Solution is at H36:M65

BUS312 Quiz #1 Version D

The following is known about ABC Corporation.

Cost of goods sold during 1996 58% of sales
Other expenses during 1996 440
Depreciation during 1996 150
Regard depreciation as the same as CCA
Interest rate based on b.o.p. total debt 10%
Cash on balance sheet at Dec 31st 1995 50
Cash on balance sheet at Dec 31st 1996 60
Accounts receivable at Dec 31st 1995 80
Inventory at Dec 31st 1995 230
Current portion of LTD at Dec 31st 1995 100
Long term debt at Dec 31st 1995 490
Quick (Acid test) ratio at Dec 31st 1996 0.75
Net profit margin for the year 1996 5%
Net share purchases during 1996 0
Total equity increased during 1996 by 80
Dividends paid out during the year 1996 20
Amount of LTD due to be repaid each year 100
No new debt was taken during 1996
Accounts payable period (1996) 45
ROE (b.o.p.) for 1996 12.5%
During 1996 fixed assets were purchased for 110
Accounts payable for 1996 was the same as AP for 1995
No assets were sold during 1996
All turnovers based on figures from the 1996 financial statements

You are to
a. Fill in the blank statements
b. What is the inventory conversion period for 1996?
c. What is the FCF for 1996 using the operational definition?

BUS312 (98/2) Quiz #1D Name ………………………………

Student # ………………………………

Income Statement for the year ending December 31st, 1996

Revenue

COGS

Other expenses

EBITDA

Depreciation
EBIT

Interest

Earnings before tax

Tax

Net Income

Dividends

To retained earnings

Balance Sheets as at December 31st

1995 1996 1995 1996

Cash Accounts payable

Accounts receivable Current LTD

Inventory LTD

Net fixed asstes Equity

Inventory conversion period

FCF (operational definition)

………… Solution
…………

Income Statement for the year endin

Revenue

COGS

Other expenses

EBITDA

Depreciation
EBIT

Interest

Earnings before tax

Tax

Net Income

Dividends

To retained earnings

Balance Sheets as at Dec

1995 1996

Cash 50 60

Accounts receivable 80 122.26

Inventory 230 197.74

Net fixed asstes 1173.01 1133.01

1533.01 1513.01

Inventory conversion period 62.22

FCF (operational definition) 150.89

e year ending December 31st, 1996

2000

1160

440

400

150
 250

59

191

91 47.64%

100

20

80

ets as at December 31st

1995 1996

Accounts payable 143.01 143.01

Current LTD 100 100

Long term debt 490 390

Total equity 800 880

1533.01 1513.01