HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: $\begin{array}{lll}\text { Dec. } 31,2004&\text { As of Dec. } 31,2005&\text { Current Assets }\\\hline 616,604 & \$ 1,267,038 & \text { Cash and short-term investments } \\ 665,828 & 490,816 & \text { Accounts Receivable (net) } \\ 487,505 & 338,599 & \text { Inventories } \\ 291,915&292,511&\text { Prepaid Expenses and other current asset: }\\ \$2,061,852&\$2,388,964&\text { Total Current Assets }\\\\ &&\text { Current Liabilities }\\\hline \$38,108 & \$ 25,190 & \text { Short-term borrowings } \\ 210,090 & 182,295 & \text { Current portion of long-term debt } \\ 334,247 & 296,307 & \text { Accounts payable } \\ 743,999 & 941,912 & \text { Accrued liabilities } \\ 239,793 & 203,049 & \text { Income taxes payable }\\1,566,237&1,648,753&\text { Total Curyent Liabilities } \end{array}$ $\text { SelectedIncome Statement Data - for the year ending December 31, } 2005$ $\begin{array}{ll} \$ 4,885,340 & \text { Net Sales } \\ 2,542,353 & \text { Cost of Goods Sold } \\ 733,541 & \text { Operating Income } \\ 230,101 & \text { Net Income } \end{array}$ SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: $ \$ 1,156,084 $$\quad$$\quad$$\quad$$\quad$CashFlows from Operations HighTech's current ratio in 2005 was

A) 1.07 B) 1.45 C) 1 D) .69 A) 1.07 B) 1.45 C) 1 D) .69

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: $\begin{array}{lll}\text { Dec. } 31,2004&\text { As of Dec. } 31,2005&\text { Current Assets }\\\hline 616,604 & \$ 1,267,038 & \text { Cash and short-term investments } \\ 665,828 & 490,816 & \text { Accounts Receivable (net) } \\ 487,505 & 338,599 & \text { Inventories } \\ 291,915&292,511&\text { Prepaid Expenses and other current asset: }\\ \$2,061,852&\$2,388,964&\text { Total Current Assets }\\\\ &&\text { Current Liabilities }\\\hline \$38,108 & \$ 25,190 & \text { Short-term borrowings } \\ 210,090 & 182,295 & \text { Current portion of long-term debt } \\ 334,247 & 296,307 & \text { Accounts payable } \\ 743,999 & 941,912 & \text { Accrued liabilities } \\ 239,793 & 203,049 & \text { Income taxes payable }\\1,566,237&1,648,753&\text { Total Curyent Liabilities } \end{array}$ $\text { SelectedIncome Statement Data - for the year ending December 31, } 2005$ $\begin{array}{ll} \$ 4,885,340 & \text { Net Sales } \\ 2,542,353 & \text { Cost of Goods Sold } \\ 733,541 & \text { Operating Income } \\ 230,101 & \text { Net Income } \end{array}$ SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: $ \$ 1,156,084 $$\quad$$\quad$$\quad$$\quad$CashFlows from Operations HighTech's quick ratio improved by what percentage from 2004 to 2005?

A) 30% B) 107% C) 25% D) 82% A) 30% B) 107% C) 25% D) 82%

Below is selected information from DXI's 2007 financial statements: \(\begin{array}{|l|l|l|} \hline \text { Dec. 31, 2006 } & \text { As of Dec.31, } 2007 & \\ \hline \$ 745,800 & \$ 958,245 & \text { Cash and short-term investments } \\ \hline 135,400 & 125,850 & \text { AccountsReceivable (net) } \\ \hline 175,840 & 195,650 & \text { Inventories } \\ \hline 30,860 & 45,300 & \text { Prepaid Expenses and other current assets } \\ \hline \$ 1,087,900 & \$ 1,325,045 & \text { Total Current Assets } \\ \hline 1,358,700 & 1,478,320 & \text { Plant, Property and Equipment, net } \\ \hline 120,400 & 125,600 & \text { Intangible Assets } \\ \hline \$ 2,567,000 & \$ 2,928,965 & \text { Total Assets } \\ \hline\\\hline & & \\ \hline 38,108 & \$ 25,190 & \text { Short-term borrowings } \\ \hline 40,000 & 45,000 & \text { Current portion of long-term debt } \\ \hline 325,900 & 285,400 & \text { Accounts payable } \\ \hline 705,891 & 916,722 & \text { Acculed liabilities } \\ \hline\\\hline 05,891 & \$ 16,722 & \text { Accued liablilties } \\ \hline 115,600 & 125,400 & \text { Income taxes payable } \\ \hline \$ 1,225,499 & \$ 1,397,712 & \text { Total Current Liabilities } \\ \hline 430,000 & 450,000 & \text { Long-term Debt } \\ \hline \$ 1,655,499 & \$ 1,847,712 & \text { Total Liabilities } \\ \hline \$ 911,501 & \$ 1,081,253 & \text { Shareholders' Equity } \\ \$ 2,567,000 & \$ 2,928,965 & \text { Total Liabilities and Shareholders Equity } \\ \hline \end{array}\) $\text { Selected Income Statement Data - for the year ending December 31,2007: }$ $\begin{array}{|c|l|l|} \hline \quad\quad\quad\quad\quad\quad\quad&\$ 3,210,645 & \text { Net Sales } \\ \hline&-2,310,210 & \text { Cost of GoodsSold } \\ \hline &900,435 & \text { Pperating Income } \\ \hline &324,850 & \text { Net Income } \\ \hline \end{array}$ $\text { SelectedStatement of Cash Flow Data - for the year encling December 31,2007:}$ $\begin{array}{|l|l|l|} \hline \quad\quad\quad\quad\quad\quad\quad&\$ 584,750 & \text { Cash Flows from Operations } \\ \hline &42,400 & \text { Interest Expense } \\ \hline &114,200 & \text { Income Tax Expense } \\ \hline \end{array}$ DXI's 2007 Long-term Debt to Shareholders' Equity ratio is

A) 31.4% B) 29.4% C) 34.0% D) 45.8% A) 31.4% B) 29.4% C) 34.0% D) 45.8%

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: $\begin{array}{lll}\text { Dec. } 31,2004&\text { As of Dec. } 31,2005&\text { Current Assets }\\\hline 616,604 & \$ 1,267,038 & \text { Cash and short-term investments } \\ 665,828 & 490,816 & \text { Accounts Receivable (net) } \\ 487,505 & 338,599 & \text { Inventories } \\ 291,915&292,511&\text { Prepaid Expenses and other current asset: }\\ \$2,061,852&\$2,388,964&\text { Total Current Assets }\\\\ &&\text { Current Liabilities }\\\hline \$38,108 & \$ 25,190 & \text { Short-term borrowings } \\ 210,090 & 182,295 & \text { Current portion of long-term debt } \\ 334,247 & 296,307 & \text { Accounts payable } \\ 743,999 & 941,912 & \text { Accrued liabilities } \\ 239,793 & 203,049 & \text { Income taxes payable }\\1,566,237&1,648,753&\text { Total Curyent Liabilities } \end{array}$ $\text { SelectedIncome Statement Data - for the year ending December 31, 2005: }$ $\begin{array}{ll} \$ 4,885,340 & \text { Net Sales } \\ 2,542,353 & \text { Cost of GoodsSold } \\ 733,541 & \text { Operating Income } \\ 230.101 & \text { Net Income } \end{array}$ $\text { SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: }$ $ \$ 1,156,084 $$\quad$$\quad$$\quad$Cash Flows from Operations HighTech's days accounts payable outstanding at the end of 2005 is

A) 7.53 days B) 48.09 days C) 45.51 days D) 50 days A) 7.53 days B) 48.09 days C) 45.51 days D) 50 days

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: $\begin{array}{lll}\text { Dec. } 31,2004&\text { As of Dec. } 31,2005&\text { Current Assets }\\\hline 616,604 & \$ 1,267,038 & \text { Cash and short-term investments } \\ 665,828 & 490,816 & \text { Accounts Receivable (net) } \\ 487,505 & 338,599 & \text { Inventories } \\ 291,915&292,511&\text { Prepaid Expenses and other current asset: }\\ \$2,061,852&\$2,388,964&\text { Total Current Assets }\\\\ &&\text { Current Liabilities }\\\hline \$38,108 & \$ 25,190 & \text { Short-term borrowings } \\ 210,090 & 182,295 & \text { Current portion of long-term debt } \\ 334,247 & 296,307 & \text { Accounts payable } \\ 743,999 & 941,912 & \text { Accrued liabilities } \\ 239,793 & 203,049 & \text { Income taxes payable }\\1,566,237&1,648,753&\text { Total Curyent Liabilities } \end{array}$ $\text { SelectedIncome Statement Data - for the year ending December 31, 2005: }$ $\begin{array}{ll} \$ 4,885,340 & \text { Net Sales } \\ 2,542,353 & \text { Cost of GoodsSold } \\ 733,541 & \text { Operating Income } \\ 230.101 & \text { Net Income } \end{array}$ $\text { SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: }$ $ \$ 1,156,084 $$\quad$$\quad$$\quad$Cash Flows from Operations HighTech's 2005 Inventory Turnover ratio is

A) 7.46 B) 11.83 C) 6.16 D) 5.62 A) 7.46 B) 11.83 C) 6.16 D) 5.62

Below is selected information from DXI's 2007 financial statements: \(\begin{array}{|l|l|l|} \hline \text { Dec. 31, 2006 } & \text { As of Dec.31, } 2007 & \\ \hline \$ 745,800 & \$ 958,245 & \text { Cash and short-term investments } \\ \hline 135,400 & 125,850 & \text { AccountsReceivable (net) } \\ \hline 175,840 & 195,650 & \text { Inventories } \\ \hline 30,860 & 45,300 & \text { Prepaid Expenses and other current assets } \\ \hline \$ 1,087,900 & \$ 1,325,045 & \text { Total Current Assets } \\ \hline 1,358,700 & 1,478,320 & \text { Plant, Property and Equipment, net } \\ \hline 120,400 & 125,600 & \text { Intangible Assets } \\ \hline \$ 2,567,000 & \$ 2,928,965 & \text { Total Assets } \\ \hline\\\hline & & \\ \hline 38,108 & \$ 25,190 & \text { Short-term borrowings } \\ \hline 40,000 & 45,000 & \text { Current portion of long-term debt } \\ \hline 325,900 & 285,400 & \text { Accounts payable } \\ \hline 705,891 & 916,722 & \text { Acculed liabilities } \\ \hline\\\hline 05,891 & \$ 16,722 & \text { Accued liablilties } \\ \hline 115,600 & 125,400 & \text { Income taxes payable } \\ \hline \$ 1,225,499 & \$ 1,397,712 & \text { Total Current Liabilities } \\ \hline 430,000 & 450,000 & \text { Long-term Debt } \\ \hline \$ 1,655,499 & \$ 1,847,712 & \text { Total Liabilities } \\ \hline \$ 911,501 & \$ 1,081,253 & \text { Shareholders' Equity } \\ \$ 2,567,000 & \$ 2,928,965 & \text { Total Liabilities and Shareholders Equity } \\ \hline \end{array}\) $\text { Selected Income Statement Data - for the year ending December 31,2007: }$ $\begin{array}{|c|l|l|} \hline \quad\quad\quad\quad\quad\quad\quad&\$ 3,210,645 & \text { Net Sales } \\ \hline&-2,310,210 & \text { Cost of GoodsSold } \\ \hline &900,435 & \text { Pperating Income } \\ \hline &324,850 & \text { Net Income } \\ \hline \end{array}$ $\text { SelectedStatement of Cash Flow Data - for the year encling December 31,2007:}$ $\begin{array}{|l|l|l|} \hline \quad\quad\quad\quad\quad\quad\quad&\$ 584,750 & \text { Cash Flows from Operations } \\ \hline &42,400 & \text { Interest Expense } \\ \hline &114,200 & \text { Income Tax Expense } \\ \hline \end{array}$ DXI's Liabilities to Assets Ratio for 2007 is

A) 105.1% B) 63.1% C) 78.3% D) 100.0% A) 105.1% B) 63.1% C) 78.3% D) 100.0%

Exam 5: Risk Analysis

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: Dec. 31,2004 As of Dec. 31,2005 Current Assets 616,604 \ 1,267,038 Cash and short-term investments 665,828 490,816 Accounts Receivable (net) 487,505 338,599 Inventories 291,915 292,511 Prepaid Expenses and other current asset: \2 ,061,852 \2 ,388,964 Total Current Assets Current Liabilities \3 8,108 \ 25,190 Short-term borrowings 210,090 182,295 Current portion of long-term debt 334,247 296,307 Accounts payable 743,999 941,912 Accrued liabilities 239,793 203,049 Income taxes payable 1,566,237 1,648,753 Total Curyent Liabilities $\text { SelectedIncome Statement Data - for the year ending December 31, } 2005$ \ 4,885,340 Net Sales 2,542,353 Cost of Goods Sold 733,541 Operating Income 230,101 Net Income SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: $\$ 1,156,084$ $\quad$ $\quad$ $\quad$ $\quad$ CashFlows from Operations HighTech's current ratio in 2005 was

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Question 21

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: Dec. 31,2004 As of Dec. 31,2005 Current Assets 616,604 \ 1,267,038 Cash and short-term investments 665,828 490,816 Accounts Receivable (net) 487,505 338,599 Inventories 291,915 292,511 Prepaid Expenses and other current asset: \2 ,061,852 \2 ,388,964 Total Current Assets Current Liabilities \3 8,108 \ 25,190 Short-term borrowings 210,090 182,295 Current portion of long-term debt 334,247 296,307 Accounts payable 743,999 941,912 Accrued liabilities 239,793 203,049 Income taxes payable 1,566,237 1,648,753 Total Curyent Liabilities $\text { SelectedIncome Statement Data - for the year ending December 31, } 2005$ \ 4,885,340 Net Sales 2,542,353 Cost of Goods Sold 733,541 Operating Income 230,101 Net Income SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: $\$ 1,156,084$ $\quad$ $\quad$ $\quad$ $\quad$ CashFlows from Operations HighTech's quick ratio improved by what percentage from 2004 to 2005?

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Question 22

Economic theory teaches that differences in market returns must relate to differences in

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Question 23

Discuss the differences between Chapter 7 and Chapter 11 bankruptcy filings?

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Question 24

Below is selected information from DXI's 2007 financial statements: Dec. 31, 2006 As of Dec.31, 2007 \ 745,800 \ 958,245 Cash and short-term investments 135,400 125,850 AccountsReceivable (net) 175,840 195,650 Inventories 30,860 45,300 Prepaid Expenses and other current assets \ 1,087,900 \ 1,325,045 Total Current Assets 1,358,700 1,478,320 Plant, Property and Equipment, net 120,400 125,600 Intangible Assets \ 2,567,000 \ 2,928,965 Total Assets 38,108 \ 25,190 Short-term borrowings 40,000 45,000 Current portion of long-term debt 325,900 285,400 Accounts payable 705,891 916,722 Acculed liabilities 05,891 \ 16,722 Accued liablilties 115,600 125,400 Income taxes payable \ 1,225,499 \ 1,397,712 Total Current Liabilities 430,000 450,000 Long-term Debt \ 1,655,499 \ 1,847,712 Total Liabilities \ 911,501 \ 1,081,253 Shareholders' Equity \ 2,567,000 \ 2,928,965 Total Liabilities and Shareholders Equity $\text { Selected Income Statement Data - for the year ending December 31,2007: }$ \ 3,210,645 Net Sales -2,310,210 Cost of GoodsSold 900,435 Pperating Income 324,850 Net Income $\text { SelectedStatement of Cash Flow Data - for the year encling December 31,2007:}$ \ 584,750 Cash Flows from Operations 42,400 Interest Expense 114,200 Income Tax Expense DXI's 2007 Long-term Debt to Shareholders' Equity ratio is

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Question 25

The ________________________________________ ratio indicates the number of times that net income before interest expense and income taxes exceeds interest expense.

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Question 26

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: Dec. 31,2004 As of Dec. 31,2005 Current Assets 616,604 \ 1,267,038 Cash and short-term investments 665,828 490,816 Accounts Receivable (net) 487,505 338,599 Inventories 291,915 292,511 Prepaid Expenses and other current asset: \2 ,061,852 \2 ,388,964 Total Current Assets Current Liabilities \3 8,108 \ 25,190 Short-term borrowings 210,090 182,295 Current portion of long-term debt 334,247 296,307 Accounts payable 743,999 941,912 Accrued liabilities 239,793 203,049 Income taxes payable 1,566,237 1,648,753 Total Curyent Liabilities $\text { SelectedIncome Statement Data - for the year ending December 31, 2005: }$ \ 4,885,340 Net Sales 2,542,353 Cost of GoodsSold 733,541 Operating Income 230.101 Net Income $\text { SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: }$ $\$ 1,156,084$ $\quad$ $\quad$ $\quad$ Cash Flows from Operations HighTech's days accounts payable outstanding at the end of 2005 is

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Question 27

Univariate bankruptcy prediction models help identify factors related to bankruptcy, but they do not provide information about

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Question 28

When calculating the quick ratio, an analyst would include in the numerator cash, ________________________________________, and receivables.

(Short Answer)

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Question 29

The source of risk related interest rate changes and demographic changes is ____________________.

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Question 30

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?

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Question 31

HighTech Company HighTech Company manufactures computer technology devices. Selected financial data for HighTech is presented below, use the information to answer the following questions: Dec. 31,2004 As of Dec. 31,2005 Current Assets 616,604 \ 1,267,038 Cash and short-term investments 665,828 490,816 Accounts Receivable (net) 487,505 338,599 Inventories 291,915 292,511 Prepaid Expenses and other current asset: \2 ,061,852 \2 ,388,964 Total Current Assets Current Liabilities \3 8,108 \ 25,190 Short-term borrowings 210,090 182,295 Current portion of long-term debt 334,247 296,307 Accounts payable 743,999 941,912 Accrued liabilities 239,793 203,049 Income taxes payable 1,566,237 1,648,753 Total Curyent Liabilities $\text { SelectedIncome Statement Data - for the year ending December 31, 2005: }$ \ 4,885,340 Net Sales 2,542,353 Cost of GoodsSold 733,541 Operating Income 230.101 Net Income $\text { SelectedStatement of Cash Flow Data - for the year ending December 31, 2005: }$ $\$ 1,156,084$ $\quad$ $\quad$ $\quad$ Cash Flows from Operations HighTech's 2005 Inventory Turnover ratio is

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Question 32

The source of risk related to management competence, strategic direction and lawsuits is _________________________.

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Question 33

For each of the following scenarios determine if it is an indicator of potential cash flow problems:

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Question 34

Below is selected information from DXI's 2007 financial statements: Dec. 31, 2006 As of Dec.31, 2007 \ 745,800 \ 958,245 Cash and short-term investments 135,400 125,850 AccountsReceivable (net) 175,840 195,650 Inventories 30,860 45,300 Prepaid Expenses and other current assets \ 1,087,900 \ 1,325,045 Total Current Assets 1,358,700 1,478,320 Plant, Property and Equipment, net 120,400 125,600 Intangible Assets \ 2,567,000 \ 2,928,965 Total Assets 38,108 \ 25,190 Short-term borrowings 40,000 45,000 Current portion of long-term debt 325,900 285,400 Accounts payable 705,891 916,722 Acculed liabilities 05,891 \ 16,722 Accued liablilties 115,600 125,400 Income taxes payable \ 1,225,499 \ 1,397,712 Total Current Liabilities 430,000 450,000 Long-term Debt \ 1,655,499 \ 1,847,712 Total Liabilities \ 911,501 \ 1,081,253 Shareholders' Equity \ 2,567,000 \ 2,928,965 Total Liabilities and Shareholders Equity $\text { Selected Income Statement Data - for the year ending December 31,2007: }$ \ 3,210,645 Net Sales -2,310,210 Cost of GoodsSold 900,435 Pperating Income 324,850 Net Income $\text { SelectedStatement of Cash Flow Data - for the year encling December 31,2007:}$ \ 584,750 Cash Flows from Operations 42,400 Interest Expense 114,200 Income Tax Expense DXI's Liabilities to Assets Ratio for 2007 is

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Question 35

When a financial analyst examines the credit risk of a company it is common that he or she uses a set of factors that all begin with the letter "C". Each factor provides a consideration that enters into the lending decision. List and discuss how each of the factors affects a company's credit risk.

(Essay)

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Question 36

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

(Short Answer)

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Question 37

Market equity beta measures the covariability of a firm's returns with the return's of

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Question 38

Below is information from DXI's 2007 financial statements.

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Question 39

One criticism of the interest and fixed charges coverage ratios as measures of long-term solvency risk is that they use earnings rather than cash flows in the numerator. Detail how the interest coverage ratio and fixed charges coverage ratio are calculated. In addition, discuss why using earnings in the numerator is a problem and what method could be used to alleviate this problem.

(Essay)

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Question 40

Economic theory teaches that differences in market returns must relate to differences in

Discuss the differences between Chapter 7 and Chapter 11 bankruptcy filings?

The ________________________________________ ratio indicates the number of times that net income before interest expense and income taxes exceeds interest expense.

Univariate bankruptcy prediction models help identify factors related to bankruptcy, but they do not provide information about

When calculating the quick ratio, an analyst would include in the numerator cash, ________________________________________, and receivables.

The source of risk related interest rate changes and demographic changes is ____________________.

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?

The source of risk related to management competence, strategic direction and lawsuits is _________________________.

For each of the following scenarios determine if it is an indicator of potential cash flow problems:

When a financial analyst examines the credit risk of a company it is common that he or she uses a set of factors that all begin with the letter "C". Each factor provides a consideration that enters into the lending decision. List and discuss how each of the factors affects a company's credit risk.

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

Market equity beta measures the covariability of a firm's returns with the return's of

Below is information from DXI's 2007 financial statements.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Key Relationships in the Dynamics of a Business

Profitability Analysis

Quality of Accounting Information and Adjustments to Reported Financial Statement Data

Revenue Recognition and Related Expenses

Liability Recognition and Related Expenses

Intercorporate Entities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

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