Chapter 1 Question 3- What is the primary disadvantage of the corporate form of organization? Name at least two advantages of corporate organization.
Chapter 1 Question 11- Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.
Chapter 2 Question 4- Billy’s Exterminators, Inc., has sales of $817,000, costs of $343,000, depreciation expense of $51,000, interest expense of $38,000, and a tax rate of 35 percent. Suppose the firm in Problem 2 paid out $95,000 in cash dividends. Suppose firm in Problem 3 had 90,000 shares of common stock outstanding. What is the earnings per share, or EPS, figure? What is the dividends per share figure?
Chapter 2 Question 9- The 2014 balance sheet of Steelo, Inc., showed current assets of $4,630 and current liabilities of $2,190. The 2015 balance sheet showed current assets of $5,180 and current liabilities of $2,830. What was the company’s 2015 change in net working capital, or NWC?
Chapter 3 Question 4- The Green Corporation has ending inventory of $417,381, and cost of goods sold for the year just ended was $4,682,715. What is the inventory turnover? The days’ sales in inventory? How long on average did a unit of inventory sit on the shelf before it was sold?
Chapter 3 Question 7- If Roten Rooters, Inc., has an equity multiplier of 1.15, total asset turnover of 2.10, and a profit margin of 6.1 percent, what is its ROE?
Chapter 4 Question 1- Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): The company has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as well. Create the pro forma statements and reconcile them. What is the plug variable here?
Chapter 4 Question 6-The most recent financial statements for Schenkel Co. are shown here:
Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. What is the internal growth rate?