Financial Analysis and Modeling
Q1. Hailey, Inc., has sales of $ 38,530, costs of $ 12,750, depreciation expense $2,550, and interest expense of $1,850. If the tax rate is 35 percent, what is operating cash flow, or OCF?
Q2. If jPhone, Inc., has an equity multiplier of 1.83, total asset turnover of 1.65, and profit margin of 5.2 percent, what is its ROE?
Q.3 Based on the following information, calculate the sustainable growth rate for Southern Light Co.:
Profit Margin = 8.1 percent
Capital Intensity ratio= 0.45
Debt-Equity ratio = 0.55
Net Income= $120,000
Dividends = $ 65,000
Q4 For each of the following, compute the present value:
Present Value Years Interest rate Future value
15 7% $ 17,328
8 11 41,517
13 10 790,382
25 13 647,816
Q5 You are trying to save to buy a new $ 150,000 Ferrari car. You have $ 35,000 today that can be invested at your bank. The bank pays 2.1 percent annual interest on its account. How long will it be before you have enough to buy the car?
Q6.Booker,Inc., has identified an investment project with the following cash flows. If discount rate is 8 percent, what is the future value of these cash flows in year 4? What is the future value at an interest rate of 11 percent and 24 percent?
Year Cash Flow
1 $ 985
2 1,160
3 1,325
4 1,495
Q7 For each of the following annuities, calculate the annual cash flow.
Present Value Years Interest rate
$ 1,900 8 5%
6,000 40 7
2,950 25 8
6,400 13 4
Q8. An investment offers a total return of 13 percent over the coming year, Janet Jello thinks the total return on this investment will be 8 percent. What does Janet believe the inflation rate will be over the next year?
Q9. You purchase a bond with an invoice price $ 1,043. The bond has coupon rate of 5.7 percent, semiannual coupons, a $ 1,000 par value, and there are 5 months to the next coupon date. What is the clean price on bond?
Q10. Mitchell, Inc., is expected to maintain constant 4.6 percent growth rate in its dividend, indefinitely. If the company has dividend yield of 5.8 percent, what is the required return on the company’s stock?
Q11. The Sleeping Flower Co. has earnings of $ 2.65 per share. The benchmark PE for company is 18. What stock price would you consider appropriate? What if the bench PE were 21?
Q12. Forecast the financial performance of the COMPANY YOU CHOSE FOR PROJECT WORK in previous weeks.
Remember to include the tools used in financial forecasting (e.g. the pro forma statements). Analyze the future performance of your company by using the current available financial information (historical statements) and analyzing that information to predict the financial performance of the company.
