Finance Question

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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 annuityordinary or annuity dueis preferable as an investment? Explain why.

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