Atl Inc. has reported its audited financial statements for the year-end 2018 in Table 1. Table 1: Auditied Balance Sheet for 2018 YE Balance Sheet Items Cash & marketable securities Accounts receivable Inventories Gross property, plant & equipment Accumulated depreciation Accounts payable Short term debt Current portion of the long term debt Long term debt Common stock Paid in capital Audited Dec 31, 2018 97 195 280 1,700 340 95 140 41 697 350 410 For 2019, the unaudited balance sheet and income statement are presented in Tables 2 and 13, respectively. Table 2: Unaudited Balance Sheet for 2019 YE Before Audit Dec 31, 2019 105 255 310 1.810 370 Balance Sheet Items Cash & marketable securities Accounts receivable Inventories Gross property, plant & equipment Accumulated depreciation Accounts payable Short term debt Current portion of the long term debt Long term debt Common stock Paid in capital 110 168 55 617 350 410 Table 3: Unaudited Income Statement for 2019 YE Income Statement Items Sales Cost of goods sold Operating expenditures Interest expense Taxes Before Audit Dec 31, 2019 4.700 3,050 580 51 170 Upon analyzing the unaudited 2019 financials, Lemi Bey, the auditor of the Atl Inc., have found following incorrect journal entries: Cash collection of $37 of accounts receivables have not been journalized, Sales of $25 on accounts receivable of items with a cost of $18 has been journalized twicele, Cash payment of $11 of short term debt has not been journalized. Atl Inc. has adjusted the respective events, and published its audited financial statements where assets are equal to liabilities and the stockholder's equity. 3 Assume taxes have not been affected by this adjustment. 3 Currently, Atl Inc.'s shares are trading at $18.45, and it has 356 shares outstanding. Atl Inc.'s current and expected dividend payout ratio is 91%. Return on risk free asset and market are 5.70% and 19.50%, respectively. B of Atl Inc. is estimated to be 1.12. Refer to page 294 of Week 12 material for required rate of return calculations. Calculate below according to December 31, 2019 audited financial statements. Q-5) Cash conversion cycle. Q-6) Debt-to-capital ratio (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-7) Constant growth rate (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-8) Value of Atl Inc. according to constant growth model. Q-9) Price-to-earnings multiple (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-10) Price-to-book value multiple (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Atl Inc. has reported its audited financial statements for the year-end 2018 in Table 1. Table 1: Auditied Balance Sheet for 2018 YE Balance Sheet Items Cash & marketable securities Accounts receivable Inventories Gross property, plant & equipment Accumulated depreciation Accounts payable Short term debt Current portion of the long term debt Long term debt Common stock Paid in capital Audited Dec 31, 2018 97 195 280 1,700 340 95 140 41 697 350 410 For 2019, the unaudited balance sheet and income statement are presented in Tables 2 and 13, respectively. Table 2: Unaudited Balance Sheet for 2019 YE Before Audit Dec 31, 2019 105 255 310 1.810 370 Balance Sheet Items Cash & marketable securities Accounts receivable Inventories Gross property, plant & equipment Accumulated depreciation Accounts payable Short term debt Current portion of the long term debt Long term debt Common stock Paid in capital 110 168 55 617 350 410 Table 3: Unaudited Income Statement for 2019 YE Income Statement Items Sales Cost of goods sold Operating expenditures Interest expense Taxes Before Audit Dec 31, 2019 4.700 3,050 580 51 170 Upon analyzing the unaudited 2019 financials, Lemi Bey, the auditor of the Atl Inc., have found following incorrect journal entries: Cash collection of $37 of accounts receivables have not been journalized, Sales of $25 on accounts receivable of items with a cost of $18 has been journalized twicele, Cash payment of $11 of short term debt has not been journalized. Atl Inc. has adjusted the respective events, and published its audited financial statements where assets are equal to liabilities and the stockholder's equity. 3 Assume taxes have not been affected by this adjustment. 3 Currently, Atl Inc.'s shares are trading at $18.45, and it has 356 shares outstanding. Atl Inc.'s current and expected dividend payout ratio is 91%. Return on risk free asset and market are 5.70% and 19.50%, respectively. B of Atl Inc. is estimated to be 1.12. Refer to page 294 of Week 12 material for required rate of return calculations. Calculate below according to December 31, 2019 audited financial statements. Q-5) Cash conversion cycle. Q-6) Debt-to-capital ratio (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-7) Constant growth rate (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-8) Value of Atl Inc. according to constant growth model. Q-9) Price-to-earnings multiple (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05). Q-10) Price-to-book value multiple (Not percent. For example, if you find 0.05, do not enter 5 or 5%. Enter 0.05)
