? Help Financial Experts: Please answer all questions a through d You are given

Question

?Help Financial Experts: Please answer all questions a through d

You are given with the following information of a firm "Hunger Game" in food industry. Assume that the firm did not issue preferred stocks while the firm may have some foreign subsidiaries overseas. The firm is making hi-tech instruments for medication. This industry tends to have gross profit margin such as 18% and other set-up costs are also high due to the production and technology. The R&D (Research and Development) costs are entirely reported as operating expenses according to the GAAP

a)Perform the Ratio Analysis for the firm. (Present all ratios you know.) Will the accounting policy on revenue recognition influence the ratios? Why or why not?

b)Show the Common-Size Statements for Company Hunger Game.

c)Given your result in a), what is your opinion on the firm's performance so far? What is the firm's strategy in raising capital? What are the firm's possible business and financial strategies in your opinions?

d) Given the above information, what will be possible dividend per share for 2013 of Company Hunger G ame? Suppose the firm has 6 million shares of stock issued in the market, what is the possible required rate of return for their stock if you based on the shareholders’ equity of 2013?

Explanation / Answer

common size balancesheet

Current ratio= current asset/current liabilities Quick ratio= (current asset-inventories)/current liabilities 2011 2012 2013 Cash 130 210 70 securities 51 200 1000 account receivable 220 350 200 inventory 1062 1078 450 current asset 1463 1838 1720 Current ratio 0.72 0.93 1.50 Quick ratio 0.20 0.38 1.11 Total assets 3336.00 4471.00 3839.00 Liabilities short term debt 1097 130 30 Advance from customer 121 326 534 accounts payable 585 1092 357 interest payable 75 298 62 tax payable 147 120 128 other accrued payable 20 15 35 current liabilities 2045 1981 1146 Bonds payable 1028 1076 450 Total debt 3073 3057 1596 inventory turnover ratio= cost of goods sold/ average inventory 2012 2.91 Debt ratio total debt / total asset 0.92 0.68 0.42

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