Use your own words to explain the following items on the assets side of a company’s balance sheet
1) Marketable Securities (also called “short-term investment”)
2) Account receivables
3) Current assets
4) Property, plant, and equipment (PP&E)
Type your answers below:
2. Based on Chapter 1: Use your own words to explain the following items on the liabilities side of a company’s balance sheet:
1) Account payables
2) Accrued items
3) Current liabilities
Type your answers below:
3. Based on Chapter 1: Use your own words to explain the differences of equity, debt, and total assets
Type your answers below:
4. Based on Chapter 1: Use your own words to explain the following items on a company’s income statement:
1) Cost of goods sold (also called “COGS”)
2) Selling, general, and administrative expenses (also called “SG&A”)
3) EBIT
Type your answers below:
5. A company has the following items for the fiscal year 2023:
· Cash = 2 million
· Marketable securities = 6 million
· Account receivables (A/R) = 1 million
· Inventories = 6 million
· Total current liabilities = 8 million
Calculate the company’s Current Ratio and Quick Ratio
Type your answers below – please show your calculation process:
6. A company has the following items for the fiscal year 2023:
· Revenue =10 million
· Cost of goods sold = 3 million
· EBIT = 4.5 million
· Net income = 3 million (also called net profit)
Calculate the company’s Net Profit Margin
Type your answers below – please show your calculation process:
7. A company has the following items for the fiscal year 2023:
· Revenue =10 million
· EBIT = 4.5 million
· Net income = 3 million
· Total Equity = 30 million
· Total Assets = 40 million
Calculate the company’s ROA and ROE
Type your answers below – please show your calculation process:
8. A company has the following items for the fiscal year 2023:
· Total Equity = 20 million
· Total Debt = 5 million
· Total Assets = 30 million
· EBIT = 4 million
· Interest expense = 1 million
Calculate the company’s ratios of Debt to Assets , Assets to Shareholders’ Equity and Interest Coverage Ratio
Type your answers below – please show your calculation process:
9. Write the formula for the following ratios and what each ratio measures:
1) Inventory Turnover and Days Inventory
2) Receivable Collection Period
Type your answers below:
10. A company has the following items for the fiscal year 2023:
· Sales = 10 million
· Cost of goods sold = 6 million
· Inventory = 2 million
· Account Receivables = 1 million
· Account Payable = 2.5 million
Calculate the company’s ratios of Inventory Turnover , Days Inventory and Receivable Collection Period
Type your answers below – please show your calculation process:
11. Write down the DuPont framework. How would you explain to your non-MBA non-Finance friends about the DuPont framework and why it is important?
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12. A company has the following items for the fiscal year 2023:
· Revenue = 10 million
· EBIT = 4 million
· Net income = 2 million
· Total Equity = 15 million
· Total Assets = 30 million
Calculate the company’s Net Profit Margin , Asset Turnover and ROE
Type your answers below – please show your calculation process:
Read Chapter 2 of the textbook and use your own words to answer the following questions.
When you read Chapter 2: You only need to read enough on pages 53-69 to finish my questions below. I will spend a lot of class time talking about cash!
13. Based on Chapter 2:
1) Use your own words to explain Operating Cash Flows (OCF)
2) Use your own words to explain Free Cash Flows (FCF)
Type your answers below:
14. Read the section on the Cash Conversion Cycle (or “Cash Cycle”) and use your own words to answer the questions:
1) Explain cash conversion cycle and why it is important to companies?
2) Is it possible that a company has a negative cash cycle? Is it a good thing or a bad thing?
Type your answers below:
15. A company has days of inventory 80 days, days receivable of 30 days, and days payable of 60 days. Calculate the company’s funding gap and interpret the number.
Type your answers below – please show your calculation process:
16. A company has days of inventory 30 days, days receivable of 30 days, and days payable of 90 days. Calculate the company’s cash cycle and interpret the number.
Type your answers below – please show your calculation process:
Read Chapter 4 of the textbook and use your own words to answer the following questions.
When you read Chapter 4: You only need to read enough to finish my questions below.
17. If the risk-free rate is 2%, the market risk premium (also called the equity risk premium) is 5%, and a company has a beta of 1.5. What is the company’s cost of equity?
Type your answers below – Please first show the formula for CAPM and show your calculation process:
18. Assume a company has 10 million of total assets: 60% of the total asset is from debt and 40% is from equity. The company has a 12% cost of equity and a 7% cost of debt. The company has a tax rate of 30%. What is the company’s weighted average cost of capital (WACC)?
Type your answers below – Please first show the formula for WACC and show your calculation process:
Read Chapter 5 of the textbook and use your own words to answer the following questions.
When you read Chapter 5: You only need to read enough to finish my questions below.
19. Use your own words to answer the following questions:
1) Write the formula for the P/E ratio and what it measures?
2) Should you invest in a company with high P/E or low P/E? Why?
Type your answers below:
20. A company has the following items for the fiscal year 2023:
· Revenue = 20 million
· Net income = 5 million
· The company has 2 million shares of stock
· Stock price per share = $50
Calculate the company’s Earnings Per Share and P/E ratio
Type your answers below – please show your calculation process:
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