ABC company has the following financial statements for the years 2009 and 2010. The company operates in the 35% tax bracket, and its after tax cost of capital is 11%. ABC Company Income Statem ent For the Year Ended Dec. 31, 2010 2010 Sales 2,800,000 Cost of Goods Sold 2,100,000 Gross Profit 700,000 Selling and G&A Expenses 350,300 Fixed Expenses 100.000 Depreciation Expense 20.000 EBIT 229,700 Interest Expense 76,000 Earnings Before Taxes 153,700 Taxes 53,795 Net Income 99,905 2009 2,500,000 1,900,000 600,000 260,000 100.000 18,900 221,100 62,500 158,600 55,510 103,090 ABC company Balance Sheet As of Dec. 31, 2010 Assets Cash and Equivalents Account Receivable Inventory Total Current Assets Plant & Equipment Accumulated Depreciation Net Fixed Assets Total Assets Liabilities and Owner's Equity Accounts Payable Short-Term Notes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Total Liabilities Common Stock Retained Earnings Total Shareholder's Equity Total Liabilities and Owner's Equity 2010 140,000 440,000 835,000 1,415,000 600,000 220,000 380,000 1,795,000 2009 120,000 420,000 750,000 1,290,000 510,000 200,000 310,000 1,600,000 230,000 260,000 100,000 590,000 450,000 1,040,000 500,000 255,000 755,000 1,795,000 160,000 220,000 150,000 530,000 400,000 930,000 450,000 220,000 670,000 1,600,000 1- How long it took the company to collect its receivables in 2010 (round to the nearest day)? * a-57 days Ob- 55 days O C-61 days Od- 54 days O e None of the above 2- The net profit margin NPM for ABC in 2009 was: O a-4.12% Ob-4.12% O c-Both a and b can be used O d-6.2% e-None of the above 3- The Preferred stocks in 2010 were equal to: * a- $ 500,000 b- $ 755,000 C-Zero d- $ 50,000 O- None of the above 4- The Liquidity ratios in 2010 were: a-2.43x, 2.40x b-2.40x, 0.98x O C-2.43x, 1.02x O d- 0.98x, 1.02% O e- None of the above 5- NOPAT in 2010 equals to a- $ 310,095 b- $ 149,305 C-8.20% O d-3.57% O e- None of the above 6- Ratio analysis helps in * a-Making investment decisions Ob-Forecasting and planning c- Measurement of operating efficiency d-Control of cost and performance e- All of the above 7- Calculate the economic profit of ABC in 2010: * a- $ 99,905 b- $ (11,845) C-$ (99,905) d- $ 11,845 e-None of the above 8- What was the dollar cost of capital in 2009?* a- $141,900 b- $142,000 0 - $143,715 O d-$470,300 O e- None of the above 9- Calculate the total debt ratio and the long-term debt ratio in 2010.* a- 57.94%, 25.07% Ob-57.94%, 25.07x C-55.9x, 26.23x Od- 54.6x, 28.2x O e-None of the above
