Question

quant analysis help

What is the operating cash flow for 2016? Total Revenues Cost of Sales Gross Profit SGA Expenses Depreciation Earnings Before Interest and Taxes Interest Taxable income Taxes 21,000 10,000 11,000 6,000 1,500 3,500 500 3,000 1.000

Answer 1

3000 Solution 1 Computation of Operating Cash flow Income before Taxes Add adjustments for: Interest paid Depreciation Operating profits before Working capital changes 500 1500 5000 Less: Taxes paid Cash flow from Operating Activities -1000 4000 Solution 2 A firm's Cash flow from Assets maybe classifies as: Operating Cashflow - Net capital spending - change in Net working Capital Solution 15 You have been tasked with deciding whether a new project should be financed with through the issuance of equity or new borrowing. This is Answer Should be A Capital Structure decision Explaination: A Capital Structure decision involves deciding which source of finance is to be choosen and what must be the proportion of such sources. A Capital Budgeting decision involves deciding wheather a project is to be commenced or not based upon the estimated future cash inflows and their present values. A Working Capital management decision is required to plan use of Current Assets and Current Liabilities Since, The decision required in the question deals with whether a project is to be financed using equity or New borrowings it is a Capital Structure decision.

Solution 16. The last option, The Book Value of an Asset on the Balance sheet will be close to its Market Value is the FALSE one Explaination: The Book value of an Asset is based upon the historical cost of such asset not upon the Market Value value. For Example: A Land Acquired 10 years ago for $1 million will be shown in the Balance sheet at its Value $1 million though its Market value will be much higher say $1.8 million. Thus, it is false to say that Book Value is close to the Market value of Asset Solution 26 The Quick Ratio is what type of ratio? Answer will be Liquidity Explanation A Quick Ratio is the ratio between Quick Assets or Kiquid Assets and Current Liabilities Quick Ratio = Liquid Assets or Quick Assets / Current Liabilities Solution 27 Financial Ratios that measure a firm's ability to pay its bills over the short-run without undo stress are known as: Solvency Answer will be Ratio

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