esNighthawk Steel, a manufacturer of specialized tools, has $5,450,000 in assets.Temporary current assetsPermanent current assetsCapital assetsTotal assets$2,900,0001,595,000955,000$5,450,000Short-term rates are 7 percent. Long-term rates are 12 percent. (Note that long-term rates imply a return to any equity). Earnings beforeinterest and taxes are $1,150,000. The tax rate is 20 percent.If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what willearnings after taxes be? For an example of perfectly hedged plans, see Figure 6-8.Earnings after taxes$

The earnings after taxes is used by the company to determine the actual profitability.Given in the…

Answered: es Nighthawk Steel, a manufacturer of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Shane Co. has sales of $11.5 million and cost of sales of $5.6 million. Its selling, generaland administrative expenses are $550,000 and its research and development is $1.3million. It has annual depreciation charges of $1.4 million and a tax rate of 35%. a. What is Local's gross margin? (answer in %, Round to one decimal place.)
King Industries has net working capital of $17,700, current assets of $39,800, equity of $55,400, and long-term debt of $11,800. What is the amount of the net fixed assets?
Currently, Atlas Tours has $5.4 million in assets. This is a peak six-month period. During the other six months temporary current assets drop to $400,000 (for computation purposes still consider these temporary current assets). Temporary current assets $1,200,000 Permanent current assets 1,800,000 Capital assets 2,400,000 Total assets $5,400,000 Short-term rates are 4 percent. Long-term rates are 5 percent. Annual earnings before interest and taxes are $1,080,000. The tax rate is 38 percent. a. If the assets are perfectly hedged throughout the year, what will earnings after taxes be? (Enter answers in whole dollar, not in million.) Earnings after taxes $ b. If short-term interest rates increase to 5 percent when assets are at their lowest level, what will earnings after taxes be? For an example of perfectly hedged plans, see Figure 6–8 (Enter answers in whole dollar, not in million.) Earnings after…
Currently, Atlas Tours has $5.4 million in assets. This is a peak six-month period. During the other six months temporary current assets drop to $400,000 (for computation purposes still consider these temporary current assets). Temporary current assets $1,200,000 Permanent current assets 1,800,000 Capital assets 2,400,000 Total assets $5,400,000 Short-term rates are 4 percent. Long-term rates are 5 percent. Annual earnings before interest and taxes are $1,080,000. The tax rate is 38 percent. a. If the assets are perfectly hedged throughout the year, what will earnings after taxes be? (Enter answers in whole dollar, not in million.)
Bank B has $800 million in assets and a ROE of 12%. Interest income amounts to $16 million, while interest expenses are equal to 8.33% of the bank capital. The difference between noninterest income and noninterest expenses is egyal to $12 million and provisions amount to 0.45% of the assets. What is the value of the bank capital? 120 million 200 million 800 million 137 million 99 million
Assume average net operating assets equal $1,000,000. The average book value of common equity equals $750,000. Assume sales for the period total $3,000,000. Assume opening income totals $150,000 and net borrowing costs (cost of debt) is 3%. Solve for the net financing expenses
Company DotThrive reported the following financial results. Operating income is $94.98 million and depreciation and amortization is $6.12 million. The company spent $13.99 million buying new equipment and sold $3.58 million old equipment (this is the after-tax salvage). Net working capital increased by $1.31 million from previous year. The company's tax bracket is 21%. What's the company's Free Cash Flow (FCF) for the year?
Novak Corporation's net income for the current year was $622000, Depreciation recorded on plant assets was $58000 and amortization expense was $93000. Accounts receivable and inventories increased by $49000 and $20000, respectively. Supplies and accounts payable decreased by $2000 and $39000, respectively. The equipment account balance increased by $55,000 and a $500,000 convertible bond was retired through the issuance of common stock. How much cash was provided by operating activities? O $565000 $667000 O $585000 $879000
BestBatteries, Inc just published this Balance Sheet. All dollar amounts are in millions of dollars. Assets Cash 2.5 AR 2.5 Long Term Assets 10.0 Liabilities Accounts Payable 5.0 Loan, repayment due in 3 months, IRR = 7% 3.0 Bond maturing in 10 years, IRR = 10% 2.0 Equity 5.0 What is the company's weighted average, pre-tax cost of debt capital, rD, pre-tax? If not enough information is provided to solve this problem, answer 0.0 (zero).
Colter Steel has $4,550,000 in assets. Temporary current assets $ 1,100,000 Permanent current assets 1,505,000 Fixed assets 1,945,000 Total assets $ 4,550,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 13 percent and long-term rates 2 percentage points lower than short-term rates. Earnings before interest and taxes are $970,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?
Onshore Bank has $31 million in assets, with risk-adjusted assets of $21 million. Core Equity Tier 1 (CET1) capital is $1,050,000, additional Tier I capital is $270,000, and Tier II capital is $422,000. The current value of the CET1 ratio is 5 percent, the Tier I ratio is 6.29 percent, and the total capital ratio is 8.3 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. b. The bank issues $3.1 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent. d. The bank issues $811,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. f. Homeowners pay back $5.1 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E The bank issues $811,000 in common…
If Jefferson Inc. purchases a building that increases fixed assets by $27,588 and they did this with 40% debt. What is the dollar amount that total equity will increase by?

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