Exam 5: Risk Analysis

Below is selected information from Marker's 2012 financial statements: As of Dec.31, 2012 Dec. 31, 2011 Cash and short-term investments \ 958,245 \ 745,800 Accounts Receivable (net) 125,850 135,400 nventories 195,650 175,840 Prepaid Expenses and other current assets 45,300 30,860 Total CurrentAssets \ 1,325,045 \ 1,087,900 Plant, Property and Equipment, net 1,478,320 1,358,700 Intangible Assets 125,600 120,400 Total Assets \ 2,928,965 \ 2,567,000 Short-term borrowings \ 25,190 \ 3,108 Current portion of long-term debt 45,000 40,000 Accounts payable 285,400 325,900 Accrued liabilities 916,722 705,89 ncome taxes payable 125,400 115,600 Total Current Liabilities \ 1,397,712 \ 1,225,499 Long-term Debt 450,000 430,000 Total Liabilities \ 1,847,712 \ 1,655,499 Shareholders' Equity \ 1,081,253 \ 911,501 Total Liabilities and Shareholders' Equity \ 2,928,965 \ 2,567,000 $\text { Selected Income Statement Data - for the year ending December 31, 2012: }$ Net Sales Cost of Goods Sold Operating Income Net Income \ 3,210,645 (2,310,210) \ 900,435 \ 324,850 $\text { Selected Statement of Cash Flow Data - for the year ending December } 31,2012 \text { : }$ Cash Flows from Operations interest Expense Income Tax Expense \ 584,750 42,400 114,200 -Marker's 2012 Interest Coverage ratio is:

Changes in interest rates can typically affect firms in all of the following ways except:

_________________________ concerns a firm's ability to make interest and principal payments on borrowings as they become due.

Which of the following ratios is not a measure of long-term solvency risk?

Mobile Company Mobile Company manufactures computer technology devices.Selected financial data for Mobile is presented below; use the information to answer the following questions: As of Dec. 31,2010 Dec. 31,2009 Cash and short-term investments \ 1,267,038 \ 616,604 Accounts Receivable (net) 490,816 665,828 Inventories 338,599 487,505 Prepaid Expenses and other current assets \underlind 291,915 Total Current Assets \ 2,388,964 \ 2,061,852 Current Liabilities Short-term borrowings \ 25,190 \ 38,108 Current portion of long-term debt 182,295 210,090 Accounts payable 296,307 334,247 Accrued liabilities 941,912 743,999 Income taxes payable Total Current Liabilities 1.648753 566237 $\text { Selected Income Statement Data - for the year ending December 31, 2010: }$ Net Sales \ 4,885,340 Cost of Goods Sold 2,542,35 Operating Income 733,54 Net Income 230,10 $\text { Selected Statement of Cash Flow Data - for the year ending December } 31,2010:$ Cash Flows from Operations \ 1.156,08 -Refer to the information for Mobile Company.Mobile's current ratio in 2010 was:

The source of risk related to political unrest and exchange rate changes are _________________________.

On January 1,2012,Deputron Company's beginning inventory was $600,000.During 2012,the company purchased $2,600,000 of additional inventory,and on December 31,2012 Creek's ending inventory was $565,000. Required: What was Deputron's inventory turnover for 2012? 

Bragdon Company is consistently profitable.Its normal financial statement relationships are as follows: Current ratid 3.5:1 Inventary tundver 4.5 tines Liabilities to as5ets ratid 0.8:1 Required: Determine whether each transaction or event that follows increased,decreased or had no effect on each ratio. 1.Bragdon declared but did not pay a cash dividend. 2.Customers returned invoiced goods for which they had not paid. 3.Accounts payable were paid at year-end. 4.Bragdon recorded both a receivable from an insurance company and a loss on a building due to fire damage. 5.Early in the year,Bragdon increased the selling price of one of its products because customer demand far exceeded production capacity.The number of units sold this year was the same as last year.

Given the following information,calculate for Year 2 the number of days of working capital financing the firm will need to obtain from other sources? Year 1 Yerar 2 Accounts Receivable, net 518 562 Accounts Payable 203 192 Inventary 535 564 Credit Sales 3,205 3,636 Cast af Gads Sald 2,037 2,294 Selling and Adrin Estuense 1,081 1,131

Working capital is defined as ______________________ minus _____________________.

All of the following are common international risks faced by companies except:

Below is selected information from Marker's 2012 financial statements: As of Dec.31, 2012 Dec. 31, 2011 Cash and short-term investments \ 958,245 \ 745,800 Accounts Receivable (net) 125,850 135,400 nventories 195,650 175,840 Prepaid Expenses and other current assets 45,300 30,860 Total CurrentAssets \ 1,325,045 \ 1,087,900 Plant, Property and Equipment, net 1,478,320 1,358,700 Intangible Assets 125,600 120,400 Total Assets \ 2,928,965 \ 2,567,000 Short-term borrowings \ 25,190 \ 3,108 Current portion of long-term debt 45,000 40,000 Accounts payable 285,400 325,900 Accrued liabilities 916,722 705,89 ncome taxes payable 125,400 115,600 Total Current Liabilities \ 1,397,712 \ 1,225,499 Long-term Debt 450,000 430,000 Total Liabilities \ 1,847,712 \ 1,655,499 Shareholders' Equity \ 1,081,253 \ 911,501 Total Liabilities and Shareholders' Equity \ 2,928,965 \ 2,567,000 $\text { Selected Income Statement Data - for the year ending December 31, 2012: }$ Net Sales Cost of Goods Sold Operating Income Net Income \ 3,210,645 (2,310,210) \ 900,435 \ 324,850 $\text { Selected Statement of Cash Flow Data - for the year ending December } 31,2012 \text { : }$ Cash Flows from Operations interest Expense Income Tax Expense \ 584,750 42,400 114,200 -Marker's 2012 Long-term Debt to Long-Term Capital ratio is:

The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?

The current ratio is one of the measures of the __________ of the firm.

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk,which of the following is not one of the factors?

Which of the following properly links the factors affecting a firm's ability to generate cash with its need to use cash in financing? a. Profitability of goods and services sold Working capital requirements b. Sales of existing plant assets Plant capacity requirements c. Borrowing capacity Debt service requirements d. Profitability of goods and services sold Debt service requirements

When a company wants to calculate the current ratio they would divide the current assets by the ___________

A.What are the three measures that are used to analyze long-term solvency risk? B.describe each measure briefly

One problem with debt ratios is that they provide no information about the ability of the firm to generate ________________________________________ to service debt.