Chapter 3

Problems 1-30

Input boxes in tan

Output boxes in yellow
Given data in blue
Calculations in red
Answers in green

NOTE: Some functions used in these spreadsheets may require that

the "Analysis ToolPak" or "Solver Add-In" be installed in Excel.
To install these, click on the Office button
then "Excel Options," "Add-Ins" and select
"Go." Check "Analyis ToolPak" and
"Solver Add-In," then click "OK."
equire that
Chapter 3
Question 1

Input area:

Net working capital $ 2,710

Current liabilities $ 3,950
Inventory $ 3,420

Output area:

Current assets $ 6,660

Current ratio 1.69

Quick ratio 0.82

Chapter 3
Question 2

Input area:

Sales $ 18,000,000
Total assets $ 15,600,000
Total debt $ 6,300,000
Profit margin 8%

Output area:

Net income $ 1,440,000

Return on assets 9.23%

Total equity $ 9,300,000

Return on equity 15.48%

Chapter 3
Question 3

Input area:

Accounts receivable $ 327,815

Credit sales $ 4,238,720

Output area:

Receivables turnover 12.93

Days' sales in receivables 28.23

The average collection period for an outstanding

accounts receivable was 28.23 days.
Vòng quay càng nhiều thu tiền càng nhanh

số ngày càng ít càng tốt Có thể chỗ này có câu lt

Chapter 3
Question 4

Input area:

Ending inventory $ 483,167

Cost of goods sold 4,285,131

Output area:

Inventory turnover 8.87

Days' sales in inventory 41.16

On average, a unit of inventory sat on the shelf

41.16 days.
Chapter 3
Question 5 necessary midterm exam

Input area:

Total debt ratio 0.46

Output area:

Debt/equity ratio 0.85

Equity multiplier 1.85 hệ số nhân vốn csh

Chapter 3
Question 6

Input area:

Addition to retained earnings $ 375,000

Cash dividends $ 175,000
Total equity $ 4,800,000

Common shares outstanding 145,000

Share price $ 79

Sales $ 4,700,000

Output area:

Net income $ 550,000

Earnings per share $ 3.79

Dividends per share $ 1.21

Book value per share $ 33.10

Market-to-book ratio 2.39

P/E ratio 20.83

Sales per share $ 32.41

P/S ratio 2.44

Chapter 3
Question 7 bản chất là dupont

Input area:

Equity multiplier 1.45

Total asset turnover 1.80
Profit margin 5.50%

Output area:

Return on equity 14.36%

Chapter 3
Question 8

Input area:

Profit margin 4.60%

Total asset turnover 2.30
Return on equity 19.14%

Output area:

Equity multiplier 1.81

Debt/equity ratio 0.81

Chapter 3
Question 9 source of cash and use of cash

Input area:

Decrease in inventory $ 430

Decrease in accounts payable 165
Increase in notes payable 150
Increase in accounts receivable 180

Output area:

Decrease in inventory is a source of cash

Decrease in accounts payable is a use of cash
Increase in notes payable is a source of cash
Increase in accounts receivable is a use of cash

Change in cash $ 235

$ 430
(165)
150
(180)
Chapter 3
Question 10

Input area:

Cost of goods sold $ 43,821

Accounts payable balance 7,843

Output area:

Payables turnover 5.59

Days' sales in payables 65.33

The company left its bills to suppliers outstanding fo 65.33 days on average.
A large value for this ratio could imply that either (1) the company is having liquidity
problems, making it difficult to pay off its short-term obligations, or (2) that the
company has successfully negotiated lenient credit terms from its suppliers.
on average.
is having liquidity
(2) that the
Chapter 3
Question 11

Input area:

Market capitalization $ 580,000

Cash $ 35,000
Debt $ 190,000
EBIT $ 91,000
Depreciation and amortization $ 135,000

Output area:

Enterprise value $ 735,000

EBITDA $ 226,000

EV/EBITDA multiple 3.25

Chapter 3
Question 12

Input area:

Debt/equity ratio 0.80

Return on assets 7.9%
Total equity $ 480,000

Output area:

Equity multiplier 1.80

Return on equity 14.22%

Net income $ 68,256.00

Chapter 3
Questions 13 -15

Input area:

2011 2012 2011 2012

Current Assets Current liabilities
Cash $ 9,279 $ 11,173 Accounts payable $ 41,060 $ 43,805
Accounts receivable 23,683 25,760 Notes payable 16,157 16,843
Inventory 42,636 46,915 Total $ 57,217 $ 60,648
Total $ 75,598 $ 83,848
Long-term debt $ 40,000 $ 35,000

Owners' equity
Common stock and
paid-in surplus $ 50,000 $ 50,000
Retained earnings 200,428 236,167
Net plant and equipment $ 272,047 $ 297,967 Total $ 250,428 $ 286,167

Total liabilities and

Total assets $ 347,645 $ 381,815 owners' equity $ 347,645 $ 381,815

Output area:

2011 #13 2012 #13 #14

Assets
Current assets
Cash $ 9,279 2.67% $ 11,173 2.93% 1.2041
Accounts receivable 23,683 6.81% 25,760 6.75% 1.0877
Inventory 42,636 12.26% 46,915 12.29% 1.1004
Total $ 75,598 21.75% $ 83,848 21.96% 1.1091
Fixed assets
Net plant and equipment $ 272,047 78.25% $ 297,967 78.04% 1.0953
Total assets $ 347,645 100% $ 381,815 100% 1.0983

Liabilites and Owners' Equity

Current liabilities
Accounts payable $ 41,060 11.81% $ 43,805 11.47% 1.0669
Notes payable 16,157 4.65% 16,843 4.41% 1.0425
Total $ 57,217 16.46% $ 60,648 15.88% 1.0600
Long-term debt $ 40,000 11.51% $ 35,000 9.17% 0.8750
Owners' equity
Common stock and paid-in surplus $ 50,000 14.38% $ 50,000 13.10% 1.0000
Accumulated retained earnings 200,428 57.65% 236,167 61.85% 1.1783
Total $ 250,428 72.04% $ 286,167 74.95% 1.1427
Total liabilities and owners' equity $ 347,645 100% $ 381,815 100% 1.0983
#15

1.0964
0.9904
1.0019
1.0099

0.9973
1.0000

0.9714
0.9492
0.9651
0.7967

0.9105
1.0729
1.0404
1.0000
Chapter 3
Questions 16,17

Input area:

2011 2012
Cash $ 9,279 $ 11,173
Accounts receivable 23,683 25,760
Inventory 42,636 46,915
Net plant and equipment 272,047 297,967
Accounts payable 41,060 43,805
Notes payable 16,157 16,843
Long-term debt 40,000 35,000
Common stock and paid in surplus 50,000 50,000
Retained earnings 200,428 236,167

Output area:
 2011 Sources/Uses 2012
Assets
Current assets
Cash $ 9,279 $ 1,894 U $ 11,173
Accounts receivable 23,683 2,077 U 25,760
Inventory 42,636 4,279 U 46,915
Total $ 75,598 $ 8,250 U $ 83,848
Fixed assets
Net plant and equipment $ 272,047 $ 25,920 U $ 297,967
Total assets $ 347,645 $ 34,170 U $ 381,815

Liabilites and Owners' Equity

Current liabilities
Accounts payable $ 41,060 $ 2,745 S $ 43,805
Notes payable 16,157 686 S 16,843
Total $ 57,217 $ 3,431 S $ 60,648
Long-term debt $ 40,000 $ (5,000) U $ 35,000
Owners' equity
Common stock and paid-in surplus $ 50,000 0 $ 50,000
Accumulated retained earnings 200,428 35,739 S 236,167
Total $ 250,428 $ 35,739 S $ 286,167
Total liabilities and owners' equity $ 347,645 $ 34,170 S $ 381,815

The firm u $ 34,170 in cash to acquire new assets. It raised this amount of cash
by increasing liabilities and owners' equity by the same amount. In particular, the
needed frunds were raised entirely by internal financing (on a net basis), out of the
additions to retained earnings, and increase in the current liabilities, and by an issue
of long-term debt.

2011 2012
a. Current ratio 1.32 1.38
b. Quick ratio 0.58 0.61
c. Cash ratio 0.16 0.18
d. NWC to total assets ratio 5.29% 6.08%
e. Debt-equity 0.39 0.33
Equity mulitplier 1.39 1.33
f. Total debt ratio 0.28 0.25
Long-term debt ratio 0.14 0.11
Chapter 3
Question 18

Input area:

Sales $ 6,189
Total assets $ 2,805
Debt-equity ratio 1.40
Return on equity 13%

Output area:

Profit margin 0.0245

Net income $ 151.94

Chapter 3
Question 19

Input area:

Net income $ 179,000

Profit margin 8.30%
Accounts receivable $ 118,370
Percent credit sales 70%

Output area:

Total sales $ 2,156,627

Credit sales $ 1,509,639
Receivables turnover 12.75

Days' sales in receivables 28.62

Chapter 3
Question 20

Input area:

Long-term debt ratio 0.35

Current ratio 1.30
Current liabilities $ 910
Sales $ 6,430
Profit margin 9.5%
Return on equity 18.5%

Output area:

Current assets $ 1,183.00

Net income $ 610.85
Total equity $ 3,301.89
Long-term debt $ 1,777.94
Total debt $ 2,687.94
Total assets $ 5,989.83

Net fixed assets $ 4,806.83

Chapter 3
Question 21

Input area:

Child's payment $ 2.00

Amount purchased $ 50

Sales $ 680
Net income $ 13.6
Total assets $ 410
Total debt $ 280

Output area:

Child: Profit = Child's payment = 4.00%

Amount purchased

Store: Profit margin = Net income = 2.00%

Sales

The advertisement is referring to the store's profit margin, but a more

appropriate earnings measure for the firm's owners is the return on
equity:

Return on equity = Net income / (Total assets - Total debt) = 10.46%

Chapter 3
Question 22

Input area:

Firm A
D/TA 45.00%
ROA 9.00%
Firm B
D/TA 35.00%
ROA 12.00%

Output area:

Firm A ROE 16.36%

Firm B ROE 18.46%

Chapter 3
Question 23

Input area:

Net income $ 15,185

Tax rate 34%
Total interest expense $ 3,806
Depreciation expense $ 2,485

Output area:

Earnings before taxes $ 23,007.58

EBIT $ 26,813.58

EBITD $ 29,298.58

Cash coverage ratio 7.70

Chapter 3
Question 24

Input area:

Current liabilities $ 435,000

Quick ratio 0.95
Inventory turnover 6.20
Current ratio 1.60

Output area:

Current assets $ 696,000

Inventory $ 282,750

Cost of goods sold $ 1,753,050

Chapter 3
Question 25

Input area:

Net income -£ 45,831

Sales £ 198,352

Sales $ 314,883

Output area:

Profit margin -23.11%

As long as both net income and sales are measured

in the same currency, there is not problem; in fact,
except for some market value ratios like EPS and
BVPS, none of the financial ratios discussed in the
text are measured in terms of currency. This is one
reason why financial ratio analysis is widely used in
international finance to compare business operations
of firms and/or divisions across national economic
borders.

Net income $ (72,757)

 Chapter 3
Questions 26-28

Input area:

Tax rate 35%

SMOLIRA GOLF CORP.
2011 and 2012 Balance Sheets
Assets Liabilities and owners' equity
2011 2012 2011 2012
Current assets Current liabilities
Cash $ 24,046 $ 24,255 Accounts payable $ 23,184 $ 27,420
Accounts receivable 12,448 15,235 Notes payable 12,000 10,800
Inventory 25,392 27,155 Other 11,571 15,553
Total $ 61,886 $ 66,645 Total $ 46,755 $ 53,773
Long-term debt 80,000 95,000
Owners' equity
Common stock and paid-in surplus $ 40,000 $ 40,000
Fixed assets Accumulated retained earnings 219,826 243,606
Net plant and equipment 324,695 365,734 Total $ 259,826 $ 283,606
Total assets $ 386,581 $ 432,379 Total liabilities and owners' equity $ 386,581 $ 432,379

SMOLIRA GOLF CORP.

2012 Income statement

Sales $ 366,996
Cost of goods sold 253,122
Depreciation 32,220
EBIT $ 81,654
Interest paid 14,300
Taxable income $ 67,354
Taxes (35%) 23,574
Net income $ 43,780

Dividends $ 20,000
Retained earnings 23,780

Output area:

26) Short-term solvency ratios:

2011 Current ratio 1.32

2012 Current ratio 1.24

2011 Quick ratio 0.78

2012 Quick ratio 0.73

2011 Cash ratio 0.51

2012 Cash ratio 0.45

Asset utilization ratios:

Total asset turnover 0.85

Inventory turnover 9.32
Receivables turnover 24.09

Long-term solvency ratios:

2011 Total debt ratio 0.33

2012 Total debt ratio 0.34

2011 Debt-equity ratio 0.49

2012 Debt-equity ratio 0.52

2011 Equity mulitplier 1.49

2012 Equity multiplier 1.52

Times interest earned ratio 5.71

Cash coverage ratio 7.96

Profitability ratios:

Profit margin 11.93%

Return on assets 10.13%
Return on equity 15.44%

27) Return on equity 15.44%

28) SMOLIRA GOLF, INC.

Statement of Cash Flows
For Period Ending December 31, 2012

Cash, beginning of the year $ 24,046

Operating activities
Net income $ 43,780
Plus:
Depreciation 32,220
Increase in accounts payable 4,236
Increase in other current liabilities 3,982
Less:
Increase in accounts receivable (2,787)
Increase in inventory (1,763)

Net cash from operating activities $ 79,668

Investment activities
Fixed asset acquisition $ (73,259)
Net cash from investment activities $ (73,259)

Financing activities
Decrease in notes payable $ (1,200)
Dividends paid (20,000)
Increase in long-term debt 15,000
Net cash from financing activities $ (6,200)

Net increase in cash $ 209

Cash, end of year $ 24,255

Chapter 3
Question 29

Input area:

Net income $ 43,780

Common stock outstanding 25,000
Stock price $ 43
Dividends paid 20,000
Total equity 283,606
Growth rate 9%

Output area:

Earnings per share $ 1.75

P/E ratio 24.55

Dividends per share $ 0.80

Book value per share $ 11.34

Market-to-book ratio 3.79

PEG ratio 2.73

Chapter 3
Question 30

Input area:

Common stock outstanding 25,000

Stock price $ 43
Current liabilities $ 53,773
Long-term debt $ 95,000
Book value of assets $ 432,379

Output area:

Market value of equity $ 1,075,000

Book value of debt $ 148,773

Tobin's Q 2.83