Use the following information to answer questions 1-8 Consider the following abbreviated financial statements for Xinghua: XINGHUA 2014 and 2015 Partial Balance Sheets Assets Liabilities and Owners Equity 2014 2015 2014 2015 Current assets $ 924 $ 1,002 Current liabilitios $ 270 Ċ 128 Not fixed accotc
Use the following information to answer questions 1-8 Consider the following abbreviated financial statements for Xinghua: XINGHUA 2014 and 2015 Partial Balance Sheets Assets Liabilities and Owners Equity 2014 2015 2014 2015 Current assets $ 924 $ 1,002 Current liabilitios $ 270 Ċ 128 Not fixed accotc
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:Use the following information to answer questions 1 - 8
Consider the following abbreviated financial statements
for Xinghua: XINGHUA 2014 and 2015 Partial Balance
Sheets Assets Liabilities and Owners Equity
2014 2015 2014 2015 Current assets $ 924 $ 1,002
Current liabilities $ 370 $ 428 Net fixed assets
3,917 4,556 Long-term debt 2, 006 2, 142 Equity
2,465 2,988 XINGHUA 2015 Income Statement Sales $
11,295 Costs 5,535 Depreciation 1,020 Interest paid
180 The tax rate is 35%. Long term debt trades at
128% of par. The firm has 500 shares outstanding. Free
Cash Flow to the Firm and the Free Cash Flow to Equity
are both expected to grow at 2% forever. The weighted
average cost of capital is 16%. The cost of equity is
24%.1. What is the change in net working capital for
2015? $ 2. What is the change in gross fixed
assets, i. e. capital expenditures, for 2015? $_
What is the Net Income for 2015? $
3.
4. What is
the Free Cash Flow to the Firm for 2015? $
What is the Value of the Firm (Assets)? $
5.
6. What
is the stock price per share using the discounted FCFF
valuation? $ 7. What is the Free Cash Flow to
Equity for 2015? $
8. What is the stock price per
share using the discounted FCFE valuation?
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