FIN 3113 Exam 3 Review

Financial Equations

100

Cedar Corp. had EBIT of $300,000, interest expense of $20,000, and a tax rate of 21%. What is net income?

$217,000

200

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

300

Crimson Co. reported EBIT = $180,000, depreciation = $40,000, and tax rate = 25%. Find OCF.

$175,000

400

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

500

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

Financial Ratios

100

Using Handout #1, find the Current Ratio

1.82

200

Using Handout #1, find the Debt-to-Equity Ratio

1.38

300

Using Handout #1, find Return on Assets

7.9%

400

Using Handout #1, find the Equity Multiplier

2.38

500

Using Handout #1, find the Return on Equity using the DuPont Analysis

Extra Time: Additional 30 seconds added!

0.1875

Capital Budgeting Identifiers

100

Using Handout #3, what is the FCF in Year 1?

$68,560.00

200

Using Handout #3, what is the OCF in Year 2?

$72,256

300

Using Handout #3, what is NOPAT in Year 3?

$41,433.60

400

Using Handout #3, what is EBIT in Year 4?

$63,872

500

Using Handout #3, what is depreciation expense in Year 5?

$16,128

Capital Budgeting Issues

100

What is the primary decision rule for accepting an independent project when using NPV?

Accept if NPV > 0 (project adds value to the firm).

200

Using Handout #2, find the Payback Period on the cash flows

2.6 years

300

Using Handout #2, find the Net Present Value using excel.

$1,155.66

400

Using Handout #2, find the IRR using excel.

15.32%

500

Using Handout #2, find the Profitability Index using excel.

1.12