FINC 5880 – H.W.
1- I1- dentify at least FOUR different ways in which a company can finance itself (“obtain funds”):
2- 2- A portfolio has 40% of its assets invested in stocks and 60% invested in bonds. If the stocks have a return of 6% and the bonds have a return of 9%, calculate the portfolio return:
3- 3- ABC plumbing supply company currently give credit (“supplier credit”) to all its customers, but is having high levels of bad debts. Identify THREE different ways that the company can reduce its bad debts:
4- 4- AAA company shows the following financial results (all amounts in millions):
o Sales $500
o Cost of goods sold: $260
o Operating Expenses: $90
o Interest Expenses: $40
o Income Tax Expense: $5
o Cash: $30
o Inventory: $35
o Accounts Receivable: $55
o Net Fixed Assets: $100
o Accounts Payable: $40
o Short-term Bank Loans: $20
o Long-term Bank Loans: $80
o Paid-In Capital: $10
o Retained earnings: ________ (please calculate it)
o # of shares: 9 million
o Year-End Stock Price: $110/share
Using the above information, please calculate the following (note: all information is relevant): Please show your work.
a) Net Income: _______
b) Gross Margin: ______
c) Gross Margin %: _______
d) Profit Margin %: _______
e) Return on Assets: _______
f) Return on Equity: _______
g) Debt Ratio: ________
h) Current Ratio: _______
i) If the beginning retained earnings was $65, how much was the dividend? ________
j) Dividend per share: ________
k) Earnings per share: _______
l) Price/Earnings Ratio: ______
m) Market cap: _________
n) Effective income tax rate: ________