The most recent financial statements

Questions 1.

The most recent financial statements for Live Co. are shown here:

Income Statement

Balance Sheet

Sales

$13,250

Current assets

$10,400

Debt

$51,000

Costs

9,480

Fixed assets

28,750

Equity

21,650

Taxable income

$3,770

Total

$39,150

Total

$39,150

Taxes (34%)

1,508

Net income

$2,262

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

Required:

What is the internal growth rate?
4.11%
7.89%
1.76%
4.21%
4.31%

Questions 2.

McCormac Co. wishes to maintain a growth rate of 12 percent a year, a debt-equity ratio of 1.20, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .75.

Required:

What profit margin must the firm achieve?
21.65%
9.28%
12.18%
5.47%
5.22%

Seaweed Mfg., Inc., is currently operating at only 95 percent of fixed asset capacity. Fixed assets are $440,000. Current sales are $550,000 and projected to grow to $630,000.

Required:

How much in new fixed assets are required to support this growth in sales?
$38,700
$38,800
$64,000
$38,900
$39,000

Questions 3.

Assume that the following ratios are constant.

Total asset turnover

2.50

Profit margin

7.8%

Equity multiplier

1.80

Payout ratio

60%

Required:

What is the sustainable growth rate?
16.33%
16.83%
-8.56%
-5.87%
26.68%

Questions 4.

The most recent financial statement for Throwing Copper Co. are shown here:

Income Statement

Balance Sheet

Sales

$42,000

Current assets

$21,000

Long-term debt

$51,000

Costs

28,500

Fixed assets

86,000

Equity

56,000

Taxable income

$13,500

Total

$107,000

Total

$107,000

Taxes (34%)

4,590

Net income

$8,910

Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debt-equity ratio.

Required:

What is the maximum increase in sales that can be sustained assuming no new equity is issued?
$5,364.03
$5,164.03
$2,105.24
$5264.03
$2,599.70

Questions 5.

Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes):

Income Statement

Balance Sheet

Sales

$23,000

Assets

$15,800

Debt

$5,200

Costs

16,700

Equity

10,600

Net income

$6,300

Total

$15,800

Total

$15,800

Phillips has predicated a sales increase of 15 percent. It has predicated that every item on the balance sheet will increase by 15 percent as well.

Required:

Calculate the dividend paid.
$5,555
$5,755
$5,655
$4,875
$5,855

Questions 6.

If the Gamett Corp. has a 15 percent ROE and a 25 percent payout ratio, what is its sustainable growth rate?
3.90%
12.68%
12.78%
12.88%
12.58%

Questions 7.

A firm wishes to maintain a growth rate of 11.5 percent and dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .60, and the profit margin is 6.2 percent. If the firm also wishes to maintain a constant debt-equity ratio, what must it be?
0.42
2.46
2.33
0.43
0.44

Questions 8.

The most recent financial statement for Zoso, Inc., are shown here (assuming no income taxes):

Income Statement

Balance Sheet

Sales

$6,300

Assets

$18,300

Debt

$12,400

Costs

3,890

Equity

5,900

Net Income

$2,410

Total

$18,300

Total

$18,300

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next yearÂ’s sales are projected to be $7,434.

Required:

What is the external financing needed?
$450
$430
$2,232
$475
$470

Our Essay Format
  • Times New Roman, 12 pt
  • 1 Inch Margins
  • Double/ Single Spacing
  • 275/ 550 Words Per Page
  • MLA/ APA/ Turabian/ Chicago style, etc

A standard double-spaced page contains 275 words

Free Features
  • Hiring a preferred expert
  • Bibliography & cover page
  • Revisions within 14-30 days
  • 24/7 customer support
payments

Team of Professional Essay Writers

With our essay service, you'll find an essay writer for any task. Their rating is based on previous customer reviews and successful orders. Before you hire a writer, you can familiarize yourself with their track record in detail.