Question:
1. Consider the following financial statement information for the Zamboni Icers Corporation:
Item Beginning Ending
Inventory $ 11,200 $ 12,200
Accounts receivable 6,200 6,500
Accounts payable 8,400 8,800
Net sales $ 92,000
Cost of goods sold 72,000
All sales are on credit.
Calculate the operating and cash cycles. (Using 365 days a year. not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Operating cycle ____ days
Cash cycle _______days
2. The Metallica Heavy Metal Mining (MHMM) Corporation wants to diversify its operations. Some recent financial information for the company is shown here:
Stock price $ 74
Number of shares 30,000
Total assets $ 9,800,000
Total liabilities $ 4,700,000
Net income $ 420,000
Company is considering an investment that has the same PE ratio as the firm. The cost of the investment is $640,000, and it will be financed with a new equity issue. The return on the investment will equal the company's current ROE.
Tell me the current book value per share and the book value per share with the investment? (not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Book value per share
Current $ _____
New $ _______
Tell me the current market-to-book ratio and the market-to-book ratio with the investment? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Market-To-Book
Current _____
New _____
What is the current EPS and the EPS with the investment? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Earnings per share
Current $ ____
New $ ____
What is the NPV of this investment? ( answer should be indicated by a minus sign. Not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.)
NPV $ ______