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FINC 400 Principles of Financial Management Week 1 Homework Problems

Complete the following problems: Problem 2-11 Problem 2-15 Problem 2-25

Management

lems

Problem 3-21 Problem 3-22 Problem 3-28

Master 11/2011-kT

Problem 2-11 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Stein Books, Inc. Books Sold Price of Books Cost of Books Selling expense Depreciation Expense Borrowings Interest on Borrowings Tax Rate 1,400 $195 $150 $12,000 $15,000 $100,000 10% 30% Sales Cost of goods sold Gross profit S & A expenses Depreciation expense Operating Profit Interest expense Earnings before taxes Taxes Earnings after taxes Solution: Stein Books, Inc. Income Statement For the Year Ended Dec. 31, 2010

ils and instructions:

Books, Inc. Statement

nded Dec. 31, 2010

Problem 2-15 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Information Accumulated Depreciation Retained Earnings Cash Bonds Payable Accounts Receivable Plant and Equipment - Original Cost Accounts Payable Allowance for bad debt Common Stock, $1 par, 150,000 shs. outstanding Inventory Prefered Stock, $50 par, 1,000 shs. Outstanding Marketable securities Investments Notes Payable Capital paid in excess of par (common stock) $300,000 $96,000 $10,000 $136,000 $48,000 $680,000 $35,000 $6,000 $100,000 $66,000 $50,000 $20,000 $20,000 $33,000 $88,000 Solution:

e chapter for details and instructions:

Solution: Assets Current Asssets: Cash Marketable Securities Accounts Receivable Less: Allowance for bad debt Inventory Total Current Assets Other Assets: Investments Fixed Assets: Plant & Equipment Less: Accumulated Dep. Net Plant & Equipment Total Assets

Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable Notes Payable Total current liabilities Long-term Liabilities: Bonds Payable Total Liailities Stockholders' Equity Preffered Stock, $50 par, 1,000 outstanding Common Stock, $1 par, 150,000 outstanding Capital paid in excess of par (common stock) Retained earnings Total Stockholders' Equity Total Liabilities and stockholders' Equity

Problem 2-25 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Amigo Software, Inc. Total Assets Current Liabilities Long-term Liabilities Preffered Stock Obligation # of common stock outstanding Earnings available to common P/E Ratio Solution: a) Total Assets Current Liabilities Long-term Liabilities Stockholders' Equity Preffered Stock Obligation Net Worth assigned to common # of common outstanding Book Value per share c) b) $800,000 $150,000 $120,000 $65,000 30,000 $48,000 20

e chapter for details and instructions:

Earnings avilable to common # of common outstanding Earnings per share P/E Ratio Price of share Market to book value per share

Problem 3-21 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Jim Short's Company Year 2010 Sales Cash Accounts Receivable Inventory Net P & E Total Assets Solution: a) Accounts Receivable Turnover $4,000,000 $100,000 $800,000 $400,000 $500,000 $1,800,000 b)

Inventory Turnover

Fixed Assets Turnover

Total Assets Turnover

c)

apter for details and instructions:

Short's Company Year 2011 Sales Cash Accounts Receivable Inventory Net P & E Total Assets Accounts Receivable Turnover $5,000,000 $100,000 $900,000 $975,000 $500,000 $2,475,000

Inventory Turnover

Fixed Assets Turnover

Total Assets Turnover

Problem 3-22 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Bryan Corporation Balance Sheet December 201x Assets Current Asssets: Cash Accounts Receivable Inventory Plant & Equipment Total Assets $50,000 $280,000 $240,000 $380,000 Accounts Payable Accrued Taxes Bonds Payable (long-term) Common Stock Paid in Capital Retained earnings $950,000 Total Liabilities and stockholders' Equity Sales $3,040,000 Solution: a) Current Ratio c) Debt to total Assets Sales on Credit $220,000 $80,000 $118,000 $100,000 $150,000 $282,000 $950,000 75% Liabilities and Stockholders' Equity

b) Quick Ratio

d) Asset turnover

e) Average Collection Period

s and instructions:

Problem 3-28 - Refer to problems at the end of the chapter for details and instruction Use template to complete the problem:
Quantum Moving Company Industry Data on Year 2008 2009 2010 Net Income $350,000 $375,000 $375,000 Total Assets Net Inc./Tot. Assets $2,800,000 $3,200,000 $3,750,000 11.5% 8.4% 5.5% a) Year 2008 2009 2010 Solution:

Quantum Moving Company Industry Data on Year 2008 2009 Debt $1,624,000 $1,730,000 $1,900,000 Total Assets Debt/Tot. Assets $2,800,000 $3,200,000 $3,750,000 54.1% 42.0% 33.4% b) Year 2008 2009 2010

ter for details and instructions:

Quantum Ratio

Industry Ratio

Quantum Ratio

Industry Ratio

As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the firm in terms of:

As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the firm in terms of: