please use 21% for taxes

please use 21% interest rate for taxes

Paragraph Styles Golden cup case study You were provided with the following balance sheet for Golden Cup firm for the year ended Dec 31, 2018 Assets Current Assets Cash Accounts Receivables Inventory Total Current Assets Consolidated Balance sheet Golden Cup As of Dec 31", 2018 Liabilities + Owners Equity Current Liabilities 40,000 Accounts Payable 12,000 4,000 Notes Payable 6,000 14,000 Accrue Wages 1000 58,000 Total Current Liabilities 19,000 Long term debt 40,000 56,000 Fixed Assets Property, Plant, and Equipment Goodwill Total Fixed Assets 24,000 80,000 Owners' equity Common Shares Retained Earnings Total Owners equity Liabilities + O.E 40,000 39,000 79,000 138.000 Total Assets 138.000 o BI 99+ DELL F4 F5 >Il F7 F8 F9 F6 PP F10 F11 F12 O . Star Aa AEE21 A.EE AaBbced AaBbceDd AaBb C AaBbcc AaB AaBbc 1 Normal T No Spac... Heading 1 Heading 2 Title Subtit! Paragraph Question 1 a- Please set up income statement for Golden Cup: Consolidated Income Statement Golden Cup As of Dec 31, 2018 Show your workings here Final answer here Revenues Cost of goods sold Gross margin Marketing expenses General and administrative expenses Depreciation EBIT Interest expenses EBT ) Tax expenses Net income Dividends Additions to Retained Earnings OBI 99+ DOLL - = S 1 Normal 1 No Spac... Heading 1 Heading 2 Title Paragraph Styles b- Please use the US corporate tax rates to calculate Golden Cup tax liability, Solution: - What is the marginal tax rate of Golden Cup? Solution: d- What is the average tax rate of Golden Cup? Solution: Question 2 O BI 99+ DOLL Paragraph Styles Golden cup case study You were provided with the following balance sheet for Golden Cup firm for the year ended Dec 31, 2018 Assets Current Assets Cash Accounts Receivables Inventory Total Current Assets Consolidated Balance sheet Golden Cup. As of Dec 31, 2018 Liabilities + Owners Equity Current Liabilities 40,000 Accounts Payable 12.000 4,000 Notes Payable 6,000 14,000 Accrue Wages 1000 58,000 Total Current Liabilities 19.000 Long term debt 40,000 56,000 Fixed Assets Property, Plant, and Equipment Goodwill Total Fixed Assets 24,000 80,000 Owners' equity Common Shares Retained Earnings Total Owners equity Liabilities + O.E 40,000 39,000 79,000 138,000 Total Assets 138.000 = In addition to that, you know the following facts about firm's operations throughout the year: Golden Cup revenues for the year includes the following: Domestic revenues S160,000 International revenues $80,000. Out of Golden Cup's sales, cost of sales and direct laboris 50% of annual revenues. 199 DELL AaA IEEE ! d 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle S. Paragraph Styles In addition to that, you know the following facts about firm's operations throughout the year: Golden Cup revenues for the year includes the following: Domestic revenues $160,000. International revenues $80,000. Out of Golden Cup's sales, cost of sales and direct labor is 50% of annual revenues. Because of the strong competition that it faces, Golden Cup has a generous marketing plan. Golden Cup signed a contract with the marketing planet Inc, by which the marketing agency will be responsible for Golden Cup marketing for five years period started this year. The contract costs Golden Cup $100,000 that were paid up front, however the company thinks this plan will affect its sales evenly over the five years period. Golden Cup also spends $30,000 in the form of general and administrative expenses per year. Golden Cup depreciable assets historical value is $40,000 and is depreciated on a straight line basis over 10 years. . Golden Cup pays interest rate of 10% on its Long-term debt outstanding. Out of the year's net income, Golden Cup is planning to repay $30,000 to its shareholders in O HI 99 DOLL a A 5 AL 1 A et 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subt Paragraph Styles Question 5 5- Assuming that the entire debt taken will be invested in assets (half on inventory and half on land). The BOD believes this step will increase sales by $20,000 next year which they think certainly justifies the decision to increase inventory. Mr. David argues that this sales increase is not enough to balance the drop in firm's total asset utilization. a- what is the current total asset utilization? Solution: b- What is the new total assets utilization? Solution: - Do you agree with Mr. David? Or with the BOD? Solution: 99+ DELL eferences Mailings Review View Help Design Layout Search Aa A 5E 21 ASED AaBbccdd AaBbced AaBb AaBbcc AaB 1 Normal 1 No Spac... Heading 1 Heading 2 Title Paragraph Styles Question 6 6- If you are given the following information about the year ended 2017 (previous year). Total assets = $120,000, Total Equity = $70,000, Sales - 150,000, Net income - $35,000 a- Calculate Golden Cup's profitability for year ended 2017 Solution: b- Calculate Golden Cup's profitability for year ended 2018. Solution: 99+ DLL Styles Paragraph c-Based on your knowledge of determinants of corporate profitability (DuPont identity), did any significant change happen to Golden Cup's profitability? Did it increase or decrease? What is the underlying reason behind the change, if any? Question 7 7- Ms. Janet McInish is currently considering selling her stock ownership. She strongly believes that the share is overpriced and is going to experience a price drop soon. In order to better understand the current situation of Golden Cup stock, she was advised to use the price earnings ratio. Giving that the total market value of Ms. Janet Golden Cup's shares is $120,000 a- If Ms. Janet believes that any stock that has a P/E ratio that is more than 20% of the industry average to be overpriced, do you recommend Ms. Janet to sell her shares knowing that industry average P/E ratio is 10? Show your calculations as well as your recommendation. o 8 99 DOLL Paragraph Styles Golden cup case study You were provided with the following balance sheet for Golden Cup firm for the year ended Dec 31, 2018 Assets Current Assets Cash Accounts Receivables Inventory Total Current Assets Consolidated Balance sheet Golden Cup As of Dec 31", 2018 Liabilities + Owners Equity Current Liabilities 40,000 Accounts Payable 12,000 4,000 Notes Payable 6,000 14,000 Accrue Wages 1000 58,000 Total Current Liabilities 19,000 Long term debt 40,000 56,000 Fixed Assets Property, Plant, and Equipment Goodwill Total Fixed Assets 24,000 80,000 Owners' equity Common Shares Retained Earnings Total Owners equity Liabilities + O.E 40,000 39,000 79,000 138.000 Total Assets 138.000 o BI 99+ DELL F4 F5 >Il F7 F8 F9 F6 PP F10 F11 F12 O . Star Aa AEE21 A.EE AaBbced AaBbceDd AaBb C AaBbcc AaB AaBbc 1 Normal T No Spac... Heading 1 Heading 2 Title Subtit! Paragraph Question 1 a- Please set up income statement for Golden Cup: Consolidated Income Statement Golden Cup As of Dec 31, 2018 Show your workings here Final answer here Revenues Cost of goods sold Gross margin Marketing expenses General and administrative expenses Depreciation EBIT Interest expenses EBT ) Tax expenses Net income Dividends Additions to Retained Earnings OBI 99+ DOLL - = S 1 Normal 1 No Spac... Heading 1 Heading 2 Title Paragraph Styles b- Please use the US corporate tax rates to calculate Golden Cup tax liability, Solution: - What is the marginal tax rate of Golden Cup? Solution: d- What is the average tax rate of Golden Cup? Solution: Question 2 O BI 99+ DOLL Paragraph Styles Golden cup case study You were provided with the following balance sheet for Golden Cup firm for the year ended Dec 31, 2018 Assets Current Assets Cash Accounts Receivables Inventory Total Current Assets Consolidated Balance sheet Golden Cup. As of Dec 31, 2018 Liabilities + Owners Equity Current Liabilities 40,000 Accounts Payable 12.000 4,000 Notes Payable 6,000 14,000 Accrue Wages 1000 58,000 Total Current Liabilities 19.000 Long term debt 40,000 56,000 Fixed Assets Property, Plant, and Equipment Goodwill Total Fixed Assets 24,000 80,000 Owners' equity Common Shares Retained Earnings Total Owners equity Liabilities + O.E 40,000 39,000 79,000 138,000 Total Assets 138.000 = In addition to that, you know the following facts about firm's operations throughout the year: Golden Cup revenues for the year includes the following: Domestic revenues S160,000 International revenues $80,000. Out of Golden Cup's sales, cost of sales and direct laboris 50% of annual revenues. 199 DELL AaA IEEE ! d 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle S. Paragraph Styles In addition to that, you know the following facts about firm's operations throughout the year: Golden Cup revenues for the year includes the following: Domestic revenues $160,000. International revenues $80,000. Out of Golden Cup's sales, cost of sales and direct labor is 50% of annual revenues. Because of the strong competition that it faces, Golden Cup has a generous marketing plan. Golden Cup signed a contract with the marketing planet Inc, by which the marketing agency will be responsible for Golden Cup marketing for five years period started this year. The contract costs Golden Cup $100,000 that were paid up front, however the company thinks this plan will affect its sales evenly over the five years period. Golden Cup also spends $30,000 in the form of general and administrative expenses per year. Golden Cup depreciable assets historical value is $40,000 and is depreciated on a straight line basis over 10 years. . Golden Cup pays interest rate of 10% on its Long-term debt outstanding. Out of the year's net income, Golden Cup is planning to repay $30,000 to its shareholders in O HI 99 DOLL a A 5 AL 1 A et 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subt Paragraph Styles Question 5 5- Assuming that the entire debt taken will be invested in assets (half on inventory and half on land). The BOD believes this step will increase sales by $20,000 next year which they think certainly justifies the decision to increase inventory. Mr. David argues that this sales increase is not enough to balance the drop in firm's total asset utilization. a- what is the current total asset utilization? Solution: b- What is the new total assets utilization? Solution: - Do you agree with Mr. David? Or with the BOD? Solution: 99+ DELL eferences Mailings Review View Help Design Layout Search Aa A 5E 21 ASED AaBbccdd AaBbced AaBb AaBbcc AaB 1 Normal 1 No Spac... Heading 1 Heading 2 Title Paragraph Styles Question 6 6- If you are given the following information about the year ended 2017 (previous year). Total assets = $120,000, Total Equity = $70,000, Sales - 150,000, Net income - $35,000 a- Calculate Golden Cup's profitability for year ended 2017 Solution: b- Calculate Golden Cup's profitability for year ended 2018. Solution: 99+ DLL Styles Paragraph c-Based on your knowledge of determinants of corporate profitability (DuPont identity), did any significant change happen to Golden Cup's profitability? Did it increase or decrease? What is the underlying reason behind the change, if any? Question 7 7- Ms. Janet McInish is currently considering selling her stock ownership. She strongly believes that the share is overpriced and is going to experience a price drop soon. In order to better understand the current situation of Golden Cup stock, she was advised to use the price earnings ratio. Giving that the total market value of Ms. Janet Golden Cup's shares is $120,000 a- If Ms. Janet believes that any stock that has a P/E ratio that is more than 20% of the industry average to be overpriced, do you recommend Ms. Janet to sell her shares knowing that industry average P/E ratio is 10? Show your calculations as well as your recommendation. o 8 99 DOLL