COLLEGE OF BUSINESS ADMINISTRATION

MASTER OF BUSINESS ADMINISTRATION (MBA)

SEMESTER FALL 2021-2022

Applied Corporate Finance

Assignment No. 1

Student Name:
Hamda Abdulrahman Mohamed Haway Alzarooni
Student ID:
U20102391
1. A firm has AED 250 million in inventory, AED 500 million in fixed assets, AED 110 million in accounts
receivables, AED 130 million in accounts payable, and AED 900 million in total assets. What is the
amount of the current assets, cash and net working capital.?
Current Assets = Total Assets - Fixed Assets
Current Assets = AED 900 M - AED 500 M
Current Assets = AED 400 M
Cash = Current Assets - Inventory - Accounts Receivable
Cash = AED 400 M - AED 250 M - AED 110 M
Cash = AED 40 M

NWC=Account receivable + inventory-accounts payable = 110M + 250M – 130M =AED 230M

2. Noor has AED 800 million in sales. The profit margin is 4.2 percent and the firm has 4,500,000
shares of stock outstanding. The market price per share is AED 60. What is the price-earnings ratio.
Earnings per share (EPS) = (Sales x profit margin) / number of shares
= (AED 800M x 4.2%) / 4,500,000
= AED 7.47
Price-earnings ratio = Price per share / EPS
= AED 60 / AED 7.47
= 8.04
Price-earnings ratio = 8.04
3. The Gulf Company has total operating income of AED 50 million. The depreciation expense was AED
4 million and dividends were paid in the amount of AED 8 million, accounts payables decreased by
AED 5 million, accounts receivables decreased by AED 12 million, inventory decreased by AED 15
million, interest expenses AED 1.8 million and tax rate 30%. What was the net cash flow from
operating activities?
Operating income 50 M
Less - depreciation 4M
Less – interest expense 1.8 M
EBT 44.2 M
Less Taxes (30%) 44.2 x 30%= 13.26 M
Net Profit 44.2 – 13.26= 30.49 M
Add Depreciation 4M
Add interest expense 1.8 M
Less decrease in account payable 5M
Add decrease in account receivable 12 M
Add decrease in inventory 15 M
Net Cash flow from operating activities 30 94+4+1.8-5+12+15=58.74M

4. If SAM's stock is currently trading at AED 40 and SAM has 20 million shares outstanding,
shareholder equity of 300 million, total assets 450 million and cash of 10 million, What is the SAM's
market-to-book ratio, the market capitalization and the enterprise value.
a). Market capitalization = Price per share x No of shares outstanding
Market capitalization = AED 40x20 M
Market capitalization = AED 800 M

b). Book Value of equity = 300 M

- Market to Book ratio = Market capitalization/Book Value of equity
Market to Book ratio = 800 M /300 M
Market to Book ratio = 2.67 times

c). Total Debt = Total Assets - Total equity

Total Debt = 450 million - 300 M
Total Debt = 150 M
Calculating Enterprise Value:-
Enterprise Value = Market capitalization + Total Debt - Cash & Cash equivalents
Enterprise Value = 800 M + 150 M - 10 M
Enterprise Value = 940 M

5. The Remal Company had net income in 2020 of AED 30 million. Here are some of the financial ratios
from the annual report.
Return on Assets = 6%
Debt Assets Ratio = 45%
Profit Margin = 4%
Using these ratios, calculate the following for the Remal Company:
a) Sales b) Total assets c) Total asset turnover d) Total debt e) Stockholders' equity f) Return on equity
(a) Sales= Net Income/Profit margin = AED 30 M / 4% = AED 750 M
(b) Total assets = Sales x Profit margin / Return on Assets = (750 x 4%) / 6% = AED 500 M
(c) Total asset turnover = Sales / Total assets = 750 / 500 = 1.5
(d) Total debt = Total Assets x Debt to Assets Ratio = 500 x 45% = AED 225 M
(e) Stock holders equity = Total Assets – Total Debt = 500 - 225 = AED 275 M
(f) Return on equity = Sales x Profit margin / Stock holders equity = (750 * 4%) / 275 = 10.91%