Following is some financial information of Dell Inc. 17. What is Dell's profit margin for 2005? A. 6.27% B. 6.18% C. 6.38% D. 6.86% 18. What is Dell's profit margin for 2006? A. 6.27% B. 6.18% C. 6.38% D. 6.86% 19. What is Dell's price-to-earnings ratio for 2006? A. 27.63 B. 12.81 C. 23.65 D. 9.70 20. What is Dell's asset turnover for 2006? A. 2.12 B. 3.58 C. 3.65 D. 2.31 21. Given the following information, calculate the inventory turnover for ABC Co. for 2006 (pick closest number). A. 8.96 B. 7.22 C. 6.93 D. 5.96 22. You have been provided the following information about Wert Inc. Return on assets for 2006 is: A. 13.71%. B. 12.68%. C. 10.77%. D. 13.21%. You have been provided the following information about High Inc. 23. Working capital for 2005 is: A. $56,000. B. $20,000. C. $151,000. D. $207,000. 24. Owner's equity for 2006 is: A. $20,000. B. $154,000. C. $174,000. D. $207,000. 25. Current ratio for 2005 is: A. 1.55. B. 1.51. C. 1.50. D. 1.14. 26. Return on common equity for 2006 is: A. 15.46%. B. 24.14%. C. 16.79%. D. 22.04%. Fluno Corporation has 1 million shares outstanding at the end of fiscal 2005. Its stock is trading at $15 per share. It issued $0.6 million in dividends, and had net income of $1 million in fiscal 2005. At the end of 2005, its total assets, liabilities, and retained earnings were $25 million, $15 million, and $7.5 million, respectively. Fluno's price-to-book ratio and dividend yield ratios for 2005 are: A. Option A B. Option B C. Option C D. Option D 39. Net income is expected to increase by 10% for the next year, and dividend payout ratio is expected to remain constant. After 2006, retained earnings are expected to decrease to zero. Using the residual income method what is the value per share of Rivaz stock as of 12/31/05? A. $15.25 B. $15.16 C. $14.38 D. $13.77 40. Using the dividend discount model, assuming dividends grow at 10% per year for the next two years and at 5% thereafter, what is the value per share of Rivaz Corporation at 12/31/05? A. $16.61 B. $16.51 C. $16.42 D. $14.87 41. Assuming total assets grew by $5,000 from 2004 to 2005, what is the return on assets of Rivaz Corporation for 2005? A. 9.23% B. 8.57% C. 10.00% D. 6.15% Byfort Company reports the following in its financial statements: *All sales are on credit. 13. How much did the company collect in cash from customers during 2006? A. $445,389 B. $454,611 C. $484,289 D. $488,900 ABC Co. starts its business raising $110,000 in cash; $60,000 from issuing equity and $50,000 from issuing 6% bonds at par. ABC used the whole amount of cash to buy a building, which it rents out for $10,000 per year. Given below is the opening balance sheet of ABC Co. for the first year of operations. At the end of Year 1, the building is valued at $150,000. Also, the market value of bonds has fallen to $49,000. Assume the useful life of the building is 30 years, and its salvage value is $50,000 at the end of that period. The rental income is received on the last day of the year. Interest on bonds is also paid on this day. Prepare the year-end balance sheet and income statement of ABC Co. based on Fair value. Compare the historical and fair values at year-end. Notice that under fair value method, all assets and liabilities are considered at their market value. Fair value accounting does not consider any depreciation on fixed assets. It recognizes any unrealized gain or loss on assets or long-term debt on account of change in market value. Hert Corporation acquired a capital lease that is carried on its books at a present value of $100,000 (discounted at 12%). Its annual rental payment is $15,000. What is the amount of interest expense from this lease? A. Option A B. Option B C. Option C D. Option D 80. The effect of leases on financial ratios Some financial information about Retail Inc. and Store Inc. is given below: You are asked to analyze these companies and specifically analyze the impact of the leases on different financial ratios. a. Compute the present value of the lease obligations for Retail Inc. using an annual interest rate of 8%. You should assume all payments are made at the end of the year, and all payments after year X6 are equal to the payment in year X6. b. Compute the present value of the lease obligations for Stores Inc. using an annual interest rate of 8%. You should assume all payments are made at the end of the year, and all payments after year X6 are equal to the payment in year X6. c. Compute the total liabilities to asset ratio and the long-term debt to assets ratio for Retail Inc. for the end of year X1. d. Compute the total liabilities to asset ratio and the long-term debt to assets ratio for Stores Inc. for the end of year X1. e. Repeat c and d and compute the total liabilities to asset ratio and the long-term debt to assets ratio for both companies for the end of year X1 assuming the companies capitalize the leases. a. Retail Inc. *Present value of an annuity of $542 million for 2.847 periods (= $1,543/$542), then discounted back five periods. b. Stores Inc. *Present value of an annuity of $312 million for 2.795 periods (= $872/$312), then discounted back five periods. c. d. e.
