Week $1$

Workshop Questions

Question $1$

Rylan Enterprises has $4$ million shares outstanding. The market price per share is $$120$ and the price per share is $$50$ while the firm's book value of equity is $$40$ million.

a$.$ What is Rylan's market capitalization?

b$.$ What is Rylan's Market$-$to$-$Book ratio?

Questions $2$

If Global has $3\mathrm{.}6$ million shares outstanding, these shares are trading for a price of $$14$ per share and a book value of equity of $$22\mathrm{.}2$ million. What is Global's market capitalisation? How does the market capitalisation compare to Global's book equity value in $2018?$

Question $3$

In $2019,$ Rylan Enterprises' net income increased by $$2\mathrm{.}5$ million while its depreciation expense decreased by $$500,000,$ accounts receivable increased by $$2,000,000$ and accounts payable increased by $$1,000,000.$ Rylan's total corporate tax rate is $40\%.$ How did the decline in Rylan's depreciation expense impact its end$-$of$-$year cash balance?

Question $4$

Suppose Global had an additional $$1$ million depreciation expense in $2018.$ If Global's tax rate on pretax income is $26\%,$ what would this expense impact Global's earnings? How would it impact Global's cash balance at the end of the year?