%
|
|
Return on common equity
|
|
19.70%
|
Question 2: Analyse the difference in the ROE of Protect IT and the ROE of the Industry in 2015 through the relevant ratios.
Question 3: Calculate the weighted average cost of capital for the project.
Question 4: Calculate the initial investment on December 31, 2015.
Question 5: Calculate the cash flows for the years 2016 to 2020.
Question 6: Calculate the terminal cash flow at the end of year 2020.
Question 7: Calculate the net present value of this project and recommend whether the project should be undertaken.
Attachment:- Financial Mangement.rar