9/16/13

Assignment Print View

1.

aw ard:

10.00 points
The Cookie Shoppe expects sales of $2,700 next year. The profit margin is 5 percent and the firm has a 49 percent dividend payout ratio. What is the projected increase in retained earnings? $66.15

$68.85 $33.75 $135.00 $101.25

Change in retained earnings = $2,700 × .05 × (1 – .49) = $68.85 Multiple Choice Difficulty: Basic Learning Objective: 04-1 Section: 4.3

2.

aw ard:

10.00 points
Gladsden Refinishers currently has $2,310 in sales and is operating at 66 percent of the firm's capacity. What is the full capacity level of sales? $2,511.57

$3,500.00 $2,108.43 $2,893.83 $1,524.60

Full-capacity sales = $2,310/.66 = $3,500.00 Multiple Choice Difficulty: Basic Learning Objective: 04-1 Section: 4.3

ezto.mhecloud.mcgraw-hill.com/hm_finance.tpx

1/8

2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net income Dividends $ 7.230)] × . 2012 Balance Sheet 2012 2.980 If Major Manuscripts.9/16/13 Assignment Print View 3.700 Common stock $ 5.900 + 4.900 4.44 percent → 5.mhecloud. what rate of growth can it maintain assuming that no additional external equity financing is available? 5.230 8.570 280 2.31 percent 9.765 220 815 30 785 285 500 100 $ $ $ $ Cash Accounts rec.750 Retained earnings 3. Inc.900 + 4.mcgraw-hill. decides to maintain a constant debt-equity ratio.80} / {{1 – {[$500 / ($2.230 8.94 percent 4.com/hm_finance. Inc.00 points Major Manuscripts.800 6. Inventory Total Net fixed assets Total assets $ $ $ Major Manuscripts.80 Sustainable growth rate = {[$500 / ($2.4 ezto.33 percent 10.66 percent Retention ratio = ($500 – 100)/$500 = ..80}} = 5. Inc.tpx 2/8 . aw ard: 10.230)] × .980 Total liabilities & equity $ 2012 1.170 Accounts payable $ 880 Long-term debt 2.94 percent Multiple Choice Difficulty: Basic Learning Objective: 04-3 Section: 4.

and current liabilities vary directly with sales.400 Common stock $ 9.00 points Major Manuscripts. 2012 Balance Sheet 2012 4.790 230 4. Inventory Total Net fixed assets Total assets $ $ $ Major Manuscripts.650 Major Manuscripts. assets.100 14.9/16/13 Assignment Print View 4.050 Long-term debt 4.500 7..com/hm_finance. 2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net income Dividends $ 9.650 Total liabilities & equity $ 2012 3.1 = $16.100 Accounts payable $ 1.3 ezto. Inc.1 = $4.1] = $6.169 – 230 – 4.844 = $372 Multiple Choice Difficulty: Intermediate Learning Objective: 04-2 Section: 4.500 Projected retained earnings = $6. Inc.mcgraw-hill.115 Projected accounts payable = $3.mhecloud. is currently operating at maximum capacity.355 508 847 198 $ $ $ $ Cash Accounts rec.500 – 6. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent? $142 $602 $32 → $372 $714 Projected total assets = $14.130 + [($847 – 198) × 1.550 Retained earnings 5.169 Current long-term debt = $230 Current common stock = $4.115 – 4. The tax rate and the dividend payout ratio will remain constant.650 × 1. Inc.500 6.715 380 1.405 50 1. aw ard: 10.790 × 1.tpx 3/8 . All costs.844 Additional debt required = $16.130 14.

415 340 1.mhecloud.320 449 871 252 $ $ $ $ Cash Accounts rec.28 percent 8.91 percent Multiple Choice Difficulty: Basic Learning Objective: 04-3 Section: 4.345 25 1.mcgraw-hill. Inventory Total Net fixed assets Total assets $ $ $ Major Manuscripts.100 Major Manuscripts.600 11.09 percent 5. aw ard: 10. does not want to incur any additional external financing. 2012 Balance Sheet 2012 2.500 5. What is the firm's maximum rate of growth? → 5.71]/{1 – [($871/$11. Inc.170 Retained earnings 3.100 Total liabilities & equity $ 2012 2.900 Common stock $ 7.. Inc. The dividend payout ratio is constant.930 11.100) × .tpx 4/8 .100 7.71]} = 5.9/16/13 Assignment Print View 5.95 percent 18.71 Internal growth rate = [($871/$11.70 percent Retention ratio = ($871 – 252)/$871 = .91 percent 6. Inc.com/hm_finance.100) × . 2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net income Dividends $ 9.290 Accounts payable $ 980 Long-term debt 3.4 ezto.750 250 2.00 points Major Manuscripts.

00 points The most recent financial statements for Zoso. the pro forma financial statements will look like this: Pro forma income statement Sales $5.065 An increase of sales to $5.708 Total $10.959 is an increase of: Sales increase = ($5.) rev: 09_17_2012 $5.692 So the EFN is: EFN = Total assets – Total liabilities and equity EFN = $21.708 – 16.600 + 1.88% Assuming costs and assets increase proportionally. Required: What is the external financing needed? (Do not round your intermediate calculations. Multiple Choice Difficulty: Basic ezto.708 Debt Equity $21.315 Learning Objective: 04-02 How to compute the external financing needed to fund a firm’s growth.959 – 4. so: Equity = $4.4188 or 41. Next year's sales are projected to be $5. are shown here (assuming no income taxes): Income Statement Sales $4. No dividends are paid.mhecloud.092 Net income Total Pro forma balance sheet $21.700 4.430 $770 Net income Assets Total Balance Sheet $15.595 → $5. Inc.9/16/13 Assignment Print View 6.200) / $4.867 $1.959.700 5.392 If no dividends are paid.692 $16.440 $5..300 Assets and costs are proportional to sales.200 Sales increase = 0.092 Equity = $5.185 $5.959 Assets Costs 4.200 Costs 3.315 $5.600 $15. the equity account will increase by the net income. Debt and equity are not.300 Debt Equity $15.tpx 5/8 . aw ard: 10.392 = $5.300 Total $10.mcgraw-hill.com/hm_finance.

00 $248. The firm has no long-term debt and does not plan on acquiring any. If all assets.mhecloud.9/16/13 Assignment Print View 7. The firm does not pay any dividends. current assets of $710.497 – 440 – 1. aw ard: 10.35 = $56.65 Multiple Choice Difficulty: Basic Learning Objective: 04-2 Section: 4.00 points Wagner Industrial Motors.85 Projected assets = ($710 + 1.35 Equity funding need = $2. current liabilities of $400.560.870 – 130.com/hm_finance.10 = $440 Current equity = $710 + 1.00 points The Two Sisters has a 11 percent return on assets and a 25 percent retention ratio.83 percent 8. and costs vary directly with sales. Sales are expected to increase by 10 percent next year. which is currently operating at full capacity.11 × . and a 5 percent profit margin.10 = $2.25) / [1 – (. how much additional equity financing is required for next year? → $56. What is the internal growth rate? rev: 09_22_2012 → 2.2 ezto.370 × .4 8.370.65 $175.83 percent 13.67 percent 8. short-term liabilities.25 percent Internal growth rate = (. has sales of $2.11 × .83 percent Multiple Choice Difficulty: Basic Learning Objective: 04-3 Section: 4.560 – 400 = $1. aw ard: 10.tpx 6/8 .497 Projected liabilities = $400 × 1.85 $11.05 × 1.870 Projected increase in retained earnings = $2.02 percent 2.10 = $130.25)] = 2.mcgraw-hill. net fixed assets of $1.560) × 1.15 $237.

222.100 8.100 3.00 Projected retained earnings = $3.700 Hungry Kids is currently operating at full capacity.272. Inventory Total Net fixed assets Total assets $ $ $ Hungry Kids 2012 Balance Sheet 2012 90 Accounts payable $ 510 Long-term debt 1.610 – 2.00 – 1.100 – 4.9/16/13 Assignment Print View 9.com/hm_finance.100 3. Sales are projected to increase by 6 percent.06) = $4. The profit margin and the dividend payout ratio are held constant.000 Common stock $ 1.272.00 points Hungry Kids 2012 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable Income Taxes Net income Dividends Addition to retained earnings $ 5.00 Projected accounts payable = $1.700 Total liabilities & equity $ 2012 1.600 Retained earnings 7.200 1. What is the external financing need? $89 → $57 $56 $87 $88 Projected total assets = $8.790 8.mcgraw-hill.4 ezto.222.200 × 1.mhecloud. aw ard: 10.26 External financing need = $9.700 × 1.06 = $9.183. Net working capital and fixed assets vary directly with sales.790 + ($371 × 1.550 705 845 190 655 210 445 74 371 $ $ $ $ $ Cash Accounts rec.06 = $1.tpx 7/8 .00 – 1.183.26 = $57 Multiple Choice Difficulty: Basic Learning Objective: 04-2 Section: 4.610 2.

4 ezto.42)]} = 10.mcgraw-hill.mhecloud. aw ard: 10.00 points Stop and Go has a 6 percent profit margin and a 42 percent dividend payout ratio.71 percent 8.68 percent → 10.1638 × (1 – .74 percent 12.06 × 1. What is the sustainable rate of growth? 7.75 and the debt-equity ratio is .56.75 × (1 + .56) = .com/hm_finance.1638 Sustainable growth = [.1638 × (1 – .42)]/{1 – [.32 percent Return on equity = .tpx 8/8 .9/16/13 Assignment Print View 10. The total asset turnover is 1.50 percent 6.50 percent Multiple Choice Difficulty: Basic Learning Objective: 04-3 Section: 4.

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