公司理财Corporate-Finance-第九版-CASE答案.doc
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1、C-45 CASE SOLUTIONSCase SolutionsFundamentals of Corporate FinanceRoss, Westerfield, and Jordan9th editionCHAPTER 2 C-5 CHAPTER 1THE McGEE CAKE COMPANY1.The advantages to a LLC are: 1) Reduction of personal liability. A sole proprietor has unlimited liability, which can include the potential loss of
2、 all personal assets. 2) Taxes. Forming an LLC may mean that more expenses can be considered business expenses and be deducted from the companys income. 3) Improved credibility. The business may have increased credibility in the business world compared to a sole proprietorship. 4) Ability to attract
3、 investment. Corporations, even LLCs, can raise capital through the sale of equity. 5) Continuous life. Sole proprietorships have a limited life, while corporations have a potentially perpetual life. 6) Transfer of ownership. It is easier to transfer ownership in a corporation through the sale of st
4、ock.The biggest disadvantage is the potential cost, although the cost of forming a LLC can be relatively small. There are also other potential costs, including more expansive record-keeping.2.Forming a corporation has the same advantages as forming a LLC, but the costs are likely to be higher.3.As a
5、 small company, changing to a LLC is probably the most advantageous decision at the current time. If the company grows, and Doc and Lyn are willing to sell more equity ownership, the company can reorganize as a corporation at a later date. Additionally, forming a LLC is likely to be less expensive t
6、han forming a corporation.CHAPTER 2CASH FLOWS AND FINANCIAL STATEMENTS AT SUNSET BOARDSBelow are the financial statements that you are asked to prepare.1.The income statement for each year will look like this:Income statement20082009Sales$247,259$301,392Cost of goods sold126,038159,143Selling & admi
7、nistrative24,78732,352Depreciation35,58140,217EBIT$60,853$69,680Interest7,7358,866EBT$53,118$60,814Taxes10,62412,163Net income$42,494$48,651Dividends$21,247$24,326Addition to retained earnings21,24724,3262.The balance sheet for each year will be:Balance sheet as of Dec. 31, 2008Cash$18,187 Accounts
8、payable $32,143Accounts receivable12,887 Notes payable 14,651Inventory27,119 Current liabilities $46,794Current assets$58,193 Long-term debt $79,235Net fixed assets$156,975 Owners equity 89,139Total assets$215,168 Total liab. & equity $215,168In the first year, equity is not given. Therefore, we mus
9、t calculate equity as a plug variable. Since total liabilities & equity is equal to total assets, equity can be calculated as: Equity = $215,168 46,794 79,235 Equity = $89,139Balance sheet as of Dec. 31, 2009Cash$27,478 Accounts payable $36,404Accounts receivable16,717 Notes payable 15,997Inventory3
10、7,216 Current liabilities $52,401Current assets$81,411 Long-term debt $91,195Net fixed assets$191,250 Owners equity 129,065Total assets$272,661 Total liab. & equity $272,661The owners equity for 2009 is the beginning of year owners equity, plus the addition to retained earnings, plus the new equity,
11、 so:Equity = $89,139 + 24,326 + 15,600Equity = $129,0653.Using the OCF equation:OCF = EBIT + Depreciation TaxesThe OCF for each year is:OCF2008 = $60,853 + 35,581 10,624 OCF2008 = $85,180OCF2009 = $69,680 + 40,217 12,163 OCF2009 = $97,7344.To calculate the cash flow from assets, we need to find the
12、capital spending and change in net working capital. The capital spending for the year was:Capital spendingEnding net fixed assets$191,250 Beginning net fixed assets156,975+ Depreciation40,217 Net capital spending$74,492And the change in net working capital was:Change in net working capitalEnding NWC
13、$29,010 Beginning NWC 11,399 Change in NWC$17,611So, the cash flow from assets was:Cash flow from assetsOperating cash flow$97,734 Net capital spending74,492 Change in NWC 17,611 Cash flow from assets$ 5,6315.The cash flow to creditors was:Cash flow to creditorsInterest paid $8,866 Net new borrowing
14、 11,960 Cash flow to creditors $3,0946.The cash flow to stockholders was:Cash flow to stockholdersDividends paid $24,326 Net new equity raised15,600 Cash flow to stockholders$8,726Answers to questions1.The firm had positive earnings in an accounting sense (NI 0) and had positive cash flow from opera
15、tions. The firm invested $17,611 in new net working capital and $74,492 in new fixed assets. The firm gave $5,631 to its stakeholders. It raised $3,094 from bondholders, and paid $8,726 to stockholders.2.The expansion plans may be a little risky. The company does have a positive cash flow, but a lar
16、ge portion of the operating cash flow is already going to capital spending. The company has had to raise capital from creditors and stockholders for its current operations. So, the expansion plans may be too aggressive at this time. On the other hand, companies do need capital to grow. Before invest
17、ing or loaning the company money, you would want to know where the current capital spending is going, and why the company is spending so much in this area already.CHAPTER 3 C-11 CHAPTER 3RATIOS ANALYSIS AT S&S AIR1.The calculations for the ratios listed are:Current ratio = $2,186,520 / $2,919,000 Cu
18、rrent ratio = 0.75 timesQuick ratio = ($2,186,250 1,037,120) / $2,919,000 Quick ratio = 0.39 timesCash ratio = $441,000 / $2,919,000 Cash ratio = 0.15 timesTotal asset turnover = $30,499,420 / $18,308,920 Total asset turnover = 1.67 timesInventory turnover = $22,224,580 / $1,037,120 Inventory turnov
19、er = 21.43 timesReceivables turnover = $30,499,420 / $708,400 Receivables turnover = 43.05 timesTotal debt ratio = ($18,308,920 10,069,920) / $18,308,920 Total debt ratio = 0.45 timesDebt-equity ratio = ($2,919,000 + 5,320,000) / $10,069,920 Debt-equity ratio = 0.82 timesEquity multiplier = $18,308,
20、920 / $10,069,920 Equity multiplier = 1.82 timesTimes interest earned = $3,040,660 / $478,240 Times interest earned = 6.36 timesCash coverage = ($3,040,660 + 1,366,680) / $478,420 Cash coverage = 9.22 timesProfit margin = $1,537,452 / $30,499,420 Profit margin = 5.04%Return on assets = $1,537,452 /
21、$18,308,920 Return on assets = 8.40%Return on equity = $1,537,452 / $10,069,920 Return on equity = 15.27% 2. Boeing is probably not a good aspirant company. Even though both companies manufacture airplanes, S&S Air manufactures small airplanes, while Boeing manufactures large, commercial aircraft. T
22、hese are two different markets. Additionally, Boeing is heavily involved in the defense industry, as well as Boeing Capital, which finances airplanes. Bombardier is a Canadian company that builds business jets, short-range airliners and fire-fighting amphibious aircraft and also provides defense-rel
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