solutions to ch 9-11-15

8/9/2019 Solutions to CH 9-11-15

1/8

Solution to chapter 9 problems

9-6 Cash $ 100.00 2.0 = $ 200.00

Accounts receivable 200.00 2.0 = 400.00

Inventories 200.00 2.0 = 400.00

Net fixe assets! "00.00 1.0 = "00.00

#otal assets $1000.00 $1"00.00

Accounts %a&able $ "0.00 2 = $ 100.00

Accruals "0.00 2 = 100.00

Notes %a&able 1"0.00 ' 0 = 1"0.00

(on)-ter* ebt 400.00 ' 0 = 400.00

Co**on stoc+ 100.00 ' 0 = 100.00

,etaine earnin)s!! 2"0.00 ' 40 = 290.00

#otal liabilities

an euit& $1000.00 $1140.00

AN = $ /60.00

!Ca%acit& sales = ales0." = $10000." = $2000 ith res%ect to existin) fixe assets.

#ar)et A ratio = $"00$2000 = 0.2".

#ar)et A = 0.2"3$2000 = $"00 = ,euire A. ince the fir* currentl& has $"00 offixe assets no ne fixe assets ill be reuire.

!!Aition to ,5 = 33131 7 8a&out ratio = 0.0"3$200030.4 = $40.


2/8

9- a. AN = 3A0!03 7 3(0!03 7 33131 7 %a&out

=

/"0$

".122$

3$0 7

/"0$

".1$

3$0 7

/"0$

".10$

3$42030.6 = $1/.44 *illion.

#he 5xcel s%reasheet oul loo+ li+e this:

b.


3/8

c. Upton Computers

Pro Forma Balance Sheet

December 31, 2013

(Millions of Dollars

201/

orecast 8ro or*a

;asis < 201/ after

2012 201/ ales Aitions 8ro or*a inancin) inancin)

Cash $ /." 0.0100 $ 4.20 $ 4.20

,eceivables 26.0 0.04/ /1.20 /1.20

Inventories ".0 0.16" 69.60 69.60

#otal current assets $ ." $10".00 $10".00

Net fixe assets /".0 0.100 42.00 42.00

#otal assets $122." $14.00 $14.00

Accounts %a&able $ 9.0 0.02" $ 10.0 $ 10.0

Notes %a&able 1.0 1.00 '1/.44 /1.44

Accruals ." 0.024/ 10.20 10.20

#otal current liabilities $ /"." $ /9.00 $ "2.44

ort)a)e loan 6.0 6.00 6.00

Co**on stoc+ 1".0 1".00 1".00

,etaine earnin)s 66.0 ."6! /."6 /."6

#otal liab. an euit& $122." $1//."6 $14.00

AN = $ 1/.44

! = $10."$/"0 = /


4/8

8a&out = $4.2$10." = 40


5/8

b. B?201/= $/4.9631.06D30.11-0.06 = $41.1"2 *illion.

c. ?@% at 12/12012= $/4.96 ' $41.1"2D31'0.11 = $699.20 *illion.

. #otal cor%orate value = $699.20 ' $49.9 = $49.10 *illion.

e. ?alue of euit& = $49.10 7 3$69.9 ' $140. - $/".0 = $"0/.4 *illion.

8rice %er share = $"0/.4 10 = $"0./4.

Solution to chapter 15 problems

1"- a. Bere are the ste%s involve:

31 >eter*ine the variable cost %er unit at %resent ?:

8rofit = 83E - C - ?3E

$"00000 = 3$1000003"0 - $2000000 - ?3"0

"03? = $2"00000

? = $"0000.

32 >eter*ine the ne %rofit level if the chan)e is *ae:

Ne %rofit = 823E2 - C2- ?23E2

= $9"00030 - $2"00000 - 3$"0000 - $1000030

= $1/"0000.


6/8

3/ >eter*ine the incre*ental %rofit:

8rofit = $1/"0000 7 $"00000 = $"0000.

34 5sti*ate the a%%roxi*ate rate of return on ne invest*ent:

,eturn = 8rofitInvest*ent = $"0000$4000000 = 21.2"


7/8

c. It is i*%ossible to state uneuivocall& hether the ne situation oul have *ore or less

business ris+ than the ol one. e oul nee infor*ation on both the sales %robabilit&

istribution an the uncertaint& about variable in%ut cost in orer to *a+e this eter*ination.

Boever since a hi)her brea+even %oint other thin)s hel constant is *ore ris+&. Also the

%ercenta)e of fixe costs increases:

@l:

E3?C

C

+

=

000"002$0000002$

0000002$

+

= 44.44


8/8

bG= 0. r 7 r,= 6.0 r r31 7 #

(everebeta

a rsb ACCc

0 100< 0.00 6.0< /.60< 0.0 9.0< 9.0

solutions to ch 9-11-15

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