Finance 486 Final Exam
Finance 486 Final Exam
1. EFN Calculation – 25 points
The most recent Financial Information for Golf Pro Inc. are shown here:
Income Statement Balance Sheet
Sales $3,400 Current Assets $4,400 Current Liabilities $880
Costs 2,800 Fixed Assets 5,700 Long Term Debt 3,580
Taxable Income 600 Equity 5,640
Taxes @ 34% 204 Total 10,100 Total $10,100
Net Income $ 396
Assets, costs and current Liabilities are proportional to sales. Long –term Debt and equity are not. The company maintains a constant 50% dividend payout ratio. As with every other firm in its industry, the next year’s sales are projected to increase by exactly 15%. What is the external financing needed?
The formula used for calculating EFN is
Assets/Sales (Forecasted Sales – Sales) – (Sales – Liabilities)/Sales (Forecasted Sales – Sales) – (Net Income/Sales)(Forecasted Sales)(Addition to Retained Earnings / Net Income)
EFN = 10,100 / 3,400 (3,910 – 3,400) – (3400 – 880)/3400 (3,910/3,400) – (210 – 1200)(3910)(198) = 1,155.30
The external financing needed for Golf Pro Inc. will be $1,155,30.
2. Financial Statement Analysis – 25 points
The Financial Statements for Johnson Inc. for the year ended December 31, 2009, follow. Johnson Inc Johnson Inc Income Statement Balance Sheet
For the year ended December 31, 2009 For year ended December 31, 2009
Sales Revenue $160,000 Assets
Less: Cost of goods sold 106,000 Cash $ 500
Gross profits $ 54,000 Marketable Securities 1,000
Less: Operating Expenses Accounts Receivable
1. EFN Calculation – 25 points
The most recent Financial Information for Golf Pro Inc. are shown here:
Income Statement Balance Sheet
Sales $3,400 Current Assets $4,400 Current Liabilities $880
Costs 2,800 Fixed Assets 5,700 Long Term Debt 3,580
Taxable Income 600 Equity 5,640
Taxes @ 34% 204 Total 10,100 Total $10,100
Net Income $ 396
Assets, costs and current Liabilities are proportional to sales. Long –term Debt and equity are not. The company maintains a constant 50% dividend payout ratio. As with every other firm in its industry, the next year’s sales are projected to increase by exactly 15%. What is the external financing needed?
The formula used for calculating EFN is
Assets/Sales (Forecasted Sales – Sales) – (Sales – Liabilities)/Sales (Forecasted Sales – Sales) – (Net Income/Sales)(Forecasted Sales)(Addition to Retained Earnings / Net Income)
EFN = 10,100 / 3,400 (3,910 – 3,400) – (3400 – 880)/3400 (3,910/3,400) – (210 – 1200)(3910)(198) = 1,155.30
The external financing needed for Golf Pro Inc. will be $1,155,30.
2. Financial Statement Analysis – 25 points
The Financial Statements for Johnson Inc. for the year ended December 31, 2009, follow. Johnson Inc Johnson Inc Income Statement Balance Sheet
For the year ended December 31, 2009 For year ended December 31, 2009
Sales Revenue $160,000 Assets
Less: Cost of goods sold 106,000 Cash $ 500
Gross profits $ 54,000 Marketable Securities 1,000
Less: Operating Expenses Accounts Receivable