Finance Question
February 26, 2021
Essayheroes
Q1 (1.5 marks)
undefined
Ahlam Company’s net income for the year 2000, is $3,700,214. The company had an EBITDA of $ 10,125,300, and its depreciation and amortization expense was equal to $2,543,790. The company’s average tax rate is 35 percent.
undefined
-
What is the amount of interest expenses for the firm? (Show the details of your calculations).
-
Prepare a common sized Income Statement if net sales equal $12,000,000.
undefined
Q2. (1 Mark)
undefined
The following are accounts balance (in thousands) for Malak Company. Calculate Net Income after-tax (show intermediate steps) t=35% for the year ended December 31, 2020.
undefined
Net property and equipment
|
$ 2,000
|
Accounts receivable
|
$3,000
|
Notes payable
|
$37,000
|
Revenues
|
$ 983,000
|
Supply expenses
|
$ 255,000
|
Depreciation expenses
|
$ 35,000
|
Labor expense
|
$300,000
|
Interest Expenses
|
$11,000
|
Stockholders’ Equity
|
$61,500
|
Cash & cash equivalents
|
$97,000
|
Long-term debt
|
$3,500
|
undefined
Q3. Calculate the following ratios from the Balance Sheet and the Income Statement given below: (1.5 Mark)
undefined
-
Current Ratio
-
Debt Ratio
-
Fixed asset turnover
-
Total asset turnover
-
Operating profit margin
undefined
|
|
|
Balance Sheet:
|
|
|
Cash
|
|
30,000
|
Acct/Rec
|
|
72,500
|
Inventories
|
|
50,000
|
Current assets
|
|
152,500
|
Net fixed assets
|
|
240,000
|
Total assets
|
|
392,500
|
|
|
|
Accts/Pay
|
|
44,500
|
Accrued expenses
|
|
31,000
|
Short-term N/P
|
|
9,500
|
Current liabilities
|
|
85,000
|
Long-term debt
|
|
110,000
|
Owner’s equity
|
|
197,500
|
Total liabilities and owners equity
|
392,500
|
|
|
|
Income Statement:
|
|
|
Net sales
|
|
450,000
|
COGS
|
|
220,000
|
Gross profit
|
|
230,000
|
Operating expenses
|
|
128,000
|
Net operating income
|
|
102,000
|
Interest expense
|
|
18,500
|
EBT
|
|
83,500
|
Income taxes
|
|
33,000
|
Net income
|
|
50,500
|
undefined
Q4. Using the values below, answer the questions that follow: (1mark)
undefined
Amount of annuity: $500
undefined
Interest rate: 9%
undefined
N=10 years
undefined
-
Calculate the future value of the annuity, assuming that it is
-
An ordinary annuity.
-
An annuity due.
-
Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable as an investment? Explain why.
