The managerial balance sheet for Ajax Corporation is shown below. All numbers are in millions:

Invested Capital					Capital Employed
$	10	Cash		$50 Short and long term debt
$	20	Working capital		??? Owners equity
$120		Assets
$ ???				$ ???

(8) What is the Owners equity for Ajax Corporation (above) ?

(9) What is the Invested capital for Ajax Corporation (above) ?

(10) How much does the capital employed change the moment after Ajax (above) takes on an additional $20 million in debt by selling bonds.

Increases by $20k

$0

Decreases by $20k

None of the above

(11) When Ajax uses $5 million of its cash to buy back some of its outstanding bonds, what changes on the left hand side of the managerial balance sheet?

Cash increases by $5 million

Cash decreases by $5 million

Working capital increases by $5 million

Assets increase by $5 million

None of the above

(12) You start up a new business and your investors are expecting a return of 10%. You invest $248,685. What must your after tax cash

flow be in years 1, 2 and 3 of the business (assume they are the same) for you to breakeven on the investment ?

(13) If your expectations for the return on the business increase from 10% to 15%, do you expect the after tax cash flow required to breakeven to increase or decrease?

(14) You are running a business and looking at your working capital. You notice that the accounts receivable increases by $10 million from the end of Sep 2017 to the end of Dec 2017. Inventory decreased by $20 million and accounts payable increased by $30 million over this same period. How much has the working capital changed by over this period?

(15) The managerial balance sheet at the end of 2009 and 2010 is shown below for Ajax Incorporated.

End of 2009

Invested Capital		Capital Employed
Cash	$385	Short term Debt	$570
WCR	$4884	Long term financing	$6129
Net Fixed Assets	$1430	Long term debt	$1300
Total Invested Capital	$6699	Shareholder equity	$4829
		Total Capital Employed	$6699
End of 2010
Invested Capital		Capital Employed
Cash	$330	Short term Debt	$2100
WCR	$6710	Long term financing	$6535
Net Fixed Assets	$1595	Long term debt	$1200
Total Invested Capital	$8635	Shareholder equity	$5335
		Total Capital Employed	$8635

(a) How much more short term debt did the company take on from the end of 2009 to the end of 2010 ?

(b) How much more cash on hand does the company have at the end of 2010 than it did at the end of 2009 ?

(c) What is the change in Invested Capital from 2009 to 2010 ?

(d) How much of the change in Invested Capital from 2009 to 2010 was financed by increasing the short term debt ?

(e) If the company borrowed more money in 2010 by taking on more short term debt, why didnt the cash increase from 2009 to 2010 ?

(1) The cash was consumed by other things such as an increase in working capital

(2) The cash was consumed by other things such as a decrease in working capital

(f) Could the company could have also taken on additional long term debt or issued stock in order to raise the cash needed for financing the increase in working capital.

(1) Yes, it could have done so

(2) No, these actions would not provide cash

(16) Over the course of a year, a company has $220 million in cash flow from operations, it raises $45 million by issuing bonds and buys a chemical plant for $250 million from a competitor. What is the change in cash flow from these activities that were completed over the year?