Grandmark International College

Post Graduate Studies

Masters of Business Administration

Financial and Management Accounting Course

Group Assignment One

Deadline May 14, 2023 Max. Weight: 30%

Submitted in Hard Copy

1a.the following data apply to Jacobus and Associates (millions of dollars):

Cash and marketable securities $ 100.00
Fixed assets =$ 283.50 Net income= $ 50.00
Sales =$1,000.00 Quick ratio =2.0
Current ratio= 3.0 DSO =40.55 days ROE =12%

Jacobus has no preferred stock—only common equity, current liabilities, and long-term debt.
Find Jacobus’s

A. Accounts receivable,= 111.1 2=100+111.1/cl =211.1/2=105.55

B. Current liabilities, = 105.5 =3=105.55/ca = 105.5/3 = 35.2
C. Current assets,35.2 +283.5=318.7
D. total assets = 318.7

ld have found Jacobus’s accounts receivable = $111.1 million. If Jacobus could reduce its DSO
from 40.55 days to 30.4 days while holding other things constant, how much cash would it
generate? If this cash were used to buy back common stock (at book value), thus reducing the
amount of common equity, how would this affect

ni=r-d= 50=1000-d= 950

30.4=111.1/R*365=

i. The ROE= 12%=50/sh= sh=50/12%=416.67

ii. The ROA = 50/318.7
iii. The ratio of total debt to total assets?= 111.1/318.7
2. Assume that RAS AMBA Hotel has annual fixed costs applicable to its operation of Birr
182,500 for its 60-rooms motel; daily room rent income of Birr 150; and variable costs of
Birr 50 for each room rented. It operates 365 days a year.
Required:
A. Operating income on rooms will be generated, if the motel is fully occupied throughout
an entire year? ni =3,285,000-(182,500+1,095,000)=949,000
B. How much operating income on rooms will be generated if the motel is half full during a
year? =1,642,500-547,500+182,500=1,076,800
C. What is the breakeven point in number of rooms rented assuming that the motel is fully
occupied throughout the year? =182,500/150-50=1,825