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- This assignment is an individual assignment.
- The Assignment must be submitted only in WORD format via allocated folder on Blackboard.
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- Students must mention question number clearly in their answer.
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Submissions without this cover page will NOT be accepted.
Assignment Questions
Q1 (1.5 marks)
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.
- 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.
Q2. (1 Mark)
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.
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 |
Q3. Calculate the following ratios from the Balance Sheet and the Income Statement given below: (1.5 Mark)
- Current Ratio
- Debt Ratio
- Fixed asset turnover
- Total asset turnover
- Operating profit margin
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 |
Q4. Using the values below, answer the questions that follow: (1mark)
Amount of annuity: $500
Interest rate: 9%
N=10 years
- 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.
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