Corporate Finance Analysis with Problems and Solutions

This document provides a detailed analysis of corporate finance with problems and solutions. It covers topics like Days Sales Outstanding, Debt Ratio, Market/Book Ratio, PE Ratio, ROE, Du Pont Analysis, Current and Quick Ratios, FV of Single Amount, PV of Single Amount, FV of Ordinary Annuity vs Annuity Due, PV of an Annuity, and PV Uneven Cash Flow Stream.

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student:
Name of the University:
Authors Note:

CORPORATE FINANCE ANALYSIS
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Table of Contents
Chapter 3 Problems:...................................................................................................................2
3-1 Days Sales Outstanding:......................................................................................................2
3-2 Debt Ratio:...........................................................................................................................2
3-3 Market/Book Ratio:.............................................................................................................2
3-4 PE Ratio:..............................................................................................................................2
3-5 ROE:....................................................................................................................................3
3-6 Du Pont Analysis:................................................................................................................3
3-7 Current and Quick Ratios:...................................................................................................3
Chapter 4 Problems:...................................................................................................................3
4-1 FV of Single Amount:..........................................................................................................3
4-2 PV of Single Amount:..........................................................................................................4
4-6 FV of Ordinary Annuity vs Annuity Due:...........................................................................4
4-13 PV of an Annuity:..............................................................................................................4
4-14 PV Uneven Cash Flow Stream:.........................................................................................5
Bibliography:..............................................................................................................................6

CORPORATE FINANCE ANALYSIS
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Chapter 3 Problems:
3-1 Days Sales Outstanding:
Particulars Value
Days Sales Outstanding 20.00
Average sales per day $ 20,000.00
Receivables Days Sales Outstanding * Average sales per day
Receivables 20 * 20,000
Receivables $ 400,000.00
3-2 Debt Ratio:
Particulars Value
Notes Payable $ 5.00
Long-term debt $ 25.00
Total Liabilities $ 30.00
Total Assets $ 200.00
Debt ratio Total Liabilities / Total Assets
Debt ratio 0.15
3-3 Market/Book Ratio:
Particulars Value
Market price per share $ 75.00
Common equity $ 6,000,000,000.00
Shares outstanding $ 800,000,000.00
Book value per share $ 7.50
Market/book ratio Market price per share / Book value per share
Market/book ratio 10.00
3-4 PE Ratio:
Particulars Value
Price/cash flow ratio 8.00
Cash flow per share $ 3.00
Price Per Share Price/cash flow ratio * Cash flow per share
Price Per Share $ 24.00
Earnings per share $ 1.50
Price/earnings ratio Price per share / Earnings per share

CORPORATE FINANCE ANALYSIS
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Price/earnings ratio 16.00
3-5 ROE:
Particulars Value
Sales $ 100,000,000.00
Total Assets $ 50,000,000.00
Total assets turnover Sales / Total Assets
Total assets turnover 2.00
Profit Margin 3.00%
Equity Multiplier 2.00
ROE Profit margin * Total assets turnover * Equity multiplier
ROE 12.00%
3-6 Du Pont Analysis:
Particulars Value
ROA 12.00%
Profit Margin 5.00%
Total asset turnover ROA / Profit Margin
Total asset turnover 2.40
ROE 20.00%
Equity multiplier ROE / ROA
Equity multiplier 1.67
3-7 Current and Quick Ratios:
Particulars Value
Current ratio 1.50
Current assets $ 3,000,000.00
Current liabilities Current assets / Current ratio
Current liabilities $ 2,000,000.00
Quick ratio 1.00
Inventories Current Assets - (Current Liabilities * Quick ratio)
Inventories $ 1,000,000.00
Chapter 4 Problems:
4-1 FV of Single Amount:
Particulars Value

CORPORATE FINANCE ANALYSIS
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Deposit $ 10,000.00
Interest annually 10.00%
Time 5.00
Future Value $ 16,105.10
4-2 PV of Single Amount:
Particulars Value
Future Payment $ 5,000.00
Interest annually 7.00%
Time 20.00
Present Value $1,292.10
4-6 FV of Ordinary Annuity vs Annuity Due:
Particulars Value
Payment each
year $ 300.00
Interest annually 7.00%
Time 5.00
Ordinary $1,725.22
Annuity Due $1,845.99
4-13 PV of an Annuity:
a. Particulars Value
PMT $ 400.00
Interest annually 10.00%
Time 10.00
Ordinary $2,457.83
Annuity Due $2,703.61
b. Particulars Value
PMT $ 200.00
Interest annually 5.00%
Time 5.00
Ordinary $865.90
Annuity Due $909.19
c. Particulars Value

CORPORATE FINANCE ANALYSIS
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PMT $ 400.00
Interest annually 0.00%
Time 5.00
Ordinary $2,000.00
Annuity Due $2,000.00
4-14 PV Uneven Cash Flow Stream:
a
. Year Cash Stream A Cash Stream B
1 $ 100.00 $ 300.00
2 $ 400.00 $ 400.00
3 $ 400.00 $ 400.00
4 $ 400.00 $ 400.00
5 $ 300.00 $ 100.00
Discounting rate 8% 8%
NPV $1,251.25 $1,300.32
b
. Year Cash Stream A Cash Stream B
1 $ 100.00 $ 300.00
2 $ 400.00 $ 400.00
3 $ 400.00 $ 400.00
4 $ 400.00 $ 400.00
5 $ 300.00 $ 100.00
Discounting rate 0% 0%
NPV $1,600.00 $1,600.00

CORPORATE FINANCE ANALYSIS
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Bibliography:
Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment:
Theory And Practice, Canadian Edition. Nelson Education.
Ehrhardt, M.C. and Brigham, E.F., 2016. Corporate finance: A focused approach. Cengage
learning.