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PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash Accounts receivable Inventory Investments $242,000 98,000 105,000 5,000 $ 130,000 102,000 90,000 3,000 Long-term assets: Land Equipment Less: Accumulated depreciation 580,000 890,000 (528,000) $1,392,000 580,000 770,000 (368,000) $1,307,000 Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payab le Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings $ 109,000 7,000 9,000 95,000 13,000 6,000 2$ 110,000 220,000 800,000 357,000 $1,392,000 $1,307,000 800,000 173,000 Total liabilities and stockholders' equity Additional information for 2021: 1. Net income is $184,000. 2. Sales on account are $1,890,000. 3. Cost of goods sold is $1,394,250.

a. Perform a Du Pont analysis on Green Valley. Assume that the industry average ratios are as follows: Total margin 3.5% Total asset turnover 1.5 Equity multiplier 2.5 Return on equity (ROE) 13.1% b. Calculate and interpret the following ratios: Industry Average Return on assets (ROA) Current ratio 5.2% 2.0 Days cash on hand 22 days Average collection period 19 days Debt ratio 71% Debt-to-equity ratio 2.5 Times interest earned (TIE) ratio 2.6 Fixed asset turnover ratio 1.4 c. Assume that there are 10,000 shares of Green Valley's stock outstanding and that some recently sold for $45 per share. • What is the firm's price/earnings ratio? What is its market/book ratio? (Hint: These ratios are discussed in the supplement to this chapter.)

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The current ratio is O a solvency measure that indicates the margin of safety for bondholders O calculated by dividing current liabilities by current assets calculated by subtracting current liabilities from current assets O used to evaluate a company's liquidity and short-term debt-paying ability Question 19 On the statement of cash flows, a $9,000 gain on the sale of fixed assets would be O added to net income in converting the net income reported on the income statement to cash flows from operating activities O deducted from net income in converting the net income reported on the income statement to cash flows from operating activities O deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends O added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

RATIO ANALYSIS. Debt Ratio Activity 6 · Understand the information provided by the debt ratio. · Identify the expected range and whether an increasing or decreasing trend is preferred. Purpose: The debt ratio compares total liabilities to total assets. This ratio measures the proportion of assets financed by debt. It is a measure of long-term solvency. Total liabilities DEBT RATI0 = Total assets JOHNSON & CITIGROUP 12/31/99 HEWLETT- PACKARD 10/3 1/99 JOHNSON 1/03/99 WAL-MART 1/31/99 ($ in 000s) Assets $716,937,000 $35,297,000 $26,211,000 $49,996,000 Liabilities 667,251,000 17,002,000 12,621.000 28,884,000 Stockholders' Equity $ 49,686,000 $18,295,000 $13,590,000 $21,112,000 Source: Disclosure, Inc, Compact D/SEC, 2000. 1. For each-company listed above, compute the debt ratio. Record your results below. Debt ratio: 0.93 2. The debt ratios computed above are primarily in the ranġe (less than 0,40 / 0.40 through 0.70 / over 0.70): 3. % of Wal-Mart's assets are financed by debt. 4.…

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Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.20% Common Equity:   Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64             Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital:

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Using the Du Pont Identity Method, calculate return on equity given the following information. Profit margin 16%; total asset turnover 0.85; equity multiplier 1.5. OA. OB. O C. O D. OE 20.40% 21.40% 22.40% 23.40% 24.40%

Assignment 1: Financial Statement Analysis and Interpretation of the Results • Select two different corporations (from the same industry) publicly traded in the US Stock Exchange Markets. (NYSE, NASDAQ) o Make sure the companies you select are traded in same currency (USD, Euro, GBP) o Please get the approval for the names of the firm before you start your work. • The analysis of same company by different students will not be graded • Download the necessary financial statements for the companies for 2021 and 2020 o For data collection you can use: finance.yahoo.com or finance.google.com Part 1: Apply the financial analysis for the last two years using ratios covered in Chapter 3. Use excel formulas for calculation of the ratios on a separate sheet (manual calculations will not be graded!) You are not responsible for Part 5 (V. Market Value) ratios Some companies may not have all the data due to their variations in industries. If you face missing data just skip that ratio (mention as…

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Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a b с Yield 8.5% 14.5% 12.0% Corporate tax rate 23% 37% 43% Cost of debt % % %

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la bonitob at bloky enig (7.8) The interest rate investors expect on a new bond issue can be determined by computing the for the company's Alternatively, it is possible on newly to determine the cost of new debt financing by finding the issued bond with similar (7.9) The firm's overall measure of the cost of capital is the cost of debt is the The dollar cost of equity is overall firm average cost of capital is the cost of equity plus the cost of debt, divided by The dollar (7.10) Interest (is / is not) a tax-deductible expense, and dividends paid to stockholders (are / are not). The payment of interest reduces the firm's taxes by after-tax cost of debt in dollars equals The after-tax cost of debt in percentage terms is WACC = dito The The

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48 The Sunland Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,434.63 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $10 per share. The preferred shares pay an annual dividend of $1.20. Sunland also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Sunland is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen…

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Use the DuPont system and the following data to find return on equity. (Do not roun intermediate calculations. Round your answer to 1 decimal place.) Leverage ratio Total asset turnover Net profit margin Dividend payout ratio Return on equity 2.9 2.7 6.2 % 33.2 % %

Below, inputs have been arrived for the XYZ company.  Using CAPM calculate its cost of equity. (Observe 2 decimal places)

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You have the following information about two firms, Debt Free, Incorporated and Debt Spree, Incorporated. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing. Scenario Bad year Normal year Good year Total assets Tax rate Debt Equity Borrowing rate Sales Interest expense for Debt Free Interest expense for Debt Spree $200 $275 $380 Debt Free $ 250 21% EBIT $12 $ 34 $ 51 $0 $ 250 16% Required: a. Calculate the interest expense for each firm: Debt Spree $ 250 21% $150 $ 100 16%

As a short-term creditor concerned with a company's ability to meet its financial obligation to you, which one of the following combinations of ratios would you most likely prefer?   Current                Debt     ratio      TIE       ratio   Question 7 options:   1.0        1.0        0.50   2.5        0.5        0.71   1.5        1.5        0.50   2.0        1.0        0.67   0.5        0.5        0.33

Use the financial ratios of company A and company B to answer the questions below.                                                                 Company A                     Company B                                                             Yr t+1   Year t                 Yr t+1   Year t Current ratio                                        0.55       0.59                   0.56       0.55 Accounts receivable turnover              6.22       6.25                   5.06       4.87 Debt to total assets                               40.5%    40%                   67.8%     65.9% Times interest earned                           8.80       30.6                   5.97       6.33 Free cash flows (in millions)           ($3,819)   $3,173                 $168      $550 Return on stockholders’equity             7.7%      7.7%                  26.6%      23.3% Return on assets                                   4.3%      4.3%                  8.9%       7.9% Profit margin…

What is the Debt assets ratio   What is the Current ratio  What is the Return on common stockholders' equity   enter percentages rounded to 2 demical places %