The following data available for ABC company

The following data available for ABC company.

Account	Beginning balance	Ending Balance	Use/source of cash
Accounts payable	20,300	24,400
Inventory	60,600	67,200
Long term debts	127,500	125,800
Common stock	200,400	215,900

 

Required:

1. Calculate and identify the source of cash or the use of cash for each account change by filling into the column next to the ending balance.
2. Assume that beginning balance of accounts receivable is $23 400 and ending balance of accounts receivable of $22 300, total revenue is $237 000, total cost of sales is $ 165 000 and all sales are on credit. Calculate the operating cycle and cash cycle.

Big Water Ltd currently has the following capital structure

Big Water Ltd currently has the following capital structure:

Debt: $4,500,000 paying 9.5% coupon bonds outstanding with 12 years to maturity, an annual before-tax yield to maturity of 8% on a new issue. The bonds currently sell for $1,113 per $1,000 face value.

Ordinary Shares: 65,000 shares outstanding currently selling for $75 per share. The company just paid a $6.50 dividend per share and is experiencing a 6% growth rate in dividends, which it expects to continue indefinitely.

(Note – The firm’s marginal tax rate is 30%.)

 

Required:

1. Calculate the current total market value of the company.
2. Calculate the capital structure of the company.
3. Calculate the weighted average cost of capital (WACC) for the firm.

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Selected information for two companies competing in the catering industry

Selected information for two companies competing in the catering industry have been presented below.

 

Account	A Ltd	B Ltd
Current assets	$55250	$83950
Non-current assets	$125000	$149500
Current Liabilities	$29300	$11750
Non-current Liabilities	$44850	$72500
Equity	$106100	$149200
Profit	$37500	$26500

 

Required:

 

1. Calculate the following ratios for A Ltd and B Ltd:
   1. Current ratio.
   2. Return on Assets (ROA).
   3. Return on Equity (ROE).
2. From your calculations in part A, explain which entity is in a more favourable position.