6:28 PM blackboard.strayer.edu Boost LTE Directions: Answer the following questi

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6:28 PM blackboard.strayer.edu Boost LTE Directions: Answer the following questions on a separate document. Explain how you r or show your work if a mathematical calculation is needed, or both. Submit your assign assignment link in the course shell. This homework assignment is worth 100 points. Use the following information for Questions 1 through 4 Assume that you recently graduated and have just reported to work as an investment a of the firms on Wall Street. You have been presented and asked to review the following Statement and Balance Sheets of one of the firm's clients. Your boss has developed th questions you must answer Income Statements and Balance Sheet 2012 Balance Sheet Cash Short-term investments Accounts receivable 2013 2014 $9,000 48,600 351,200 $7,282 $14,000 71,632 632,160 878,000 715,200 1,287,360 1716,480 $1,124,000 $1,946,802 $2,680,112 491,000 1,202,950 1,220,000 263,160| 383,160 S939,790 $836,840 $1,468,800 $2,886,592 $3,516,952 20,000 Total current assets Gross fixed assets 146,200 344,800 Net fixed assets Total assets Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Common stock (100,000 $145,600 $324,000 $359,800 720,000 300,000 284,960 380,000 $481,600 $1,328,960 $1,039,800 1,000,000 500,000 460,0001680,936 97,632296,216 $557,632 $1,977,152 $1,468,800 $2,886,592 $3,516,952 200,000 136,000 shares) Retained earnings Total equity Total liabilities and equity 323,432 460,000 203,768 $663,768 2015 Strayer University, All Roghts Reserved. This document contains Strayer University Confidential and

Explanation / Answer

Free cash flow calculations net income 253584 Interest 80000 depreciation and amortization 120000 cash flow before depreciation and amortization 453584 cash flow from changes in working capital Increase in short term investment 51632 increase in bills receivables 245840 increase in inventories 429120 increase in bills payable 35800 decrease in notes payable 420000 increase in accurals 95040 1015752 gross value of fixed asset in 2014 1220000 gross value of fixed asset in 2013 1202950 change in fixed assets 17050 Free cash flow for 2014 cash flow from operating activities cash flow before depreciation and amortization 453584 less cash outflow from change in working capital 1015752 less capital expenditure 17050 free cash flow -579218 current assets current liabilities answer no 3 2680112 1039800 2014 current ratio current assets/current liabilities 2.577526 2014 quick ratio quick assets/current liabilities 0.926747 current assets current liabilities answer no 3 1946802 1328960 2013 current ratio current assets/current liabilities 1.464906 current ratio is less than ideal ratio of 2:1 so it is a serious conern to management 2013 quick ratio quick assets/current liabilities 0.496209 Quick ratio is only .49 which is very low means heavy investment is inventories answer no 2 depreciation 120000 Free cash flow will increase by 120000 if doubled 120000 free cash flow -579218 EBIT before change 502640 increased depreciation 120000 EBIT after change of depreciation 382640 new free cash flow -459218 interest 80000 EBT 302640 Tax 121056 net income 181584 old net income 253584 reported profit will decrease by -72000 answer no 4 net profit 253584 sales 7035600 assets sales 7035600 total assets 3516952 equity profit margin net profit/sales 0.036043 assets turnover sales/total assets 2.000482 equity multiplier total assets/equity ROE Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity) 0.128257 Company financial ratio is good for 2014 as you can see from the given table that various ratio figures in comparison to previous year has improved so can say that financial position is good for year 2014

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