Questions and Answers of Fundamentals Of Corporate Finance

The 2020 balance sheet of Osaka’s Tennis Shop, Inc., showed $780,000 in the common stock account and $4.78 million in the additional paid-in surplus account. The 2021 balance sheet showed $965,000
Given the information for Osaka’s Tennis Shop, Inc., in Problems 9 and 10, suppose you also know that the firm’s net capital spending for 2021 was $1.5 million and that the firm reduced its net
Nightwish Corp. shows the following information on its 2021 income statement: Sales = $336,000; Costs = $194,700; Other expenses = $9,800; Depreciation expense = $20,600; Interest expense = $14,200;
During 2021, Raines Umbrella Corp. had sales of $865,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $535,000, $125,000, and $170,000, respectively. In
Given the following information for Troiano Pizza Co., calculate the depreciation expense: Sales = $76,800; Costs = $36,900; Addition to retained earnings = $6,800; Dividends paid = $2,370; Interest
Polska, Inc., is obligated to pay its creditors $10,300 during the year.a. What is the market value of the shareholders’ equity if assets have a market value of $11,600?b. What if assets equal
Consider the following abbreviated financial statements for Parrothead Enterprises:a. What is owners’ equity for 2020 and 2021?b. What is the change in net working capital for 2021?c. In 2021,
In Problem 17, suppose Raines Umbrella Corp. paid out $128,000 in cash dividends. Is this possible? If net capital spending and net working capital were both zero, and if no new stock was issued
Martinez Industries had the following operating results for 2021: Sales = $38,072; Cost of goods sold = $27,168; Depreciation expense = $6,759; Interest expense = $3,050; Dividends paid = $2,170. At
On the balance sheet, the net fixed assets (NFA) account is equal to the gross fixed assets (FA) account (which records the acquisition cost of fixed assets) minus the accumulated depreciation (AD)
Graffiti Advertising, Inc., reported the following financial statements for the last two years. Construct the cash flow identity for the company. Explain what each number means.
Draw up an income statement and balance sheet for this company for 2020 and 2021.
For 2021, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders.
Chris Guthrie was recently hired by S&S Air, Inc., to assist the company with its financial planning and to evaluate the company’s performance. Chris graduated from college five years ago with
SDJ, Inc., has net working capital of $2,630, current liabilities of $5,970, and inventory of $3,860. What is the current ratio? What is the quick ratio?
Denver, Inc., has sales of $14.2 million, total assets of $11.3 million, and total debt of $4.9 million. If the profit margin is 5 percent, what is net income? What is ROA? What is ROE?
The eXtensible Business Reporting Language (XBRL) is the future of financial reporting. XBRL is a computer language that “tags” each item and specifies what that item is. XBRL reporting has also
The Top Corporation has ending inventory of $426,287, and cost of goods sold for the year just ended was $4,738,216. What is the inventory turnover? The days’ sales in inventory? How long on
What types of information do common size financial statements reveal about the firm? What is the best use for these common-size statements? What purpose do common-base year statements have? When
Mobius, Inc., has a total debt ratio of .57. What is its debt-equity ratio? What is its equity multiplier?
Explain what peer group analysis is. As a financial manager, how could you use the results of peer group analysis to evaluate the performance of your firm? How is a peer group different from an
Bolton Corp. had additions to retained earnings for the year just ended of $435,000. The firm paid out $245,000 in cash dividends, and it has ending total equity of $5.7 million. If the company
If Rogers, Inc., has an equity multiplier of 1.43, total asset turnover of 1.87, and a profit margin of 6.05 percent, what is its ROE?
Specialized ratios are sometimes used in specific industries. For example, the book-to-bill ratio is closely watched for semiconductor manufacturers. A ratio of .93 indicates that for every $100
Jackson Corp. has a profit margin of 5.8 percent, total asset turnover of 1.75, and ROE of 13.85 percent. What is this firm’s debt-equity ratio?
Dexter, Inc., had a cost of goods sold of $75,318. At the end of the year, the accounts payable balance was $18,452. How long on average did it take the company to pay off its suppliers during the
The market value of the equity of Nina, Inc., is $755,000. The balance sheet shows $63,000 in cash and $220,000 in debt, while the income statement has EBIT of $95,000 and a total of $178,000 in
Kodi Company has a debt-equity ratio of .63. Return on assets is 8.4 percent, and total equity is $645,000. What is the equity multiplier? Return on equity? Net income?
Prepare the 2020 and 2021 common-size balance sheets for Just Dew It.Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work the above
Prepare the 2021 common base year balance sheet for Just Dew It.Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work the above
Prepare the 2021 combined common-size, common-base year balance sheet for Just Dew It.Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information
For each account on this company’s balance sheet, show the change in the account during 2021 and note whether this change was a source or use of cash. Do your numbers add up and make sense? Explain
Y3K, Inc., has sales of $5,987, total assets of $2,532, and a debt-equity ratio of .57. If its return on equity is 11 percent, what is its net income?
A company has net income of $213,700, a profit margin of 7.1 percent, and an accounts receivable balance of $126,385. Assuming 65 percent of sales are on credit, what is the company’s days’ sales
The Mikado Company has a long-term debt ratio of .35 and a current ratio of 1.45. Current liabilities are $1,140, sales are $8,370, profit margin is 8.3 percent, and ROE is 16.5 percent. What is the
In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $1.25 to go buy $50 worth of groceries, then your child makes twice as

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