Agec 424 Final Exam
Fall-2012 FINAL EXAM AGEC 424 (246 total points)
Name___________________________ Date___________
You must show logically correct work, including calculator inputs and outputs for all problems to receive credit. Show signs on calculator inputs. Differentiate calculator outputs from inputs.
Ratio | Industry median | AgBiz Inc. | Profit margin (PM = ROS) | 5% | 2.5% | Total Asset Turnover | 2 x | 4 x | Debt ratio (TL/TA) | 50% | 75% | DSO (also called ACP) | 25 days | 10 days | ITO (COGS/inventory) | 10 x | 15 x | Accounts payable deferral | 20 days | 20 days |
Use the above data for questions 1-4. 1. (3 points) How does the ROA for AgBiz and the industry compare (you have to first determine both ROAs to compare them)? Explain very briefly.
2. (12 points) Construct the extended Du Pont equation for both AgBiz Inc. and for the industry. Then analyze each of the three components of the company's ROE in a side-by-side comparison to the industry (say something about each component).
3. (8 points) Show a side by side comparison of the cash conversion cycle for AgBiz Inc. with the industry. Use the CCC to analyze working capital management for AgBiz Inc. in comparison to the industry (say something about each component).
4. (2 points) Based on the data and information on this page point out any red flags or major successes that you see for AgBiz Inc.
5. Critically evaluate the following statements made over the years by groups during AGEC 424 term project presentations. Explain in one or two sentences.
a. (2 points) My company has a debt ratio (TL/TA) of 1.08.
b. (2 points) The industry has an equity multiplier of 0.73.
c. (2 points) My company has poor earnings from interest because TIE is only 2 compared to the industry median of 8.
d. (2 points) I need to present both ITO and inventory conversion period because they show different information.
6. The risk free rate and MRP were given to you as 2%
Name___________________________ Date___________
You must show logically correct work, including calculator inputs and outputs for all problems to receive credit. Show signs on calculator inputs. Differentiate calculator outputs from inputs.
Ratio | Industry median | AgBiz Inc. | Profit margin (PM = ROS) | 5% | 2.5% | Total Asset Turnover | 2 x | 4 x | Debt ratio (TL/TA) | 50% | 75% | DSO (also called ACP) | 25 days | 10 days | ITO (COGS/inventory) | 10 x | 15 x | Accounts payable deferral | 20 days | 20 days |
Use the above data for questions 1-4. 1. (3 points) How does the ROA for AgBiz and the industry compare (you have to first determine both ROAs to compare them)? Explain very briefly.
2. (12 points) Construct the extended Du Pont equation for both AgBiz Inc. and for the industry. Then analyze each of the three components of the company's ROE in a side-by-side comparison to the industry (say something about each component).
3. (8 points) Show a side by side comparison of the cash conversion cycle for AgBiz Inc. with the industry. Use the CCC to analyze working capital management for AgBiz Inc. in comparison to the industry (say something about each component).
4. (2 points) Based on the data and information on this page point out any red flags or major successes that you see for AgBiz Inc.
5. Critically evaluate the following statements made over the years by groups during AGEC 424 term project presentations. Explain in one or two sentences.
a. (2 points) My company has a debt ratio (TL/TA) of 1.08.
b. (2 points) The industry has an equity multiplier of 0.73.
c. (2 points) My company has poor earnings from interest because TIE is only 2 compared to the industry median of 8.
d. (2 points) I need to present both ITO and inventory conversion period because they show different information.
6. The risk free rate and MRP were given to you as 2%