Professional Documents
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ECO 280
FALL 2010
QUIZ #1
NAME: _______________________________________
Student ID: ____________________________________
Question 1 (6 points)
The following tables show financial statements for NUESTRA Corporation. The closing stock price for
NUESTRA Corporation was $ 140 on December 31 / 2009. The number of outstanding shares on December
31 / 2009 was 800 million and the number of shares one year before was 700 million.
All numbers in thousands
Assets
Current Assets
Cash and Cash Equivalents 9,352,000 6,392,000
Short-Term Investments 6,034,000 3,718,000
Net Receivables 4,811,000 3,452,000
Inventory 346,000 270,000
Other Current Assets 1,413,000 677,000
Total Current Assets 21,956,000 14,509,000
Long-Term Investments ----- -----
Property Plan and Equipment 1,832,000 1,281,000
Goodwill 38,000 38,000
Intangible Assets 382,000 160,000
Accumulated Amortization ----- -----
Other Assets 1,051,000 1,217,000
Deferred Long-Term Asset Charges 88,000 -----
Total Assets 25,347,000 17,205,000
Liabilities
Current Liabilities
Accounts Payable 6,230,000 6,471,000
Short/Current Long-Term Debt ----- -----
Other Current Liabilities 3,069,000 -----
Total Current Liabilities 9,299,000 6,471,000
Long-Term Debt ----- -----
Other Liabilities 67,000 14,000
Deferred Long-Term Liability Charges 1,449,000 736,000
Minority Interest ----- -----
Negative Goodwill ----- -----
Total Liabilities 10,815,000 7,221,000
Stockholders' Equity
1
BALANCE SHEET (continued) All numbers in thousands
INCOME STATEMENT
Total Revenue 24,006,000 19,315,000
Cost of Revenue 15,852,000 13,717,000
Gross Profit 8,154,000 5,598,000
Operating expenses ----- -----
Research Development 782,000 712,000
Selling General and Administrative 2,963,000 2,433,000
Operating Income or Loss 4,409,000 2,453,000
Income from Continuing Operations ----- -----
Total Other Income / Expenses Net 599,000 365,000
Earning Before Interest And Taxes 5,008,000 2,818,000
Interest Expenses ----- -----
Income Before Tax 5,008,000 2,818,000
Income Tax Expenses 1,512,000 829,000
Minority Interest ----- -----
Net Income From Continuing Ops 3,496,000 1,989,000
Net Income 3,496,000 1,989,000
a) In which order are assets and liabilities listed in the Balance Sheet?
2
b) Compute the following ratios and explain briefly what they mean:
i) Debt ratio
It tells us the proportion of the firm’s assets that it has financed with debt.
The firm was able to sell and restock its inventory 77,94 times per year.
DSO = receivables / avg. sales per day = 4.811.000 / (24.006.000 / 365) = 73,149 days
3
Question 2 (4 points)
You have just graduated from METU NCC and plan to begin a retirement fund. It is your desire to withdraw
money every year for 30 years starting 25 years from now. The retirement fund earns 7% interest per year
compounded annually. What uniform annual amount will you be able to withdraw when you retire in 25
years, if you deposit $1000 per year for the first 24 years? Make sure you show all your calculations.
(1 + i ) N − 1 (1,07) 24 − 1
F = A( F / A, i, N ) = A = 1000
i 0,07
2) Using this F as P, we can calculate A using capital recovery equal payment series formula.
i (1 + i ) N 0,07(1,07) 30
A = P ( A / P , i , N ) = A N = 58 . 176, 67 30
(1 + i ) − 1 (1,07) − 1
A=$4.688,25
A A A A
1 2 3 24
................
0 ................ 25 26 54