Question

1) .Bike-With-Us Corporation is a specialty bicycle parts replacement venture. The founders borrowed $50,000 from members of their families and each put up $30,000 in equity capital. Retail space was rented and $60,000 was spent for fixtures and store equipment. Following are after one complete year of operation in 2017:

Income Statement:

Sales	325,000
Less: Operating costs	285,000
EBITDA	40,000
Less: Depreciation	10,000
EBIT	30,000
Less: Interest	5,000
EBT	25,000
Less: Taxes	6,000
Net Income	19,000

Balance Sheet:

Cash	1,000	Payables	11,000
Receivables	30,000	Accruals	10,000
Inventories	50,000	Total Current Liabilities	21,000
Total Current Assets	81,000	Long-term Loan	50,000
Fixed Assets, Net	50,000	Stockholders' Equity	60,000
Total Assets	131,000	Total Liabilities and Equity	131,000

Questions:

A. Calculate the current ratio and NWC-to-total-assets ratio.

B. Calculate the debt-to-equity ratio and interest coverage ratio

C. Calculate the net profit margin, sales-to-total-assets ratio, and the equity multiplier.

D. Show the ROE model with its three components.

F. Calculate the operating return on assets.

2) A venture has the following monthly info: Monthly cash operating expenses: $25,000 Monthly cash sales: $20,000 Cash on hand: $50,000

Questions:

-What’s net cash burn per month?

-What’s cash burn rate?

-Describe some ways to reduce net cash burn.

Answer 1