SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY SOLUTIONS

Solutions Manual For Cfin 6th Edition Besley Solutions-Free PDF

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SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY,Chapter 2 CFIN6. Chapter 2 Solutions, 2 1 Publically traded companies are required to provide adequate financial information to their shareholders. Information generally is provided through financial reports that a company periodically produces which. include a balance sheet an income statement a statement of cash flows and a statement of retained. earnings In addition the reports published by a company contain discussions of the firm s operations both. present and forecasted Each of the financial statements provides different types of information But. because it incorporates information from both the income statement and the balance sheet the statement. of cash flow provides the best information for investors. 2 2 a The balance sheet shows at a particular point in time the amount the firm has invested in assets and. how much of those investments are financed with loans liabilities and how much are financed with equity. stock b The income statement shows the revenues sales that the firm generated during a particular. period and the expenses that were incurred during that same period whether those expense were incurred. as the result of normal operations or as the result of how the firm is financed c The statement of cash. flows shows how the firm generated cash inflows and how the firm used cash outflows during a particular. accounting period If the firm uses more cash than it generates through normal operations it is deficit. spending and deficit spending must be financed with external funds either stocks or debt. 2 3 The most important aspect of ratio analysis is the judgment used when interpreting the results to reach. conclusions concerning a firm s current financial position and the direction in which the firm is headed in the. future The analyst should be aware of and include in the interpretation the fact that 1 large firms with. many different divisions are difficult to categorize into a single industry 2 financial statements are reported. at historical costs 3 seasonal factors can distort the ratios 4 some firms try to window dress their. financial statements to look good 5 firms use different accounting procedures to compute inventory. values depreciation and so on 6 there might not exist a single value that can be used for comparing. firms ratios e g a current ratio of 2 0 might not be good for some firms and 7 conclusions concerning. the overall financial position of a firm should be based on a representative number of ratios not a single. 2 4 Shares issued 100 000 Price per share 7 Par value per share 3. Common stock at par 300 000 3 x 100 000, Paid in capital 400 000 7 3 x 100 000 700 000 300 000. 2 5 Net cash flow Net income Depreciation 90 000 25 000 115 000. 2 6 The income statement for HighTech Wireless with the information that is given in the problem. Operating expenses excluding depreciation 500 000,Depreciation 100 000. Interest 0 HighTech has no debt,Earnings before taxes EBT.
Net income NI 240 000, 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Chapter 2 CFIN6, Starting with net income and working up the income statement to solve for sales we have the. following computations,1 NI EBT 1 0 4,Net income 240 000. Thus EBT 400 000,1 Tax rate 1 0 40,Taxes 400 000 240 000 160 000.
2 EBIT EBT Interest 400 000 0 400 000, 3 Sales EBIT Operating expenses excluding depreciation Depreciation. 400 000 500 000 100 000 1 000 000, To show that this is the correct result let s start with sales equal to 1 000 000 and compute the. net income,Sales 1 000 000,Operating expenses excluding depreciation 500 000. Depreciation 100 000,EBIT 400 000,Interest 0,Earnings before taxes EBT 400 000. Taxes 40 160 000,Net income 240 000, Net cash flow Net income Depreciation 240 000 100 000 340 000.
2 7 a Current 3 5 Current assets 73 500,ratio Current liabilities Current liabilities. Current liabilities 21 000, b Quick 3 0 Current assets Inventory 73 500 Inventory. ratio Current liabilities 21 000,Inventory 73 500 3 0 21 000 10 500. Sales Sales,2 8 a Total assets turnover 2 0,Total assets 150 000. Sales 2 0 150 000 300 000,Net income Net income,b Return on assets 0 06.
Total assets 150 000,Net income 0 06 150 000 9 000. 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Chapter 2 CFIN6,Net income 9 000,Net profit margin 0 03 3 0. Sales 300 000,Net income Net income,2 9 a ROA 0 05. Total assets 300 000,Net income 0 05 300 000 15 000.
Net income 15 000 15 000,b Return on equity 0 15 15 0. Common equity 300 000 200 000 100 000,Alternative solution. Net income Total assets,Return on equity ROA,Common equity Common equity. 0 05 0 05 3 0 0 15 15 0,300 000 200 000,2 10 a Debt ratio 40. Proportion of firm Common equity Common equity,1 0 40 0 6 60.
financed with common stock Total assets 750 000,Common equity 750 000 0 6 450 000. Net income Sales Net income,Total assets Total assets Sales. Net income,Net income 0 06,0 02 2 0 Net profit margin. Alternative solution,Total assets Sales Sales,turnover Total assets 750 000. Sales 3 750 000 2 250 000,Net income Net income,Total assets 750 000.
Net income 0 06 750 000 45 000,Net profit Net income 45 000. margin Sales 2 250 000, 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Chapter 2 CFIN6,Sales Sales,2 11 a Total assets turnover 2 5. Total assets 10 000,Sales 2 5 10 000 25 000,Net income Net income.
b Return on assets 0 04,Total assets 10 000,Net income 0 04 10 000 400. Net income 400,Net profit margin 0 016 1 6,Sales 25 000. Alternative solution,Sales Net income,Return on assets. Total assets Sales,Net income,Net income 0 04,0 016 1 6 Net profit margin. Current assets 340 000,2 12 1 Current ratio 5 0,Current liabilities Current liabilities.
Current liabilities 340 000 5 0 68 000,Current assets Inventories 340 000 Inventories. 2 Quick ratio 1 8,Current liabilities 68 000, Inventories 340 000 1 8 68 000 340 000 122 400 217 600. 3 Current assets Cash Equivalents Accounts receivable Inventories. 340 000 43 000 Accounts receivable 217 600,Accounts receivable 340 000 43 000 217 600 79 400. Cost of goods sold CGS,4 Inventory turnover 7 0,Inventory 217 600. CGS 7 217 600 1 523 200,5 CGS 0 80 Sales thus Sales 1 904 000.
Accounts receivable 79 400,6 DSO 15 0 days,Sales 360 1 904 000 360. 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Chapter 2 CFIN6,2 13 a TIE EBIT INT so find EBIT and INT. Interest 200 000 x 0 06 12 000,Net income 540 000 x 0 04 21 600. Net income Taxable income 1 T,Taxable income EBT 21 600 1 T 21 600 1 0 4 36 000.
EBIT 36 000 12 000 48 000,TIE 48 000 12 000 4 0 x,b For TIE to equal 6 0 EBIT 6 0 12 000 72 000. When EBIT 72 000 Net income 72 000 12 000 1 0 40 36 000. Because NI 0 04 Sales Sales 36 000 0 04 900 000,Check When Sales 900 000 NI 900 000 x 0 04 36 000. EBT 36 000 1 0 40 60 000,EBIT 60 000 12 000 72 000. TIE 72 000 12 000 6 0, 2 14 We are given Common equity 35 000 000 Common shares outstanding 7 000 000. Market price per share 8 Net income 14 000 000,a EPS 14 000 000 7 000 000 2.
P E ratio 8 2 4 0,b Book value per share 35 000 000 7 000 000 5. M B ratio 8 5 1 6, 2 15 We are given ROE 15 TA turnover Sales Total assets 2 0x. Debt Ratio 60, a From DuPont equation ROE ROA x Equity multiplier. 0 15 ROA x Total assets Common equity, Recognize that Total assets Common equity is simply the inverse of the proportion of the firm that is. financed with equity The proportion of the firm that is financed with equity equals 1 Debt ratio Thus. 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY.
Chapter 2 CFIN6,1 Debt ratio,ROA 0 15 2 5 0 06 6 0. b ROA Net profit margin x Total assets turnover,0 06 Net profit margin x 2 0. Net profit margin 0 06 2 0 0 03 3 0,Alternative solution. TA turnover Sales Total assets 2 0x thus Sales 2 0 Total assets. ROE Net income Common equity Net income 1 0 6 Total assets 0 15 thus. Net income 0 15 0 4 Total assets 0 06 Total assets. Net income 0 06 Total assets 0 06,PM 0 03 3 0,Sales 2 0 Total assets 2 0. 2 16 We are given ROA 8 Total assets 440 000,Debt Ratio 20.
Net income Net income,a ROA 0 08,Total assets 440 000. Net income 0 08 440 000 35 200, b From DuPont equation ROE ROA x Equity multiplier. Total assets 1 1,Equity multiplier 1 25,Common equity 1 Debt ratio 1 0 20. Thus ROE 0 08 x 1 25 0 10 10 0,Alternative solution. Common equity 440 000 1 0 2 352 000,Net income 35 200.
ROE 0 10 10 0,Common equity 352 000,2 17 We are given ROA 4 Current assets 260 000. Net income 140 000 Long term debt 1 755 000,assets financed with equity 35. 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Chapter 2 CFIN6,Net income 140 000,1 ROA 0 04 Total assets 140 000 0 04 3 500 000. Total assets Total assets, 2 Total liabilities Total assets x Debt ratio 3 500 000 1 0 35 2 275 000.
3 Current liabilities Total liabilities Long term debt 2 275 000 1 755 000 520 000. Current assets 260 000,4 Current ratio 0 5,Current liabilities 520 000. 2 18 We are given ROA 3 ROE 5 Total assets 100 000. Net income Net income,a ROA 0 03 Net income 100 000 0 03 3 000. Total assets 100 000,Net income 3 000,b ROE 0 05 CE 3 000 0 05 60 000. Common equity Common eqiuty,Total liabilities 100 000 60 000. Debt ratio 0 40 40,Total assets 100 000, 2 19 We are given assets financed with equity 60 Current ratio 5 0.
Total assets turnover 4 0 Current assets 150 000,Sales 1 800 000. Current assets 150 000,1 Current ratio 5 0,Current liabilities Current liabilities. Current liabilities 150 000 5 30 000,Sales 1 800 000. 2 Total assets turnover 4 0,Total assets Total assets. Total assets 1 800 000 4 0 450 000,3 Total liabilities 450 000 1 0 60 180 000.
4 Long term liabilities 180 000 30 000 150 000, 2 20 We are given P E ratio 15 0 Price per share 30. Fixed assets turnover 8 0 Current ratio 5 0, Current liabilities 300 000 Net profit margin 0 04. Shares of common 60 000,Pr ice per share 30,1 P E ratio 15 0 EPS 30 15 2. Net income 60 000 2 120 000, 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY.
Chapter 2 CFIN6,Net income 120 000, 2 Net profit margin 0 04 Sales 120 000 0 04 3 000 000. Sales Sales,Fixed assets Sales 3 000 000,3 8 0 Fixed assets 3 000 000 8 375 000. turnover Net fixed assets Fixed assets,Current Current assets CA. 4 5 0 Current assets 300 000 5 1 500 000,ratio Current liabilities 300 000. 5 Total assets Fixed assets Current assets 375 000 1 500 000 1 875 000. Net income 120 000,a ROA 0 064 6 4,Total assets 1 875 000.
Total assets Sales 3 000 000,turnover Total assets 1 875 000. 2019 Cengage Learning All Rights Reserved May not be scanned copied or duplicated or posted to a publicly accessible website in. whole or in part,SOLUTIONS MANUAL FOR CFIN 6TH EDITION BESLEY. Ethical Dilemma,Hocus Pocus Look An Increase in Sales. Dynamic Energy Wares DEW manufactures and distributes products that are used to. save energy and to help reduce and reverse the harmful environmental effects of. atmospheric pollutants DEW relies on a relatively complex distribution system to get the. products to its customers Large companies which account for nearly 30 of the firm s. total sales purchase directly from DEW Smaller companies and retailers that sell to. individuals are required to make their purchases from one of the 50 independent. distributors that are contractually obligated to exclusively sell DEW s products. DEW S accountants have just finished the firm s financial statements for the third quarter. of the fiscal year which ended 3 weeks ago The results are terrible Profits are down. 30 from this time last year when a downturn in sales began Profits are depressed. primarily because DEW continues to lose market share to a competitor that entered the. field nearly 2 years ago, Senior management has decided it needs to take action to boost sales in the fourth quarter. so that year end profits will be more acceptable Starting immediately DEW will 1. eliminate all direct sales which means that large companies must purchase products from. DEW s distributors just as the smaller companies and retailers do 2 require. Paid in capital 400 000 7 3 x 100 000 700 000 300 000 2 5 Net cash flow Net income Depreciation 90 000 25 000 115 000 2 6 The income statement for HighTech Wireless with the information that is given in the problem

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