1. Rickroll Juice Inc. has assets of $4,500,000, liabilities of $2,400,000, and $300,000 in preferred stock outstanding. There have been 300,000 shares of common stock issued.
a. Compute the book value per share
b. If the firm has earnings per share of $2.50 and a P/E ratio of 8, what is the stock price per share?
c. What is the ratio of market value per share to book value per share?
d. Which value is considered more of a primary concern to the financial manager, security analyst and stockholders?
2. Calculate the 13 different financial ratios found in Chapter 3 given the following information (assume a 360 day year):
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Jason Corporation
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Balance Sheet
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12/31/2012
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Assets
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Current Assets:
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Cash
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$150,000
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Marketable securities
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80,000
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Accounts receivable (net)
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520,000
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Inventory
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410,000
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Total current assets
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1,160,000
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Investments
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240,000
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Net plant and equipment
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900,000
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Total assets
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2,300,000
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Liabilities and Stockholders' Equity
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Current liabilities:
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Accounts payable
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275,000
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Notes payable
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150,000
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Accrued taxes
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65,000
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Total current liabilities
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490,000
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Long-term liabilities:
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Bonds payable
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460,000
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Total liabilities
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950,000
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Stockholders equity
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Preferred stock, $100 par value
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300,000
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Common stock, $5 par value
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100,000
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Capital paid in excess of par
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420,000
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Retained earnings
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530,000
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Total stockholders equity
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1,350,000
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Total liabilities and stockholders' equity
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2,300,000
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Jason Corporation
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Income Statement
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For the Year Ending 12/31/2012
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Sales (on credit)
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$5,200,000
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Less: Cost of goods sold
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3,300,000
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Gross profit
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1,700,000
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Less: Selling and admin expenses*
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1,200,000
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Operating profit (EBIT)
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500,000
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Less: Interest expense
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80,000
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Earnings before taxes (EBT)
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420,000
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Less: Taxes
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147,000
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Earnings after taxes (EAT)
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273,000
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*includes lease payment
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100,000
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Please find each of the following:
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a
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Profit margin
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b
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Return on assets
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c
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Return on equity
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d
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Receivables turnover
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e
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Average collection period
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f
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Inventory turnover
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g
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Fixed asset turnover
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h
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Total asset turnover
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i
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Current ratio
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j
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Quick ratio
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k
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Debt to total assets
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l
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Times interest earned
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m
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Fixed charge coverage
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3. Platetech only sells one product and they project to sell 6500 units next year at $60 each. They currently have 500 units in stock which cost $18 per unit to manufacture last year. Next year, the cost per unit to manufacture is expected to rise to $22 per unit. They desire to have 20% of unit sales in stock at the end of the year.
a. How many units will Platetech need to produce next year?
b. What is the projected total cost of goods sold for next year?
c. What is the projected total gross profit?
4. Peter Inc. has forecast credit sales for the fourth quarter of the year as:
September (actual) $240,000
Fourth Quarter
October $160,000
November $380,000
December $340,000
Experience has shown that 20 percent of sales receipts are collected in the month of sale and 75 percent in the following month, and 5 percent are never collected. Prepare a schedule of cash receipts for Griffin Inc. covering the fourth quarter (October through December).
5. Given the following financial statements for Bravo, Inc. answer the questions below:
AMC, Inc.
Balance Sheets
for the Year Ending December 31, 2011
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2010
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2011
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Cash
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$400,000
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$300,000
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Accounts receivable
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$900,000
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$850,000
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Inventories
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$1,100,000
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$1,250,000
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Total current assets
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$2,400,000
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$2,400,000
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Plant and equipment
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$4,400,000
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$5,200,000
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Less: accumulated depreciation
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$2,000,000
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$2,400,000
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Net plant and equipment
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$2,400,000
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$2,800,000
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Total assets
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$4,800,000
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$5,200,000
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Accounts payable
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$400,000
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$300,000
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Notes payable current (9%)
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$0
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$300,000
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Total current liabilities
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$400,000
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$600,000
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Bonds (8 1/3%)
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$1,200,000
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$1,200,000
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Common stock
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$600,000
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$600,000
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Retained earnings
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$2,600,000
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$2,800,000
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Total liabilities and common equity
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$4,800,000
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$5,200,000
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AMC, Inc.
Income Statements
for the Year Ending December 31, 2011
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2010
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2011
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Sales
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$2,400,000
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$2,900,000
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Cost of goods sold
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$1,400,000
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$1,700,000
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Gross margin
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$1,000,000
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$1,200,000
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Operating Expenses
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Marketing
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$20,000
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$30,000
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General and administrative
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$40,000
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$50,000
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Depreciation
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$440,000
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$400,000
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Total operating expense
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$500,000
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$480,000
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Net operating income
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$500,000
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$720,000
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Interest expense
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$100,000
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$128,000
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Net Income before taxes
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$400,000
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$592,000
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Taxes (40%)
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$160,000
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$236,800
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Net Income
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$240,000
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$355,200
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- What is AMC's total sales revenue for 2011?
- What is AMC's EBIT for 2011?
- Where would AMC's total marketing and general and administrative expenses be shown?
- Can you determine the dividends paid for 2011 from the financial statements?
- How much additional capital equipment did AMC purchase in 2011?
- What is AMC's total liability?
- What is AMC's total equity?