4．Consider the balance sheet shown below for the Starburst Corporation: Starburst Corporation Balance Sheet
($
millions)
| Assets | Liabilities & Owners’ Equity | Cash | $ 20 | Accounts payable | $ 30 | Marketable securities | 10 | Notes payable | 10 | Accounts receivable | 40 | Total current liabilities | $ 40 | Inventories | 80 |
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| Total current assets | $150 | Long-term debt | $120 |
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| Common stock | 40 | Net property, plant, & equipment | $230 | Retained earnings | 200 | Intangible assets | 20 | Total stockholders’ equity | $240 | Total assets | $400 | Total liabilities & equity | $400 |
Footnotes to Starburst’s financial statements include the following information: §
Inventories are valued at cost as determined by the last in, first out (LIFO) method. The LIFO reserve is $10 million. §
Additional operating facilities and equipment are financed with operating leases that have a present value of $20 million. §
Intangible assets represent $4 million of goodwill from previous acquisitions. §
Due to a decrease in interest rates, Starburst’s long-term debt has a current market value of $150 million. Which of the following is closest to Starburst's total debt ratio after making the necessary balance sheet adjustments? A) 0.35. B) 0.49. C) 0.60. D) 0.38.
5．Express Delivery Inc. (EDI) reported the following year-end data: Depreciation expense | $30 million | Net income | $30 million | Total assets | $535 million | Shareholder’s equity | $150 million | Effective tax rate | 35 percent |
Last year EDI purchased a fleet of delivery vehicles for $140 million. For the first year, straight-line depreciation was used assuming a depreciable life of 7 years with no salvage value. However, at year-end EDI’s management determined that assumptions of a useful life of 5 years with a salvage value of 10 percent of the original value were more appropriate. How would the return on assets (ROA) and return on equity (ROE) for last year change due to the change in depreciation assumptions? ROA decreases to: A) 5.7% from 5.6% and ROE decreases to 19.7% from 20.0%. B) 5.3% from 21.43% and ROE increases to 20.7% from 20.0%. C) 5.7% from 21.43% and ROE increases to 21.0% from 20.0%. D) 5.0% from 5.6% and ROE decreases to 18.4% from 20.0%.
6．Great Plains Grains (GPG) reported the following 2003 year-end data: Net income | $45 million | Dividends | $10 million | Total long-term liabilities | $100 million | Total shareholder’s equity | $200 million | Effective tax rate | 40 percent |
Following the release of this data, GPG discovered that the service and interest costs related to their pension fund accounting had been miscalculated. The new estimates are $5 million and $8 million higher than the original estimates. What is the impact on the debt to equity ratio? The new debt/equity ratio is: A) 56.5%. B) 56.1%. C) 61.7%. D) 62.2%.
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发表于 2008-5-21 14:33
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