Quick few questions: 1. What ae the absolute ralues of 3.57 nd-20,000? A firm\'s

Question

Quick few questions:

1. What ae the absolute ralues of 3.57 nd-20,000? A firm's cash reserves balance increases by 5% over the course of a year. If the firm's balance was $250,000 at the beginning of the rear, what is its cash resecre balance at the end of the year 2. J Befou ane t neem. at the end of 1999-5125.000 and ta: ate " 39the miat " its Eamg uncome at the end of 1999 was $125.000 und its tax ate as 39.5%, the "that ats Euangs Befoe Taxes? Hint when nerking backaarti !? the income statement, duide tbe net income (1-income tae rate). 4. At the ead of 2004, Fim B eported encrent assets of $650,000 and crent Eabilities of $385,000. What is the ratio of current assets to curcentliabilities? Hint Calaulating ratios is simply dividing one mumber ly the otber 5. Ficm C's income statement sepocts net income of $13,000,000 and a dividend payont of $2,500,000. What peccentage of earnings does Fim C pay out to its shareholdes? p ercentage of e acnings does Ficm C pay out to its shaseholdess? Hint To calaulate the percentage of a eannings (i,tbe wbole) paid out to sbarebolders, divide tbe dividend payont by earnings

Explanation / Answer

1. The absolute value of 3.57 is 4.

2. To calculate the ending balance at the end of the year , the opening balance has to be multiplied by 105% as there is an increase of 5%

So, $250,000 * 105% = $ 262,500

3. Net income = $125,000, tax rate 39.5%

Income before tax would be = net income / (1-tax rate)

= 125,000/(1-39.5%)

= $ 206,612

4. Current assets = $ 650,000

Current liabilities = $ 385,000

Current ratio = current assets/current liabilities = 650,000/385,000 = 1.69

5. Net income = 13,000,000

Dividend paid = 2,500,000

Dividend payout = 19%

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