FIN 534 â€“ Homework Set #1
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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.
Use the following information for Questions 1 through 4:
1. What is the free cash flow for 2014?
2. Suppose Congress changed the tax laws so that Berndtâ€™s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?
3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the companyâ€™s liquidity position in 2013?
4. Use the extended DuPont equation to provide a summary and overview of companyâ€™s financial condition as projected for 2014. What are the firmâ€™s major strengths and weaknesses?
Assume that you recently graduated and have just reported to work as an investment advisor at the one of the firms on Wall Street. You have been presented and asked to review the following Income Statement and Balance Sheets of one of the firmâ€™s clients. Your boss has developed the following set of questions you must answer.
|Income Statements and Balance Sheet Balance Sheet||2012||2013||2014|
|Total current assets||$1,124,000||$1,946,802||$2,680,112|
|Gross fixed assets||491,000||1,202,950||1,220,000|
|Less: Accumulated depreciation||146,200||263,160||383,160|
|Net fixed assets||$344,800||$939,790||$836,840|
|Liabilities and Equity|
|Total current liabilities||$481,600||$1,328,960||$1,039,800|
|Common stock (100,000 shares)||460,000||460,000||1,680,936|
|Total liabilities and equity