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FIN 534 Homework Set #1
Use the following information for Questions 1 through 8: Assume that you recently graduated and have just reported to work as an investment advisor at the one of the firms on Wall Street. You have been presented and asked to review the following Income Statement and Balance Sheets of one of the firm’s clients. Your boss has developed the following set of questions you must answer. |
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Income Statements and Balance Sheet
Balance Sheet 2012 2013 Cash $9,000 $7,282 Short-term investments 48,600 20,000 Accounts receivable 351,200 632,160 Inventories 715,200 1,287,360 Total current assets $1,124,000 $1,946,802 Gross fixed assets 491,000 1,202,950 Less: Accumulated depreciation 146,200 263,160 Net fixed assets $344,800 $939,790 Total assets $1,468,800 $2,886,592 Liabilities and Equity Accounts payable $145,600 $324,000 Notes payable 200,000 720,000 Accruals 136,000 284,960 Total current liabilities $481,600 $1,328,960 Long-term debt 323,432 1,000,000 Common stock (100,000 shares) 460,000 460,000 Retained earnings 203,768 97,632 Total equity $663,768 $557,632 Total liabilities and equity $1,468,800 $2,886,592
Income Statements 2012 2013
Sales $3,432,000 $5,834,400 Cost of goods sold except depr. 2,864,000 4,980,000 Depreciation and amortization 18,900 116,960 Other expenses 340,000 720,000 Total operating costs $3,222,900 $5,816,960 EBIT $209,100 $17,440 Interest expense 62,500 176,000 EBT $146,600 ($158,560) Taxes (40%) 58,640 -63,424 Net income $87,960 ($95,136) Other Data 2012 2013 Stock price $8.50 $6.00 Shares outstanding 100,000 100,000 EPS $0.88 ($0.95) DPS $0.22 0.11 Tax rate 40% 40% Book value per share $6.64 $5.58 Lease payments $40,000 $40,000 |
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Ratio Analysis 2012 2013
Current 2.3 1.5 Quick 0.8 0.5 Inventory turnover 4 4 Days sales outstanding 37.3 39.6 Fixed assets turnover 10 6.2 Total assets turnover 2.3 2 Debt ratio 35.60% 59.60% Liabilities-to-assets ratio 54.80% 80.70% TIE 3.3 0.1 EBITDA coverage 2.6 0.8 Profit margin 2.60% −1.6% Basic earning power 14.20% 0.60% ROA 6.00% −3.3% ROE 13.30% −17.1% Price/Earnings (P/E) 9.7 −6.3 Price/Cash flow 8 27.5 Market/Book 1.3 1.1
1. What is the free cash flow for 2013?
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