Financial Equations
Cedar Corp. had EBIT of $300,000, interest expense of $20,000, and a tax rate of 21%. What is net income?
$217,000
Using Handout #1, find the Current Ratio
1.82
Using Handout #3, what is the FCF in Year 1?
$68,560.00
What is the primary decision rule for accepting an independent project when using NPV?
Accept if NPV > 0 (project adds value to the firm).
A company has cash = $60,000, accounts receivable = $90,000, inventory = $150,000, accounts payable = $70,000, accrued expenses = $30,000, and notes payable = $50,000. What is NWC?
$150,000
Using Handout #1, find the Debt-to-Equity Ratio
1.38
Using Handout #3, what is the OCF in Year 2?
$72,256
Using Handout #2, find the Payback Period on the cash flows
2.6 years
Crimson Co. reported EBIT = $180,000, depreciation = $40,000, and tax rate = 25%. Find OCF.
$175,000
Using Handout #1, find Return on Assets
7.9%
Using Handout #3, what is NOPAT in Year 3?
$41,433.60
Using Handout #2, find the Net Present Value using excel.
$1,155.66
Over the past year, gross fixed assets rose by $120,000. Current assets increased by $50,000, while current liabilities increased by $25,000. Find Investment in Operating Capital.
$145,000
Using Handout #1, find the Equity Multiplier
2.38
Using Handout #3, what is EBIT in Year 4?
$63,872
Using Handout #2, find the IRR using excel.
15.32%
Given EBIT = $320,000, Depreciation = $50,000, Taxes = $70,000, Investment in Fixed Assets = $100,000, and Increase in NWC = $40,000, find FCF.
$160,000
Using Handout #1, find the Return on Equity using the DuPont Analysis
Extra Time: Additional 30 seconds added!
0.1875
Using Handout #3, what is depreciation expense in Year 5?
$16,128
Using Handout #2, find the Profitability Index using excel.
1.12