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Assign3 Module6

This document provides 12 problems related to financial analysis and ratio calculations. The problems cover calculating accounts receivable based on days sales outstanding, debt and market-to-book ratios, price-earnings ratios, return on equity using DuPont analysis, basic earning power, various asset and liability ratios, and current ratio requirements. The ratios and financial metrics are calculated using information provided, such as sales, assets, liabilities, equity, debt, earnings, and stock prices.

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finn mertens
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51 views

Assign3 Module6

This document provides 12 problems related to financial analysis and ratio calculations. The problems cover calculating accounts receivable based on days sales outstanding, debt and market-to-book ratios, price-earnings ratios, return on equity using DuPont analysis, basic earning power, various asset and liability ratios, and current ratio requirements. The ratios and financial metrics are calculated using information provided, such as sales, assets, liabilities, equity, debt, earnings, and stock prices.

Uploaded by

finn mertens
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINMGT1

Module 6 –Financial Analysis Assignment

Problem 1: (Day Sales Outstanding)


DSO = 40 days; S= P7,300,000; AR =?

40 = AR/P20,000
AR= (20,000)(40)
AR = P800,000

Problem 2: (Debt Ratio)


A/E = 2.4; D/A =?
D 1
=1−
A A/E
D 1
=1−
A 2.4
D
=0.5833=58.33 %
A
Problem 3: (Market/Book ratio)
TA = 10,000,000,000; LT debt = 3,000,000,000
CL = 1,000,000,000;CE= 6,000,000,000
Sharing Outstanding = 800,000,000; Stock price =32; M/B = ?

6,000,000,000
Book Value= =P 7.50
800,000,000
P 32.00
MB= =4.27
P 7.50

Problem 4: (Price/Earnings Ratio)


EPS = P2.00; BVPS = P20; M/B = 1.2x; P/E = ?

M/B = 1.2x
P/P20 = 1.2x
P = (P20)(1.2x)
P = P24.00

P/E = P24.00/P2.00 = 12.0x

Problem 5: (DuPont and ROE)


PM = 2%; EM = 2.0; Sales = P100,000,000; Assets = P50,000,000; ROE = ?

ROE = PM x TATO x EM
= NI/S x S/TA x A/E
= 2% x P100,000,000/P50,000,000 x 2
ROE =8%

Problem 6: (DuPont and Net Income)


Total Asset:
Sales = 6,000,000
3.2 x = Sales/TA
3.2x = 6,000,000/Assets
Assets = 6,000,000/3.2 x
Assets = 1,875,000

Net income:
Debt 50%; Equity 50%
Equity = 1,875,000 x 0.5 = 937,500

ROE = NI/S x S/TA x TA/E


0.12 = NI/6,000,000 x 3.2 x 1,875,000/937,500
0.12 = 6.4NI/6,000,000
6.4NI = (60,000)(0.12)
NI = 720,000/6,4
NI = 112,500
Problem 7: (Basic Earning Power)
ROA = 8%; NI =600,000; TA = ?

ROA = NI/TA
85 = 600,000
TA = 600,000/8%
TA = 7,500,000

EBIT (225,000 + 923,007) 1,149,077


Interest 225,000
EBT (600,000/0.65) 923,000
Taxes (35%) 323,077
NI 600,000

BEP = EBIT/TA
= 1,148,077/7,500,000
= (0.1531)
BEP = 15.31%

Problem 8: (Ratio Calculation)


ROA = 3%; Sales/Total assets = 1.5x

ROA = Profit Margin x Total assets turnover


3% = Profit margin (1.5)
Profit margin =3%/1.5
Profit margin =2%

E
E ¿ ¿ ∧D E
= x =1− so X
A A A A
E 1
=3 % x
A 0.05
E
=60 %
A
D
=1−0.60=0.40=40 %∨4 %
A
Problem 9: (Ratio Calculation)
TA = 12,000,000; T = 40%; EBIT/TA = 15%; ROA = 5%; TIE = ?

EBIT = 1,800,000,000
NI = 600,000,000

EBIT 1,800,000,000
INT (1.8B – 1B) 800,000,000
EBT (6M/0.6) 1,000,000,000
Taxes (40%) 400,000,000
NI 600,000,000

TIE = EBIT/INT
= 1,800,000,000/800,000,000
TIE = 2.25x

Problem 10: (Return on Equity)

ROE = 462,000/10,000,000 x 10,000,000/5,000,000 x 2.5


ROE = 0.231 = 23.1%

Problem 11: (Current Ratio)

1,312,500
Present Current Ratio = =2.5
525,000

1,312,500+ NP
Minimum Current ratio = =2.0
525,000+ NP

1,312,5000 + NP = 1,050,000 + 2NP


NP = 262,500

Problem 12: (DSO and Accounts Receivable)


Current annual sales using DSO equation:
55 = 750,000/(Sales/365)
55Sales = 273,750,000
Sales = 273,750,000/55
Sales = 4,977,272.73

4,977,272.73 (0.85) = 4,230,681.82

35 =AR/(4,230,681.82/365)
35 =AR/11,590.91
AR =(11,590.91)(35)
AR =405,681.82 = P405,682

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