Required words: 2000 words with 20% increasing or decreasing allowance
Question 1 :
The following information is taken from records of ABC Company:
Items 2017 2018
Bank Short-Term Borrowings 479 13,315
Accounts & Notes Payable 289,313 271,468
Accrued Expenses 1,803 4,732
Dividend payable 0 1
Provisions 518 518
Other Current Liabilities 17,516 10,911
Other Long Term debt 58 55
Paid-in Capital 25,000 25,000
Legal Reserves 860 1,303
Retained Earnings (loss) (1,852) 1,515
Profit for the year 10,862 17,143
Time Deposits 651 3,225
Cash 34,689 64,746
Accounts & Notes Receivable (net) 42,317 81,295
Advances To Suppliers 4,775 8,762
Due From Parent Company 246,730 158,928
Prepaid Expenses 173 340
Other Debit Balances 11,635 19,133
Inventory 2,951 8,796
Gross Fixed Assets 3,405 3,772
Accumulated Depreciation 2,770 3,035
Items 2017 2018
Selling & Marketing Expenses 2,075 1,839
General & Admin. Expenses 7,008 12,773
Provisions 1,655 58
Depreciation 230 265
FX Gain (Loss) (3,864) 1,132
Interest Income 1,798 7,333
Other Bank Charges 918 (,306
Income Taxes 5,863 5,617
Sales Revenue 457,110 695,557
COGS 426,434 665,021
Net Profit 10,862 17,143
1- Prepare financial statements ( income statement and Balance sheet) 2- According to above information, answer the following questions:
1. The company’s gross profit margin?
2. The company’s net profit margin?
3. The company’s return on assets?
4. The company’s return on equity?
5. The company’s assets turnover?
6. The company’s Inventory turnover?
7. The company’s days inventory on hand?
8. The company’s receivable turnover?
9. The company’s net working capital?
10. The company’s current ratio?
11. The company’s Quick ratio?
12. The company’s average collection period?
13. The company’s debt to equity?
14. The company’s liability to assets?
15. The company’s Equity to assets?
3- Makes recommendations to ABC company based on your analysis and interpretation of the financial position.
Q2: Calculate the Weighted Average Cost of Capital (WACC) for the following capital structure: (20 marks)
Issuing 200,000,000 common stocks with par value of EGP 10 per share, and we have historical data for stock price and market price as below:
DATE EGX30 Stock A
31/12/2019 13927 10.06
30/1/2020 13763 12.34
27/2/2020 13009 12.27
31/3/2020 9517 10.50
30/4/2020 10514 10.79
31/5/2020 10110 11.02
30/6/2020 10750 13.33
29/7/2020 10569 12.92
31/8/2020 11366 13.48
30/9/2020 10976 11.70
28/10/2020 10496 11.84
RFR before tax 15.5%, RM=17%, Income tax rate 22.5%, TAX rate for RFR 20%
Q3: Suppose that you have the two projects as below:
Year Project A Project B
Initial investment 1,000,000 1,100,000
1 225,000 250,000
2 350,000 275,000
3 300,000 350,000
4 300,000 400,000
5 250,000 250,000
Cost of Capital 10%
Determine which project should be accepted using the following technique:
- Net present Value (NPV)
- Internal Rate of Return(IRR)
- Payback period
- Discounted Payback period
- Profitability Index(PI)