BUSI 420 MOD 7 Homework solutions complete answers

BUSI 420 MOD 7 Homework solutions complete answers 

 

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Thorpe Mfg., Inc., is currently operating at only 93 percent of fixed asset capacity. Current sales are $300,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,105 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be $32,450. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Given the above information for Hetrich, Inc., calculate the operating cash flow, investment cash flow, financing cash flow, and net cash flow. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

 

Lemon Co. has net income of $720,000 and 80,000 shares of stock. If the company pays a dividend of $1.64 per share, what are the additions to retained earnings? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

Alphonse, Inc., has a return on equity of 18 percent, 42,000 shares of stock outstanding, and a net income of $108,500. What are earnings per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Weston Corporation had earnings per share of $2.16, depreciation expense of $370,500, and 150,000 shares outstanding. What was the operating cash flow per share? If the share price was $81, what was the price-cash flow ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $7,788. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $13,000. At the end of the year, Smashville stock sold for $47 per share. Calculate the price-book ratio, price-earnings ratio, and price-cash flow ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .87.

 

a. A stock has an annual return of 16 percent and a standard deviation of 59 percent. What is the smallest expected gain over the next year with a probability of 5 percent? (Do not round intermediate calculations. Round the z-score value to 3 decimal places when calculating your answer. Enter your answer as a percent rounded to 2 decimal places.)

 

a. A stock has an annual return of 11.4 percent and a standard deviation of 46 percent. What is the smallest expected loss over the next year with a probability of 5 percent? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round the z-score value to 3 decimal places when calculating your answer. Enter your answer as a percent rounded to 2 decimal places.)

 

The Layton Growth Fund has an alpha of 1.7 percent. You have determined that Layton’s information ratio is .20. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 2 decimal places.)

 

Assume that the correlation of returns on Portfolio Y to returns on the market is .80. What percentage of Portfolio Y’s return is driven by the market? (Enter your answer as a decimal not a percentage. Round your answer to 4 decimal places.)

 

Assume that the tracking error of Portfolio X is 8.60 percent. What is the information ratio for Portfolio X? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places.)

 

You find the monthly standard deviation of a stock is 4.70 percent. What is the annual standard deviation of the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 1

 

You find a particular stock has an annual standard deviation of 27 percent. What is the standard deviation for a five-month period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 2

 

You find the monthly standard deviation of a stock is 6.90 percent. What is the annual standard deviation of the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

 

Question 3

 

You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset:

 

What are the Sharpe ratio, Treynor ratio, and Jensen’s alpha for each portfolio? (A negative value should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Leave your ratio answers as a decimal rounded to 5 places (e.g., 0.23546). Enter your alpha answers as a percent rounded to 2 decimal places (e.g., 0.22%).)

 

Question 4

 

You are given the following information concerning three portfolios, the market portfolio, and the risk-free asset:

 

Assume that the tracking error of Portfolio X is 9.10 percent. What is the information ratio for Portfolio X? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places.)

 

Question 5

 

Assume that the correlation of returns on Portfolio Y to returns on the market is 0.84. What is the percentage of Portfolio Y’s return that is driven by the market? (Round your answer to 4 decimal places.)

 

Question 6

 

The Layton Growth Fund has an alpha of 1.5 percent. You have determined that Layton’s information ratio is 0.60. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 2 decimal places.)

 

Question 7

 

a. A stock has an annual return of 12.2 percent and a standard deviation of 32 percent. What is the smallest expected loss over the next year with a probability of 1 percent? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round the z-score value to 3 decimal places when calculating your answer. Enter your answer as a percent rounded to 2 decimal places.)

 

b. Does this number make sense?

 

Question 8

 

a. A stock has an annual return of 12 percent and a standard deviation of 55 percent. What is the smallest expected gain over the next year with a probability of 2.5 percent? (Do not round intermediate calculations. Round the z-score value to 3 decimal places when calculating your answer. Enter your answer as a percent rounded to 2 decimal places.)

 

b. Does this number make sense?

 

Question 9

 

You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.97.

 

What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

 

Question 10

 

You have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is 0.95.

 

Calculate Jensen’s alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Enter the alpha as a percent rounded to 2 decimal places. Round the ratio to 4 decimal places.)

 

Question 11

 

Given the following information for Smashville, Inc., construct an income statement for the year:

 

What are retained earnings for the year? (Input all amounts as positive values.)

 

Question 12

 

Given the following information for Smashville, Inc., construct a balance sheet:

 

Question 13

 

You are given the following information for Smashville, Inc.

 

Calculate the gross margin, the operating margin, return on assets, and return on equity. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

Question 14

 

During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

Question 15

 

During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $12,000. At the end of the year, Smashville stock sold for $46 per share. Calculate the price-book ratio, price-earnings ratio, and the price-cash flow ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

Question 16

 

The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): 

 

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,408. What is the external financing needed? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole number.) 

 

Question 17

 

Weston Corporation had earnings per share of $1.61, depreciation expense of $673,400, and 260,000 shares outstanding. What was the operating cash flow per share? If the share price was $59, what was the price-cash flow ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places.)   

 

Question 18

 

Alphonse Inc. has a return on equity of 23 percent, 52,000 shares of stock outstanding, and a net income of $126,000. What are earnings per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 19

 

Lemon Co. has net income of $680,000 and 76,000 shares of stock. If the company pays a dividend of $2.09 per share, what are the additions to retained earnings? (Do not round intermediate calculations. Round your answer to the nearest whole number.)

 

Question 20

 

Given the above information for Hetrich, Inc., calculate the operating cash flow, investment cash flow, financing cash flow, and net cash flow. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

 

Question 21

 

The most recent financial statements for Martin, Inc., are shown here: 

 

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,120 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be $34,515. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

 

Question 22

 

Amounts are in thousands of dollars (except number of shares and price per share):

 

Calculate the gross and operating margins for Kiwi Fruit. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 

 

Question 23

 

Calculate ROA and ROE for Kiwi Fruit. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

 

Question 24

 

Calculate the price-book, price-earnings, and price-cash flow ratios for Kiwi Fruit. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

Question 25

 

Thorpe Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $320,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)