University of Waterloo Income Statement for Alpha Corporation Questions

ALPHA CORP.
2018 Income Statement
Sales
Cost of Goods Sold
Depreciation
EBIT
Interest paid
Taxable Income
Taxes
Net Income
$311,153
$142,555
$ 15,000
$153,598
$ 12,000
$141,598
$ 42,479
$ 99,118
Dividends
Additions to retained Earnings
Capital/Equity
$ 40,000
$ 59,118
$120,000
XYZ Corp. has 10,000 shares of common stock outstanding, and the market price for a share of stock at the end
of 2018 was $96.
1) What is the price-earnings ratio?
2) What is the price-sales ratio?
3) What are the dividends per share?
4) What is the market-to-book ratio at the end of 2018?
XYZ CORP
2018 Income Statement ($ in millions)
Sales
Cost of Goods sold
Depreciation
EBIT
Interest Paid
Taxable Income
Taxes (34%)
Net Income
$3,756
$2,453
$ 490
$ 813
$ 613
$ 200
$
68
$ 132
.
Balance Sheets as of December 31, 2017, and 2018 ($in millions-)
Assets
Current Assets
Cash
A/R
Inventory
Total
Fixed Assets
Net plant
Total Assets
2017
2018
$120
224
424
768
$101
192
368
661
$5,228
$5,996
$5,553
$6,214
Liabilities and Owners’ Equity
2017
2018
Current Liabilities
A/R
Notes Payable
$124
1,412
144
1,039
$1,536
$1,804
$2,656
1,183
2,289
2,742
$5,996
6,214
Total
Long Term Debt
Owners Equity
Total Liabilities
& Owners Equity
Question 5
Based on the balance sheets and income statements above, calculate the following ratios for 2018
Current Ratio:
Quick Ratio:
Cash Ratio:
Inventory Turnover:
Accounts Receivables Turnover:
Day’s sales in inventory:
Day’s sales in Accounts Receivables:
Total Debt Ratio:
Times interest earned ratio:
Cash coverage ratio:
Question # 6
Please explain the difference between CPA audited and CPA reviewed financial statements?
Question # 7
TXK REIT has assets of $70,000 and debt of $55,000. Calculate the NAV (Net Asset Value) of TXK REIT
using the classical accounting formula discussed in class and write the answer below.
Part b of Question #7
What is TXK REIT’s return on the NAV you previously calculated assuming that they made GAAP Net Income
of $6,000 during the current year.
a)
b)
c)
d)
35%
40%
85%
28.5%
Question # 8
Please indicate with a YES or NO whether the below statement indicates potential cash flow problems for a
firm. Please provide a one paragraph commentary after your answer.
a) A substantial shift from long-term borrowing to short term borrowing.
b) A decrease in recognized sales for a firm during the 4th quarter of the year, however their first 1st quarter
of the following year shows a substantial increase in recognized sales.
Question #9
Please write down the four “C” of credit risk analysis?
Question # 10
Please circle below the two most secure collateral assets for a loan?
1.
2.
3.
4.
Cash deposits held at banks
Accounts Receivable
Inventories
Property, Plant and Equipment