FIN-751-AP1

1. In your text, go through Chapter 3 ST1 through ST5 (pages 104-105). Use the Excel file that I provide and the formula sheet in the book to make the calculations. Be sure to use cell references.

- See Assigned Readings Related to Excel Basics for Problem Set for tutorials on entering formulas in Excel.

-Note: You can skip ST3. part D if you want with no penalty.

Balance Sheet ($000)						Ratios	Calculation
Assets			Liabilities and Equity
							Liquidity
Cash	$ 1,500		Accounts payable	$ 12,500			Current
Marketable securities	$ 2,500		Notes payable	$ 12,500			Quick
Accounts receivable	$ 15,000		Total current liabilities	$ 25,000
Inventory	$ 33,000		Long-term debt	$ 22,000			Asset Management
Total current assets	$ 52,000		Total liabilities	$ 47,000			Average collection period
Fixed assets (net)	$ 35,000		Common stock (par value)	$ 5,000			Inventory turnover
Total assets	$ 87,000		Contributed capital in excess of par	$ 18,000			Fixed-asset turnover
			Retained earnings	$ 17,000			Total asset turnover
			Total stockholders' equity	$ 40,000
			Total liabilities and stockholders' equity	$ 87,000			Financial Leverage
							Debt
Income Statement ($000)		Other Info				Debt-to-equity
							Times interest earned
Sales (all on credit)	$ 130,000		Stock Price	$9.50			Fixed charge coverage
Cost of sales	$ 103,000		Book value/share	$8.00
Gross margin	$ 27,000		Number of shares	5,000	in thousands	Profitability
Operating expenses*	$ 16,000						Gross profit margin
EBIT	$ 11,000						Net profit margin
Interest	$ 3,000						Return on investment
EBT	$ 8,000						Return on stockholders' equity
Income Tax	$ 3,000
EAT	$ 5,000						Market-based
							Price-to earnings
* includes 200 in lease payments						Market price-to-book

2 . Write one sentence (in the Excel File) next to each ratio you calculated in Question 1 describing what that number means in words. (50 pts)

• For example, if you calculate the average collection period as 40, you should write something like on average, it takes 40 days for Freemont Corporation to collect its accounts receivable. Submit your modified Excel file.