Business and Corporation Law PDF

Running Head: BUSINESS AND CORPORATION LAW 0
Fundamental of business finance
2/10/2020
Student’s Name

Fundamental of Business Finance
1
Question 1
Ratio Analysis
Formula Name Formula Calculation
Calculated
Ratio
Current ratio = Current Assets /Current
Liabailties 1775000/655000 2.71
Acid test ratio = Quick Assets/Current Liabailties 1125000/655000 1.72
Debt ratio = Total Debt/Total asstes 950000/2465000 0.39
Operating profit
margin = Operating Profit/Sales 1700000/9550000 18%
Operating return on assets = Operating income/assets 1700000/2465000 69%
Return on equity = Net Profit/Shareholder Equity 993000/860000 115%
Times interest earned
=
Earnings before interest and
tax/interest 1700000/45000 37.78
Average collection period = Average Debtors/cost of
sales * 365
725000/4866000*
365 54.38 days
Inventory turnover = Average inventory/cost of sales *
365
650000/4866000*
365 48.76 days
Fixed asset turnover
= Net Sales/Average Fixed assets 9550000/690000 13.84
Total asset turnover
= Sales/Total assets 9550000/2465000 3.87
Question 2
Market Value Ratios
Market Price Per
Share Price earning Ratio* Earning per share 11*42 462
Price/book ratio
Market Price Per Share/Book value per
share 462/17.40 26.55

Fundamental of Business Finance
2
Question 3
Future Value Calculation
Formula Calculation Future Value
FV=PV(1+r/m)^mt <=-FV(5%,5,,80000) SAR 1,02,102.53
FV=PV(1+r/m)^mt <=-FV(4%,12,,60000) SAR 7,65,293.40
FV=PV(1+r/m)^mt <=-FV(12%,4,,35500) SAR 55,859.94
FV=PV(1+r/m)^mt <=-FV(7%,15,,97000) SAR 2,67,626.06
Question 4
Present Value Calculation
Formula Calculation Present Value
PV = C1/ (1+R)^N <=-PV(5%,5,,900000)
SAR
7,05,173.55
PV = C1/ (1+R)^N <=-PV(4%,12,,478000)
SAR
2,98,557.39
PV = C1/ (1+R)^N <=-PV(12%,4,,279000)
SAR
1,77,309.54
PV = C1/ (1+R)^N <=-PV(7%,15,,440000)
SAR
1,59,476.25
Question 5
Compound annuity calculation (Future value)
Formula Calculation Future Value
P((1+r)^n)-1)/r)) <=-FV(5%,5,20000)
SAR
1,10,512.63
P((1+r)^n)-1)/r)) <=-FV(4%,12,42000)
SAR
6,31,083.83
P((1+r)^n)-1)/r)) <=-FV(12%,4,8000)
SAR
38,234.62
P((1+r)^n)-1)/r)) <=-FV(7%,15,19500)
SAR
4,90,015.93

Fundamental of Business Finance
3
Question 6
Compound annuity calculation (Present value)
Formula Calculation Future Value
P((1-(1+r)^-n)/r)) <=-PV(12%,5,20000)
SAR
72,095.52
P((1-(1+r)^-n)/r)) <=-PV(5%,12,42000)
SAR
3,72,256.57
P((1-(1+r)^-n)/r)) <=-PV(4%,4,8000)
SAR
29,039.16
P((1-(1+r)^-n)/r)) <=-PV(2%,5,19500)
SAR
91,912.46
Question 7
Formula Calculation Future Value
A = P (1+R/N)^NT FV(3%,10,,20000)
SAR
26,878.33
A = P (1+R/N)^NT FV(1%,48,,42000)
SAR
67,713.50
A = P (1+R/N)^NT FV(1%,48,,8000)
SAR
12,897.81