NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting &
ID: 2793516 • Letter: N
Question
NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting & Finance) Corporate Finance (FINC 201) 1IZOI Sept. 20, 2017 Prof. Raja Nag Name: Ahmad Naser 1106056Maximum tim: 15 minutes You are given the following information: MICROFRAME COMPUTER COMPANY Balance Sheet (as of 12-31-2016) ASSETS LIABILITIES& STOCKHOLDERS FQUITY Cash Accounts Receivable 70,000 Inventory $40,000 80,000 210,000 Accounts Payable Accrued Expenses Long-term debt $50,000 40,000 130,000 Plant & Equipment Common stock Retained Earnings 80,000 100,000 Total Assets: $400,000 Total Liabilities& Equity: $400,000 MICROFRAME COMPUTER COMPANY Income Statement For the year ended December 31, 2016 Sales (all on credit) Cost of Goods Sold Gross Profft Sales and Administrative Expense Depreciation Operating Profit Interest Expense Earnings before Taxes Taxes (@ 30%) Net Income: S 720,000 500,000 220,000 - 20,000 -40,000 160,000 - 16,000 144,000 -43,200 $ 100.800Explanation / Answer
Debt to Equity=Total Liabilities/Equity=(50000+40000+130000)/(80000+100000)=1.222
Inventory turnover=Cost Of Goods Sold/Inventory=500000/80000=6.25
Days Sales Oustanding=365*accounts receivable/credit sales=365*70000/720000=35.48611
Return on Equity=Net Income/Equity=100800/(80000+100000)=56%
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