Exam 2: Essential Concepts in Finance: Part A

Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = $18. -The Net Profit margin is:

Retained earnings are:

Use the following information to answer the question: Sales for 2000 are projected to double; no new equipment is expected to be purchased or sold in 2000. Depreciation expense along with preferred stock and common stock will remain unchanged in 2000. Current assets, accounts payable, accrued expenses, COGS, and selling expenses vary at a constant percentage of sales. Notes payable, long- term debt, preferred stock, and common stock are scheduled to stay the same. -Projected net profit for 2000 is:

The firm currently uses straight line depreciation so that depreciation expense in 2000 will be the same as in 1999. Depreciation expense in 1999 was $5,000. Sales are expected to grow by 30% in 2000. All current assets and accounts payable are also expected to grow by 30%. All net income is paid out in dividends and no new stock issues are planned. Notes payable at the end of 1999 will be paid off in 2000. Calculate total assets and additional funds needed for 2000.

Why do we need a cash flow statement? Can't we just use net income as a proxy for cash flow?

Calculate earnings per share for the followin:

Preferred stock dividends:

What is EBITA?

Retained earnings were $1,500,000 at the beginning of the year and $1,800,000 at the end of the year. Net income for the year was $400,000.The company paid $60,000 in preferred dividends. What did they pay in common share dividends?

Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = $18. -The Current Ratio is:

You have elected to fund additional needs for the next year with an increase in long- term debt. What, if any, problems might be associated with this decision?

Shares outstanding of common stock = 1,000,000 Shares outstanding of preferred stock = 500,000 Market price of common stock = $18. -The Operating Profit Margin is:

The Canadian government encourages certain types of business activity by:

Amortization:

A company that is running "lean and mean:"

What is the most common way to obtain small amounts of funds when additional funding is needed? Why is this type of funding so attractive?

Times interest earned is best described by:

For the following income statement and balance sheet, fill in the missing information for the calendar year ending December 31.

Additional funds needed for next year are projected to be $50,000. The Current Ratio is 1.00; the Debt Ratio is at 75%, dividend payout ratio is 15%. Explain how you would analyze additional funding needed.

Explain why prepaid expenses are considered to be an asse.