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Cain's has a debt-equity ratio of .94. Return on assets is 8.5 percent, and total equity is $520,000.
What is net income?
 
$85,748

Explanation
Equity multiplier = 1 + Debt-equity ratio
Equity multiplier = 1.94ROE = .085(1.94)
ROE = .1649
Net income = .1649($520,000)
Net income = $85,748
   
EBITDA ratio
Enterprise value / EBITDA
 
Cash                                                     150
other current assets               397
ppe net depreciation                538
current liabilities                      324
Total liabilities                             504

What is net working capital?
 
223

(150 + 397) - 324
   
Net income                                                                      34,000
increase in accounts payable                             14,000
increase in accrued income taxes                   14,000
increase in accounts receivable                      16,000
depreciation                                                                  22,000

Cash flow to investors from operating activities?
 
68000

34000 + (14000 + 14000 + 22000) - 16000
   
Trekkers Footwear bought a piece of machinery on January 1, 2006 at a cost of $2.3 million,
and the machinery is being depreciated annually at an amount of $230,000 for 10 years.
Its market value on December 31, 2008 is $1.75 million.
The firm's accountant is preparing its financial statement for the fiscal year end on December 31, 2008.
 
The net value of the asset that should be reported on the balance sheet is:
 
1.61 million
 
$230,000 · 3 = 690,000 = 0.69
$2,300,000 – 690,000 = 1,610,000 (1.61 million)
   
Happy Pets has annual sales of $328,000 with 8,000 shares of stock outstanding.
The firm has a net profit margin of 4.5 percent and a price-sales ratio of 1.20.
What is the firm's price-earnings ratio?
 
26.7

Explanation
Price per share = 1.20 ($328,000 / 8,000)
Price per share = $49.20
EPS = [.045($328,000)]/8,000EPS = $1.845
PE ratio = $49.20/$1.845
PE ratio = 26.7
 
   
Chartworth Associates' financial statements indicated that the company has EBITDA of $3,145,903.
It had depreciation of $633,000, and its interest rate on debt of $1.25 million was 7.5%.
The company is likely to owe $822,512 in taxes.
 
What are the marginal and average tax rates for this company?
 
34%, 34%

822512 / 2419153
   
Natural Lite, Inc. reported the following items during fiscal 2010.
The firm purchased marketable securities of $87,500, paid down a long-term loan in the amount of $650,000,
purchased $4,250,000 of new equipment.
The firm also issued $6,250,000 of common stock, paid $350,225 in dividends to its common shareholders,
and repurchased $1,250,000 of common stock in the open market.
 
What is the net cash provided by financing activities?
 
3,999,775

650,000 + 1,250,000 + 350,225 = 2,250,225
6,250,000-2,250,225=3,999,775
   
Trident Manufacturing Company's treasurer identified the following cash flows during this year as significant.
The company repaid existing debt of $425,110, while raising additional debt capital of $750,000.
It also repurchased stock in the open markets for a total of $63,250 and paid $233,144 in dividends to its shareholders.
 
What is the net cash provided by (used in) financing activities?
 
28,496

425,110 + 63,250 + 233,144 = 721,504
750,000 - 721,504 = 28,496
   
Triumph Trading Company provided the following information to its auditors.
For the year ended March 31, 2008,
the company had revenues of $1,122,878,
operating expenses (excluding depreciation and leasing expenses) of $612,663,
depreciation expenses of $231,415,
leasing expenses of $126,193,
and interest expenses of $87,125.
 
If the company's average tax rate was 34 percent, what is its net income after taxes?
(Round your final answer to the nearest dollar.)
 
43,218

EBIT = $1,122,878 - ($612,663 + $231,415 + $126,193) = $152,607
Earnings before taxes = ($152,607 - $87,125) = $65,482
Net income = $65,482 (1 - 0.34) = $43,218
   
For the past year, Zhao Events had taxable income of $198,600, beginning common stock of $68,000,
beginning retained earnings of $318,750, ending common stock of $71,500, ending retained earnings of $316,940,
interest expense of $11,300, and a tax rate of 21 percent.
What is the amount of dividends paid during the year?
 
$158,704

Explanation
Net income = $198,600(1 − .21)
Net income = $156,894
Dividends paid = $156,894 − ($316,940 − 318,750)
Dividends paid = $158,704
   
Shen & Sanchez Engineering is an all-equity firm that has net income of $96,200, depreciation expense of $6,300,
and an increase in net working capital of $2,800.
What is the amount of the net cash from operating activity?
 
$99,700

Explanation
Net cash from operating activity = $96,200 + 6,300 − 2,800
Net cash from operating activity = $99,700
   
Muro Press has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908.
How many dollars' worth of sales are generated from every $1 in total assets?
 
$1.08

Explanation
Total asset turnover = $31,350 / ($2,715 + 22,407 + 3,908)
Total asset turnover = 1.08
Every $1 in total assets generates $1.08 in sales.
 
A firm has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and current liabilities of $90,549.
What is the quick ratio?
 
0.75

Explanation
Current Assets = Current Liabilities + Net Working Capital
Current Assets = $90,549 + 4,507 = $95,056
Quick ratio = ($95,056 − 29,406) / $90,549
Quick ratio = .75
   
Spartan, Inc., is a manufacturer of automobile parts located in Greenville, South Carolina.
At the end of the current fiscal year, the company had net working capital of $157,903.
The company showed accounts payables of $94,233
accounts receivables of $83,112
inventory of $171,284
and cash and marketable securities of $12,311.
 
Calculate the amount of notes payables.
(Assume that notes payable and accounts payable are the only two current liabilities of the company.)
 
14,571

Total current assets = $12,311 + $83,112 + $171,284 = $266,707
Net working capital = $266,707 - Total current liabilities = $157,903
Total current liabilities = $266,707 - $157,903 = $108,804
Total current liabilities = $108,804 = Accounts payable + Notes payable
Notes payable = $108,804 - $94,233 = $14,571
   
Teakap, Inc., has current assets of $1,456,312 and total assets of $4,812,369 for the year ending September 30, 2016.
It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347.
 
What is the value of long term debt?
 
803,010

Total Stockholders' equity = $1,500,000 + $1,468,347 = $2,968,347
Long-term debt = Total assets - Current liabilities - Total Stockholders' equity
Long-term debt = $4,812,369 - $1,041,012 - $2,968,347 = $803,010
   
Tre-Bien Bakeries generated net income of $233,412 this year.
At year end, the company had accounts receivables of $47,199, inventory of $63,781, and cash of $21,461.
It also had accounts payables of $51,369, short-term notes payables of $11,417, and accrued taxes of $6,145.
 
The net working capital of the firm is:
 
$63,510

Total current assets = $21,461 + $47,199 +$63,781 = $132,441
Total current liabilities = $51,369 + $11,417 + $6,145 = $68,931
Net working capital = $132,441 - $68,931 = $63,510
   
Dillinger has a taxable income of $830,000. Calculate the company's tax using the following tax schedule.
Corporations' Taxable Income

Marginal Tax Rate
$0-$50,000                                        15%
$50,001-$75,000                             25%
$75,001-$100,000                          34%
$100,001-$335,000                       39%
$335,001-$10,000,000  34%
 
$282,200
 
830,000 · 0.35 = 282,200
   
Maddux, Inc., has completed its fiscal year and reported the following information.
The company had current assets of $153,413, net fixed assets of $412,331, and other assets of $7,822.
The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000.
 
Calculate the amount of retained earnings.
 
$167,918

Total assets = $153,413 + $412,331 + $7,822 = $573,566
Total liabilities = $65,314 + $178,334 = $243,648
Total stockholders' equity = Total assets - Total liabilities
Total stockholders' equity = $573,566 - $243,648 = $329,918
Retained earnings = Total stockholders' equity - Common stock
Retained earnings = $329,918 - $162,000 = $167,918
   
Galan Associates prepared its financial statement for 2008 based on the information given here.
The company had cash worth $1,234, inventory worth $13,480, and accounts receivables worth $7,789.
The company's net fixed assets are $42,331, and other assets are $1,822.
It had accounts payables of $9,558, notes payables of $2,756, common stock of $22,000, and retained earnings of $14,008.
 
How much long-term debt does the firm have?
 
$18,334

Current assets = $1,234 + $7,789 + $13,480 = $22,503
Total assets = $22,503 + $42,331 + $1,822 = $66,656
Current liabilities = $9,558 + $2,756 = $12,314
Total stockholders' equity = $22,000 + $14,008 = $36,008
Long-term debt = Total assets - Current liabilities - Total stockholders' equity
Long-term debt = $66,656 - $12,314 - $36,008 = $18,334
   
Chandler Sporting Goods produces baseball and football equipment and lines of clothing.
This year the company had cash and marketable securities worth $335,485,
accounts payables worth $1,159,357, inventory of $1,651,599, accounts receivables of $1,488,121,
short-term notes payable worth $313,663, and other current assets of $121,427.
 
What is the company's net working capital?
 
$2,123,612

Total current assets = $335,485 + 1,488,121 + $1,651,599 + $121,427 = $3,596,632
Total current liabilities = $1,159,357 + $313,663 = $1,473,020
Net working capital = $3,596,632 - $1,473,020 = $2,123,612
   
Centennial Brewery produced revenues of $1,145,227 in 2008.
It has expenses (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112
 It pays an average tax rate of 34 percent.
What is the firm's net income after taxes?
Round your final answer to the nearest dollar.
 
$79,292

Earnings before taxes = $1,145,227 - ($812,640 + $131,335 + $81,112) = $120,140
Net income = $120,140 (1 - 0.34) = $79,292
   
Parrino Corporation has announced that its net income for the year ended June 30, 2008, is $1,824,214.
The company had an EBITDA of $5,174,366, and its depreciation and amortization expense was equal to $1,241,790.
The company's average tax rate is 34 percent.
 
What is the amount of interest expense for the firm?
 
$1,168,615

$5,174,366.00 - 1,241,790.00 = $3,932,576.00
$3,932,576.00 - 1,168,615.39 = $2,763,960.61
$2,763,960.61 – ($2,763,960.61 · 0.34) = $1,824,214.00
$1,824,214 / 0.66 = $2,763,960.61
$3,932,576 − $2,763,960.61 = $1,168,615.39
   
A firm has sales of $3,340, net income of $274, net fixed assets of $2,600, and current assets of $920. The firm has $430 in inventory.
What is the common-size statement value of  inventory?
 
A. 46.74 percent
B. 16.54 percent
C. 13.36 percent
D. 44.16 percent
E. 12.22 percent
 
Common-size inventory = $430 / ($2,600 + 920) = 0.1222, or
12.22 percent
   
A firm has total debt of $4,850 and a debt-equity ratio of .57. What is the value of the total assets?
 
A. $9,571.95
B. $11,034.00
C. $6,128.05
D. $13,358.77
E. $7,253.40
 
Total equity = $4,850 / .57 = $8,508.77
Total assets = $4,850 + 8,508.77 = $13,358.77
   
Billings, Inc. has net income of $161,000, a profit margin of 7.6 percent, and an accounts receivable balance of $127,100.
Assume that 66 percent of sales are on credit. What is the  days' sales in receivables?
 
A. 21.90 days
B. 36.19 days
C. 33.18 days
 
Sales = $161,000 / .076 = $2,118,421
Credit sales = $2,118,421 × .66 = $1,398,158
Accounts receivable turnover = $1,398,158 / $127,100 = 11
times
Days' sales in receivables = 365 / 11 = 33.18 days