# Operaciones financieras

Operaciones financieras gy marielmcmgo HO-•R6pR 15, 2011 22 pagos Chapter 3 SOLUTIONS TO END-OF-CHAPTER PROBLEMS 3-1 CAZ [pic] – . 5; [pic] = 1 0; [PiC] = 40 days; S = AR = ? 3-2 OSO [pic] PACE 1 to View nut*ge 3-3 A/E [picl 3-4 ROA = 10%; PM = 2%; ROE = 15%; SITA -3 ME ROA = NI/A; PM = NI,’S; ROE – NI,’E ROA PM ( SITA NI,’A = SITA = ( SITA SITA = 5. ROE PM ( SITA ( TA/E = 1. 5 maximum of \$262,500 without violating a 2 to 1 current ratio, assuming that the entire increase in notes payable is used to increase current assets.

Since we assumed that the additional funds would be used to increase inventory, the inventory account Will increase to \$637,500, and current assets Will total \$1 Quick ratio = (\$1 • – 1. 19(. 3-7 1. [pic] -3 [PiC] = 3. 0( Current liabllities – – \$270,ooo. [picl — -1. 4( Inventories= \$432,OOO. Current assets = Cash + [pic] + [pic] * Inventories \$810,000 = \$120,000 + Accounts receivable + \$432,000 Accounts receivable = \$258,000. 4. [pic] = [PiC] = 6. 0( Sales = 5. DSO [pic] [picl 36. 33 days ( 36 days. 3-8 TIE – EBIT/INT, so find EBIT and INT.

Interest = \$500,OOO ( 0. 1 = \$50,OOO. Net income = ( 0. 05 = 3100,000. pre-tax income (EBT) = – T) = \$100,000/0. 7 – SI 42,857. EBIT = EBT + Interest = 5142,857 + \$50,OOO = \$192,857. TIE = – Cost EBIT (given) 300,000 EBT 700,000 – Taxes (34%) 238,000 462,000 Now we can use some ratios to get some more data: Total assets turnover 2 SITA; TA — S/2 = DIA – 60%; so E,’A = 40%, and, therefore, Equity multipner = TA,’E = 1/(E/A) = 1/0. 4 = 2. 5. Now we can complete the Du Pont equation to determine ROE: ROE = ( ( 2. 5 0. 231 – 23. 1%. 3-10 Known data: BEP = 0. – EBIT/TotaI assets, so EBIT – 0. 2(\$1 = \$200,ooo; DIA 0. 5 50%, so Equity 3500,000. DIA – \$200,ooo EBIT Interest \$1 50,000 -rax (40%) 80,000 64,000 NI \$120,OOO \$ 96,000 ROE [picl [pic] 12 Difference in ROE – — 19. Refer to the solution setup for Problem 3-10 and think about it this way: (1) Adding assets Will not affect common equity if the assets are financed with debt. (2) Adding assets Will cause expected EBIT to increase by the amount EBIT – BEP(added assets). (3) Interest expense Will increase by the amount kd(added assets). 4) Pre-tax income Will rise by the amount (added assets)(3EP • kd). Assuming BEP > kd, if pre-tax income increases so Will net income. (5) If expected net income increases but common equity is held constant, then the expected ROE Will also increase. Note that ifkd > BEP, then adding assets financed y debt would Iower net income and thus the ROE. Therefore, Statement a is true—if assets financed by debt are added, and if the expected BEP on those assets exceeds the cost of debt, then the firm’s ROE Will increase.

Statements b, c, and d are false, because the BEP ratio uses EBIT, which is calculated before the effects of taxes or interest charges are felt. Of course, Statement e is also false. 3-12 a. Currently, ROE is ROÉI – 7. 5%. he current ratio Will be set such that 2. 5 = CAICL. CL is \$50,000, and it Will not change, so we can solve to find the new level of current assets: CA = 2. (CL) = = \$125,000 This is the level of current assets that Will produce a current ratio At present, current assets amount to \$210,000, so they can be reduced by 3210,000 -\$125,000 \$8S,OOO.

Ifthe \$85,OOO generated is used to retire common equity, then the new common equity balance Will be \$200,000 – \$85 used to retire common equity, then the new common equity balance will be \$200,OOO – 95,000 = \$115,000. Assuming that net income is unchanged, the new ROE Will be ROE2 = = Therefore, ROE Will increase by 13. 04% – 7. 50% = 5. 54%. b. 1. Doubling the dollar amounts would not affect the answer; it would Still be 5. 4%. 2. Common equity would increase by \$25,000 from the Part a scenario, which would mean a new ROE of \$1 = 10. 71%, which would mean a difference of 10. 71% – 7. 0% = 3. 21%. 3. An inventory turnover of 2 would mean inventories of 5100,000, down \$50,000 from the current level. That would mean an ROE of\$15,OOO/\$1 50,000 10. 00%, so the change in ROE would be 10. 00% – 7. 596 = 2. 5%. 4. If the company had 10,000 shares outstanding, then its EPS would be \$1 \$1. 50. The stock has a book value of = \$20, so the shares retired would be = 4,250, leaving 10,000 – 4,250 = 5,750 shares. The ew EPS would be = \$2. 6087, so the increase in EPS would be \$2. 6087 – \$1. 50 – \$1. 1087, which is a 73. 91 percent increase, the same as the increase in ROE. 5.

If the stock was selling for twice book value, or 2 ( \$20 – \$40, then only half as many shares could be retired (\$85,000/\$40 2,125), so the remainlng shares would be 10,000 – 2,125 = 7,875, and the new EPS would be = SI ,9048, for an increase of \$1. 9048 – 51. 5000 = \$0. 4048. c. We could have started with Iower inventory and higher accounts receivable, then late the DSO, th s OF have started with Iower inventory and higher accounts receivable, hen had you calculate the DSO, then move to a Iower DSO which would require a reduction in receivables, and then determine the effects on ROE and EPS under different conditions.

Smilarly, we could have focused on fixed assets and the FA turnover ratio. In any ofthese cases, we could have had you use the funds generated to retire debt, which would have Iowered interest charges and consequently increased net income and ÉPS. If we had to increase assets, then we would have had to finance this increase by adding either debt or equity, which would have Iowered ROE and EPS, other things held constant. Finally, note that we could have asked some conceptual questlons about the problem, either as a part of the problem or without any reference to the problem.

For example, «If funds are generated by reducing assets, and if those funds are used to retire common stock, Will EPS and/or ROE be affected by whether or not the stock sells above, at, or below book value? ‘ 3-13 1. Debt – assets) – – \$150,000. 2. Accounts payable Debt – Long-term debt \$1 50,000 – 360,000 = 90,000. 3. Common stock – [pic] – Debt – Retained earnings – \$300,OOO – \$1 50,000 – 97,500 352,500. 4. Sales – assets) – – \$450,OOO. . Inventory Sales/5 \$450,000/5 = 90,000. 6. Accounts receivable = = (\$450,000/360) (36) = \$45,ooo. OF 7. cash 7. Cash + Accounts receivable = payable) cash 4 \$45,OOO = cash \$72,OOO \$45,OOO \$27,000. 8. Fixed assets Total assets – (Cash + Accts rec. + Inventories) – \$300,ooo – (\$27,ooo + \$45,ooo + \$90,000) – \$ 138,000. g. cost ofgoods sold = – 0. 25) = = 5337,500. 3-14 a. (Dollar amounts in thousands. ) Industry Firm Average = [pic] – 1. 98( 2. 0( — [pic] = 75 days 35 days OSO = [pic] – [pic] = [picl – 6. 66( 6. 7( 1. 70( 3. 0( [pic] — [pic] – [pic] — [PiC] – 61 60. 0% For the firm,

The firm’s days sales outstanding is more than twice as long as the industry average, indicating that the firm should tighten credit or enforce a more stringent collection policy. The total assets turnover ratio is well below the industry average so sales should be increased, assets decreased, or both. While the company’s profit margin is higher than the industry average, its other profitability ratios are Iow compared to the industry–net income should be higher given the amount of equity and assets. However, the company seems to be in an average liquidity position and financial leverage is similar to others in the industry. If 2000 represents a period of supernormal growth for the firm, ratios based on this year Will be distorted and a comparison between them and industry averages WII have little meaning. Potential investors who look only at 2000 ratios Will be misled, and a return to normal conditions in 2001 could hurt the firm’s stock Price. 3-15 a. Current ratio = 2. 73( – 30. 00% 30. 00% [PiC]- — [pic] – [pic] – 9. 46( = [pic] = [pic] – 30 days 24 days OSO = [pic] = [pic] — 5. 41 ( 8 OF [pic] – [p 5. 41( [pic] – 1. 77( Profit margin – 3. 40% 3. 00% – 6. 00% 9. 009’0 ROA ( EM – ( 1. 286 8. 57% 2. 0% Alternatively, ROE – [pic] = [pic] = 857% ( b. ROE – Profit margin ( Total assets turnover ( Equity multiplier – ( [PiC] ( [PiC] = ( ( [PiC] = 1. 77 ( 1. 4286 = 8. 6%. Firm Industry Comment Profit margin Good Total assets turnover 1. 77( Poor Equity multiplier I. 43* 1 . 4286 O. K. *1 – [PiC] I -0. 30 -0. 7 EM = [PiC] = 1. 43 Alternatively, EM = ROE/ROA – – 1. 43. c. Analysis of the Du Pont equation and the set of ratios shows that the turnover ratio of sales to assets is quite Iow. Either sales should be increased at the of assets, or the current level of assets should be d more in line with the firm.

If the company’s inventory could be reduced, this would generate funds that could be used to retire debt, thus reducing interest charges and improving profits, and strengthening the debt position. There might also be some excess investment in fixed assets, perhaps indicative of excess capacity, as shown by a slightly Iower-than-average fixed assets turnover ratio. However, this is not nearly as clear-cut as the overinvestment in inventory. e. If the firm had a Sharp seasonal sales pattern, or if it grew rapidly during the year, many ratios might be distorted.

Ratios nvolving cash, receivables, inventories, and current liabilities, as well as those based on sales, profits, and common equity, could be biased. It is possible to correct for such problems by using average rather than end-of-period figures. 3-16 a. Here are the firm’s base case ratios and other data as compared to the industry: Firm Industry Comment QUiCk 0. 8( 1. 0( weak Current 2. 3 2. 7 Weak Inventory turnover 4. 8 7. 0 Days sales outstanding 37 days 32 days Fixed assets turnover 10. 0( 13. 0( Total assets turnover 2. 6 Return on assets gad Bad Return on equity 18. 2 13. 1 Debt ratio 54. 8 22