Stone Cold Incorporated

Balance Sheet: 12/31/04

Assets20042003

Cash and Marketable Securities1080

Accounts Receivable375315

Inventories   615   415

Total Current Assets1,000810

Net plant and equipment1,000     870

TOTAL ASSETS2,0001,680

Liabilities and Equity20042003

Accounts Payable6040

Notes Payable14060

Accruals   110   130

Total Current Liabilities310230

Long Term Bonds   754   580

TOTAL DEBT1,064810

Preferred Stock4040

Common Stock130130

Retained earnings766700

TOTAL COMMON EQUITY896830

TOTAL LIABILITIES AND EQUITY2,0001,680

Income Statement: 12/31/0420042003

Net Sales3,2002,850

Operating Costs (excludes Dep/Amortization)2,700              2,497

EBITDA   500   353

Depreciation10090

Amortization       0                     0

Depreciation and Amortization   100                   90

EBIT400263

Less Interest     88     60

EBT312203

Taxes (40%)124.8    81.2

NET INCOME (before Preferred Dividends)187.2121.8

Preferred Dividends       4                     4

NET INCOME 183.2  117.8

Common Dividends11753

Addition to Retained Earnings66.264.8

61.Refer to Stone Cold. For 2004, what was the average collection period for the firm in 2004?

a.6.84 days

b.8.77 days

c.42.77 days

d.51.22 days

62.Refer to Stone Cold. For 2004, what was the total asset turnover for 2004?

a.0.80

b.1.20

c.1.40

d.1.60

63.Refer to Stone Cold. For 2004, what was the times interest earned ratio for 2004?

a.2.13

b.2.77

c.3.55

d.4.55

64.What was the free cash flow in 2004 for Stone Cold Incorporated?

a.-$55.20

b.-$44.80

c.$145.20

d.$215.00

65.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  50,000

Total Assets$300,000

Total Shareholder Equity$200,000

Net Sales$100,000

What is the total asset turnover for the firm in 2004?

a.16.67%

b.25.00%

c.33.33%

d.40.00%

66.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  ???,???

Total Assets$250,000

Total Shareholder Equity$200,000

Net Sales$100,000

If the return on equity is 20%, what was Net Income for 2004?

a.$25,000

b.$40,000

c.$50,000

d.$65,000

Titans Electronics

Titans Electronics reports the following data for the past year:

EBIT$1,000,000# of Common shares400,000

Net Income$   480,000Total Dividends Paid              $120,000

Interest Paid$   200,000Current Assets              $  80,000

Total Assets$6,000,000Current Liabilities$  60,000

Market Price of

Common equity

$         20

67.What is the current P/E ratio for the Titans?

a.8.00

b.10.00

c.15.50

d.16.67

68.Titans Electronics is applying for a new line of credit from their banking partner. To issue the credit, the bank requires the following cutoffs for certain financial ratios:

TIE ratio of 4.25     Current Ratio of 1.50     ROA of 5%.

What is a likely response from the bank to the application?

a.The bank will have reservations, as the TIE ratio does not meet requirements.

b.The bank will have concerns, as the current ratio does not meet requirements.

c.The bank will have concerns, as the ROA is not high enough.

d.The bank will have concerns, as two or more of the requirements are not met.

Exhibit 2-1

The tax schedule for corporate income is shown in the table below:

Taxable Income OverNot OverTax Rate

$                0              $       50,000              15.00%

50,000         75,000              25.00%

75,000       100,000              34.00%

100,000       335,000              39.00%

335,000       500,000              34.00%

10,000,000  15,000,00035.00%

15,000,000  18,333,33338.00%

18,333,333...............35.00%

69.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was their tax liability for the year?

a.$56,100

b.$91,650

c.$170,000

d.$200,000

70.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was the average tax rate they paid for the year?

a.23.25%

b.25.00%

c.29.40%

d.34.00%

Stone Cold Incorporated

Balance Sheet: 12/31/04

Assets20042003

Cash and Marketable Securities1080

Accounts Receivable375315

Inventories   615   415

Total Current Assets1,000810

Net plant and equipment1,000     870

TOTAL ASSETS2,0001,680

Liabilities and Equity20042003

Accounts Payable6040

Notes Payable14060

Accruals   110   130

Total Current Liabilities310230

Long Term Bonds   754   580

TOTAL DEBT1,064810

Preferred Stock4040

Common Stock130130

Retained earnings766700

TOTAL COMMON EQUITY896830

TOTAL LIABILITIES AND EQUITY2,0001,680

Income Statement: 12/31/0420042003

Net Sales3,2002,850

Operating Costs (excludes Dep/Amortization)2,700              2,497

EBITDA   500   353

Depreciation10090

Amortization       0                     0

Depreciation and Amortization   100                   90

EBIT400263

Less Interest     88     60

EBT312203

Taxes (40%)124.8    81.2

NET INCOME (before Preferred Dividends)187.2121.8

Preferred Dividends       4                     4

NET INCOME 183.2  117.8

Common Dividends11753

Addition to Retained Earnings66.264.8

61.Refer to Stone Cold. For 2004, what was the average collection period for the firm in 2004?

a.6.84 days

b.8.77 days

c.42.77 days

d.51.22 days

62.Refer to Stone Cold. For 2004, what was the total asset turnover for 2004?

a.0.80

b.1.20

c.1.40

d.1.60

63.Refer to Stone Cold. For 2004, what was the times interest earned ratio for 2004?

a.2.13

b.2.77

c.3.55

d.4.55

64.What was the free cash flow in 2004 for Stone Cold Incorporated?

a.-$55.20

b.-$44.80

c.$145.20

d.$215.00

65.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  50,000

Total Assets$300,000

Total Shareholder Equity$200,000

Net Sales$100,000

What is the total asset turnover for the firm in 2004?

a.16.67%

b.25.00%

c.33.33%

d.40.00%

66.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  ???,???

Total Assets$250,000

Total Shareholder Equity$200,000

Net Sales$100,000

If the return on equity is 20%, what was Net Income for 2004?

a.$25,000

b.$40,000

c.$50,000

d.$65,000

Titans Electronics

Titans Electronics reports the following data for the past year:

EBIT$1,000,000# of Common shares400,000

Net Income$   480,000Total Dividends Paid              $120,000

Interest Paid$   200,000Current Assets              $  80,000

Total Assets$6,000,000Current Liabilities$  60,000

Market Price of

Common equity

$         20

67.What is the current P/E ratio for the Titans?

a.8.00

b.10.00

c.15.50

d.16.67

68.Titans Electronics is applying for a new line of credit from their banking partner. To issue the credit, the bank requires the following cutoffs for certain financial ratios:

TIE ratio of 4.25     Current Ratio of 1.50     ROA of 5%.

What is a likely response from the bank to the application?

a.The bank will have reservations, as the TIE ratio does not meet requirements.

b.The bank will have concerns, as the current ratio does not meet requirements.

c.The bank will have concerns, as the ROA is not high enough.

d.The bank will have concerns, as two or more of the requirements are not met.

Exhibit 2-1

The tax schedule for corporate income is shown in the table below:

Taxable Income OverNot OverTax Rate

$                0              $       50,000              15.00%

50,000         75,000              25.00%

75,000       100,000              34.00%

100,000       335,000              39.00%

335,000       500,000              34.00%

10,000,000  15,000,00035.00%

15,000,000  18,333,33338.00%

18,333,333...............35.00%

69.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was their tax liability for the year?

a.$56,100

b.$91,650

c.$170,000

d.$200,000

70.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was the average tax rate they paid for the year?

a.23.25%

b.25.00%

c.29.40%

d.34.00%

Stone Cold Incorporated

Balance Sheet: 12/31/04

Assets20042003

Cash and Marketable Securities1080

Accounts Receivable375315

Inventories   615   415

Total Current Assets1,000810

Net plant and equipment1,000     870

TOTAL ASSETS2,0001,680

Liabilities and Equity20042003

Accounts Payable6040

Notes Payable14060

Accruals   110   130

Total Current Liabilities310230

Long Term Bonds   754   580

TOTAL DEBT1,064810

Preferred Stock4040

Common Stock130130

Retained earnings766700

TOTAL COMMON EQUITY896830

TOTAL LIABILITIES AND EQUITY2,0001,680

Income Statement: 12/31/0420042003

Net Sales3,2002,850

Operating Costs (excludes Dep/Amortization)2,700              2,497

EBITDA   500   353

Depreciation10090

Amortization       0                     0

Depreciation and Amortization   100                   90

EBIT400263

Less Interest     88     60

EBT312203

Taxes (40%)124.8    81.2

NET INCOME (before Preferred Dividends)187.2121.8

Preferred Dividends       4                     4

NET INCOME 183.2  117.8

Common Dividends11753

Addition to Retained Earnings66.264.8

61.Refer to Stone Cold. For 2004, what was the average collection period for the firm in 2004?

a.6.84 days

b.8.77 days

c.42.77 days

d.51.22 days

62.Refer to Stone Cold. For 2004, what was the total asset turnover for 2004?

a.0.80

b.1.20

c.1.40

d.1.60

63.Refer to Stone Cold. For 2004, what was the times interest earned ratio for 2004?

a.2.13

b.2.77

c.3.55

d.4.55

64.What was the free cash flow in 2004 for Stone Cold Incorporated?

a.-$55.20

b.-$44.80

c.$145.20

d.$215.00

65.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  50,000

Total Assets$300,000

Total Shareholder Equity$200,000

Net Sales$100,000

What is the total asset turnover for the firm in 2004?

a.16.67%

b.25.00%

c.33.33%

d.40.00%

66.Consider the following financial information for Classic City Ice Cream Corporation:

2004 Financial Data

Net Income$  ???,???

Total Assets$250,000

Total Shareholder Equity$200,000

Net Sales$100,000

If the return on equity is 20%, what was Net Income for 2004?

a.$25,000

b.$40,000

c.$50,000

d.$65,000

Titans Electronics

Titans Electronics reports the following data for the past year:

EBIT$1,000,000# of Common shares400,000

Net Income$   480,000Total Dividends Paid              $120,000

Interest Paid$   200,000Current Assets              $  80,000

Total Assets$6,000,000Current Liabilities$  60,000

Market Price of

Common equity

$         20

67.What is the current P/E ratio for the Titans?

a.8.00

b.10.00

c.15.50

d.16.67

68.Titans Electronics is applying for a new line of credit from their banking partner. To issue the credit, the bank requires the following cutoffs for certain financial ratios:

TIE ratio of 4.25     Current Ratio of 1.50     ROA of 5%.

What is a likely response from the bank to the application?

a.The bank will have reservations, as the TIE ratio does not meet requirements.

b.The bank will have concerns, as the current ratio does not meet requirements.

c.The bank will have concerns, as the ROA is not high enough.

d.The bank will have concerns, as two or more of the requirements are not met.

Exhibit 2-1

The tax schedule for corporate income is shown in the table below:

Taxable Income OverNot OverTax Rate

$                0              $       50,000              15.00%

50,000         75,000              25.00%

75,000       100,000              34.00%

100,000       335,000              39.00%

335,000       500,000              34.00%

10,000,000  15,000,00035.00%

15,000,000  18,333,33338.00%

18,333,333...............35.00%

69.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was their tax liability for the year?

a.$56,100

b.$91,650

c.$170,000

d.$200,000

70.Refer to Exhibit 2-1. Pale Rider Corporation reports taxable income of $500,000 in 2004. What was the average tax rate they paid for the year?

a.23.25%

b.25.00%

c.29.40%

d.34.00%

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