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# Corporate Finance

Midterm Test
Date and Time: 9:05-11:35am, April 22, 2011 Conditions: Closed book This test counts for 30% of the final grade Name: 1. Student ID No.

1）What is the net working capital for 2009? Net working capital = \$313 + \$1,162 + \$1,521 - \$1,051 = \$1,945 2） What is the change in net working capital from 2008 to 2009?

Change in net working capital = \$1,945 - (\$250 + \$1,092 + \$1,495 - \$717) =19452120= -\$175 3） What is the net capital spending for 2009? Net capital spending =( \$4,123 - \$4,006) + \$122 = \$239

(-\$175) = \$1.Cash flow to creditors =\$1.\$4.\$2.Net capital spending=-\$1.644 5） What is the cash flow from assets for 2009? Cash flow from assets = Operating cash flow.\$239 .\$670 = \$1.580 6） What is net new borrowing for 2009? Net new borrowing = \$1.300 7）What is the cash flow to creditors for 2009? Cash flow to creditors = 280 .423 .109 . .400 = -\$1.100 .Change in net working capital.(-\$1.580 \$1.\$122) + \$122 .300) = \$1.4） What is the operating cash flow for 2009? Operating cash flow = (\$6.580 = \$0 2.580 8） What is the cash flow to stockholders for 2009? Cash flow to stockholders = Cash flow from assets.644 .

1) What is the quick ratio for 2009? Quick ratio=(3650-2360)/1920=67.4=19.19% 2).4 Days' sales in receivables for 2009 = 365/ 18. How many days of sales are in receivables? (Use 2009 values) Accounts receivable turnover for 2009 = \$17.300/\$940 = 18.84 .

300/0.56 Total asset turnover at full-capacity = \$21.500) × (\$1.830)]} = 10.179.111. Sales are projected to increase by 11 percent.52 percent 8) Identify the four primary determinants of a firm's growth and explain how each factor could either add to or limit the growth potential of a firm.380 × (1 + .03) = \$1.[(\$1.20 Projected retained earnings = \$1.500 × 1.78 = \$22.830)]/{1 .131.131.580 + (\$1.380/\$1.80 External financing need = \$16. The profit margin and the dividend payout ratio are held constant.300/0.095 . What is the maximum rate at which the firm can grow without acquiring any additional external financing? Internal growth = [(\$1. What is the fullcapacity level of sales? Full-capacity sales = \$17.500 .11 = \$2.920 × 1. What is the external financing needed? Projected total assets = \$14.11) = \$3.380/\$1. What is the total asset turnover ratio at full capacity? Full-capacity sales = \$17.097.500 = 1.095 Projected accounts payable = \$1.380 × 1.11 = \$16. Net working capital and fixed assets vary directly with sales.3) Hungry Howie's is currently operating at 78 percent of capacity. The firm is currently operating at full capacity.421. .49 4) Hungry Howie's is currently operating at 82 percent of capacity.40 6) Hungry Howie's is currently operating at full capacity. The profit margin and the dividend payout ratio are projected to remain constant.46 5) Hungry Howie's is currently operating at 96 percent of capacity.500 .097.500) × (\$1.\$7.56/\$14.80 = -\$148 7) Hungry Howie's maintains a constant payout ratio.\$3. What is the projected addition to retained earnings for next year? Projected addition to retained earnings = \$1.\$2.20 .830/\$14.\$3. Sales are projected to increase by 3 percent next year.111.830/\$14.82 = \$21.

Oil Well Supply offers 7. 0.0.55) = 0.30 × (1 + 0.09 × 1. and a profit margin of 9.05.18135 Sustainable growth = [0. Frasier Cabinets wants to maintain a growth rate of 5 percent without incurring any additional equity financing.18135 × b)] = .0 percent.18135 × b]/[1 .68 percent.55. b = 0.2626 = 73. What must the dividend payout ratio be? Return on equity = 0.000? .2626 Payout ratio = 1 .5 percent coupon bonds with semiannual payments and a yield to maturity of 7.74 % 4. The firm maintains a constant debt-equity ratio of . The bonds mature in 6 years. a total asset turnover ratio of 1. What is the market price per bond if the face value is \$1.30.The four factors are: 3.(0.

Dividends are expected to grow at a 22 percent rate for the next 3 years.80 annual dividend. Jen's Fashions is growing quickly.）））））））） 5. The required return is 12 percent and the company just paid a \$3. What is the current share price? . with the growth rate falling off to a constant 8 percent thereafter.