A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital. (2 Marks)
- Your parents have given you $1,500 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 7% interest. You know that the trip costs $1600 right now and that inflation for the year is predicted to be 3%. Will you have enough money in a year to purchase the trip? Show your calculations. (2 Marks)
- If the following financial information related to XYZ Company. Total Revenues last year $970, depreciation expenses $50, costs of goods sold $450, and interest expenses $55. At the end of the year, current assets were $121 and current liabilities were $107. The company has an average tax rate of 35%. Calculate the net income for XYZ Company by setting up an income statement. (2 Marks)
- Calculate the common-size balance sheet from the following information for the company: (2 Marks)
| Cash | 50,000 | Accts/Pay | 25,800 |
| Acct/Rec | 60,000 | Accrued expenses | 30,000 |
| Inventories | 200,500 | Short-term N/P | 9,700 |
| Total Current assets | 310,500 | Current liabilities | 65,500 |
| Net fixed assets | 132,000 | Long-term debt | 150,000 |
| Total assets | 442,500 | Total liabilities | 215,500 |
| Owner’s equity | 227,000 | ||
| Total liabilities and owners’ equity | 442,500 |
- Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual interest rate of 5%. What is the value of the investment today? What is the interest on interest earned on this investment? (2 Marks)
- You have just won a lottery that promises an annual payment of $120000 beginning immediately. You will receive a total of 15 payments. If you can invest the cash flow in an investment that is paying 8% annually, what is the present value of this annuity? (2 Marks)
- XXX company has forecast a rate of return of 20% if the economy booms (30% probability); a rate of return of 19% if the economy in in a growth phase (40% probability); a rate of return of 2.50% if the economy in in decline (20% probability); and a rate of return of -10% if the economy in a depression (10% probability). What is the company standard deviation of returns? (3 Marks)
