Numerade

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Rachel Gore

Numerade educator

Gemini Beverage has the following historical balance sheet: Cash $ 20 Accounts payable $ 200 Accounts receivable 240 Notes payable 130 Inventory 320 Accruals 30 Total current assets $ 580 Current liabilities $ 360 Net plant & equipment $ 420 Long-term bonds $260 Common stock 270 Retained earnings 110 Total assets $1,000 Total liab. & equity $1,000 Over the next year Gemini's current assets, accounts payable, and accruals will grow in proportion to sales. Last year's sales were $800 and this year's sales are expected to increase by 40 percent. The firm will retain $58 in earnings to fund current asset growth, and the rest of the increase will be funded entirely with notes payable. The net plant and equipment account will increase to $500 and will be funded directly by a new equity issue. What will Gemini's new current ratio be after the changes in the firm's financial picture are complete? also give explaination

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Anand Jangid

Numerade educator

Jackson Co. has the following balance sheet as of December 31, 2004. Assets: Claims: Current assets $ 600,000 Accounts payable $ 100,000 Fixed assets 400,000 Accruals 100,000 Notes payable 100,000 Total current liabilities $ 300,000 Long-term debt 300,000 Total equity 400,000 Total assets $1,000,000 Total claims $1,000,000 In 2004, the company reported sales of $5 million, net income of $100,000, and dividends of $60,000. The company anticipates its sales will increase 20 percent in 2005 and its dividend payout will remain at 60 percent. Assume the company is at full capacity, so its assets and spontaneous liabilities will increase proportionately with an increase in sales. Assume the company uses the AFN formula and all additional funds needed (AFN) will come from issuing new long-term debt. Given its forecast, how much long-term debt will the company have to issue in 2005?

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INSTANT ANSWER

5/ A firm has the following balance sheet: \begin{tabular}{lrlr} Cash & $ \$ 10 $ & Accounts payable & $ \$ 10 $ \\ Accounts receivable & 10 & Notes payable & 20 \\ Inventory & 10 & Long-term debt & 40 \\ Fixed assets & 90 & Common stock & 40 \\ & & Retained earnings & $ \underline{10} $ \\ \multicolumn{1}{l}{ Total assets } & $ \$ 120 $ & Total liabilities and equity & $ \$ 120 $ \end{tabular} Fixed assets are being used at 80 percent of capacity; sales for the year just ended were $ \$ 200 $; sales will increase $ \$ 10 $ per year for thl next 4 years; the profit margin is 5 percent; and the dividend payout ratio is 60 percent. Assume that underutilized fixed assets cannot be sold. What are the total external financing requirements for the entire 4 years, i.e., the total AFN for the 4 -year period?

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Rachel Gore

Numerade educator

from this statement of financial position Statement of financial position ABC co. (millions) 2013 2012 2011 Assets Current assets Cash and cash equivalents 3,550 3,473 3,216 Account receivables 10,651 11,578 6,432 Inventories 8,876 9,262 5,789 Other current assets 1,385 1.216 1,235 Total current assets 24,463 25,529 16,672 Non-current assets Property, plant and equipment (Gross) 37,940 32,707 28,944 - Accumulated depreciation (17,247) (13,074) (10,130) Property, plant and equipment (Net) 20,692 19,633 18,814 Other non-current assets 1,686 1,698 1,608 Total non-current assets 22,379 21,331 20,422 Total assets 46,842 46,859 37,093 Statement of financial position ABC co. (millions) 2013 2012 2011 Liabilities and Equity Current liabilities Account payables 4,757 4,290 4,112 Short-term loans 1,267 961 143 Current portion of long-term loans 3,415 3,925 2,316 Accruals 1,154 695 643 Total current liabilities 10,593 9,870 7,214 Non-current liabilities Long-term loans -net of current portion 13,658 15,699 9,262 Deferred tax liabilities 383 393 381 Other non-current liabilities (no interest) 976 695 836 Total non-current liabilities 15,017 16,786 10,479 Total liabilities 25,610 26,656 17,693 Shareholders' equity Issued and fully paid up share capital 10,000 10,000 10,000 Share premium 8,000 8,000 8,000 Retained earnings Appropriated-statutory reserve 1,000 1,000 1,000 Unappropriated 2,231 1,203 400 Total Retained earnings 3,231 2,203 1,400 Total shareholders' equity 21,231 20,203 19,400 Total liabilities and shareholders' equity 46,842 46,859 37,093 Income statement of ABC co. (millions) 2013 2012 2011 Sales 88,762 77,184 64,320 Cost of goods sold (68,346) (62,519) (50,813) Gross profit 20,415 14,665 13,507 Selling expenses (4,438) (2,316) (2,573) Administrative expenses (1,686) (1,389) (1,286) Depreciation expenses (4,173) (2,944) (2,894) Earnings before interest and taxes (EBIT) 10,117 8,017 6,754 Finance cost (1,441) (879) (800) Earnings before taxes (EBT) 8,676 7,137 5,954 Income tax expenses (1,822) (1,784) (1,905) Net Income 6,854 5,353 4,048 Dividend 5,826 4,550 3,441 Earnings per share 6.85 5.35 4.05 Dividend per share 5.83 4.55 3.44 Weighted average number of shares (millions) 1,000 1,000 1,000 Statutory tax rate (Ts) 20% 23% 30% Assume that Retention Ratio in year 2014 is equal to Retention Ratio in year 2013 Please assess that if sales in year 2014 = 100,000 Millions, Does company need financing to support their sales growth or not by using Additional Financing Needed formula to explain

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ANSWERED

Anand Jangid

Numerade educator

Assume company have full capacity in production Sales 92.5 M Total Asset 65 M Curren Liabilities 16 M (Curren Liabilities Compose of following: Trade payable= 8 M Accrued Payable= 5 M Other loan= 3 M Net Profit to Sales Ratio = 10% Retention Ratio = 60.0% The company forecast that Sales in next year will grow 20%from this year The company need financing to support their sales growth, Please calculate AFN in next year

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Yujie Wang

Numerade educator

12. Yesterday, you entered into a futures contract to buy €62,500 at $1.50 per €. Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted? Note that you illustrate all occurred process to make students who have roughly derivative and international financial knowledge understand easier. Thank you so much for your help. a) $1.5160 per €. b) $1.208 per €.. c) $1.1920 per €. d) $1.4840 per €.

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Cameron Besana

Numerade educator

9. Suppose you observe the following 1-year interest rates, spot exchange rates and futures prices. Futures contracts are available on €10,000. How much risk-free arbitrage profit could you make on 1 contract at maturity from this mispricing? Interest APR Exchange Rate is below Exchange Rate | Interest Rate | APR --- | --- | --- S0($/€) | $1.45 = €1.00 | i$ | 4% F360($/€) | $1.48 = €1.00 | i€ | 3% a) $159.22 b) $153.10 c) $439.42 d) None of the above.

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Cameron Besana

Numerade educator

6. The current exchange rate is £1.00 = $2.00. Compute the correct balances in Bank A's correspondent account(s) with Bank B if a currency trader employed at Bank A buys £45,000 from a currency trader at Bank B for $90,000 using its correspondent relationship with Bank B. And illustrate all process occurred a) Bank A's dollar-denominated account at B will rise by $90,000. b) Bank B's dollar-denominated account at A will fall by $90,000. c) Bank A's pound-denominated account at B will rise by £45,000. d) Bank B's pound-denominated account at A will rise by £45,000.

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Jennifer Stoner

Numerade educator

4. If you would like to empirically test the PPP theory, How would you do with it? Just list the regression equation and the null hypothesis also illustrate with some concrete examples in this process to be easier understandable concept order to make students who have roughly derivative and international financial knowledge understand this procedure thoroughly, thank you for your help.

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INSTANT ANSWER

3. Please analyze also illustrate with some concrete examples in this process to be easier understandable concept inforder to make students who have roughly derivative and international financial knowledge understand this procedure thoroughly, by using appropriate model(s), how cash market (with price denoted as $ p_{S T} $ ) and the corresponding futures market ( $ p_{F T} $ ) move together in the long run.

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JSP P.