1. Use the following information to calculate the ratios below:

Total Assets 600,000 Total Liabilities 200,000

Current Assets 160,000 Current Liabilities 80,000

Net Income 85,000 Shares Outstanding 15,000

Accounts Receivable 55,000 Sales 400,000

Inventory 25,000

Quick Ratio ______________________ Equity Multiplier ____________________

Earnings Per Share _________________ Days Sales in Receivables _________________

Return on Equity ______________________

2.Use the following tax table to complete the lines below:

0 – 50,000 15% Sales 620,000

Costs 510,000

50,001 – 75,000 25%

Taxable Income ___________________

75,001 – 100,000 34%

Total Tax ___________________

100,001 – 335,000 39%

Average Tax Rate __________________

Marginal Tax Rate __________________

3. Use the following information and the DuPont Identity to solve for profit margin:

Net Income $85,000

Total Asset Turnover 2.15

Debt/Equity Ratio .75

Total Equity $500,000

4. Calculate the Sustainable Growth Rate using the following information:

Total Assets $400,000 Total Debt 100,000

Net Income 18,000 Dividends 8,000

5. Use the following information and the cash flow formulas from chapter two to calculate Net Capital Spending:

Change in Net Working Capital 37,000 Interest Paid 29,000

Operating Cash Flow 180,000 Net New Borrowing 12,000

Dividends Paid 40,000 Net New Equity Issued 14,000

6. Restate the following balance sheet to do a COMMON BASE YEAR analysis:

2016 2017

Base Year

Assets

Cash 175,000 180,000 _________

Inventory 90,000 75,000 _________

Land 335,000 410,000 _________

Total Assets 600,000 665,000 _________

Liabilities

Accts Payable 16,000 24,000 _________

Long Term Loan 230,000 240,000 _________

Total Liabilities 246,000 264,000 _________

Owner’s Equity

Common Stock 235,000 200,000 _________

Retained Earnings 119,000 201,000 _________

Total O. E. 354,000 401,000 _________

Total Liabilities & O.E. 600,000 665,000 _________

7. Decide whether each of the following is a use or a source of cash; then determine the net amount that will impact total cash:

Use or Source

Decrease in Accounts Receivable 150,000 ____________

Increase in Notes Payable 275,000 ____________

Decrease in Accounts Payable 65,000 ____________

Total Cash will be ______________________ by _$_____________

(increased or decreased)

8. The CEO of Frozen Treats to Go, Inc. would like to grow the company to $805,000 in sales for next year. The finance officer has compiled the data below for the current year. Assets and costs will grow proportionate to sales; debt and equity will not. The dividend payout ratio will be the same as current year. What is external financing needed?

Current Year Data

Sales $700,000

Costs 520,000

Tax rate 35%

Assets 1,400,000

Debt 500,000

Equity 900,000

Dividends 49,400

9. Use the following information to create an income statement and balance sheet.

Accounts Payable 40,000 Accounts Receivable 100,000

Cash 75,000 Common Stock 50,000

Costs 375,000 Depreciation Expense 23,000

Goodwill 175,000 Interest Expense 15,000

Inventory 150,000 Line of Credit (used) 110,000

Paid in Surplus 183,450 Preferred Stock 60,000

Retained Earnings ? Sales 500,000

Tax Rate 35%