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Assignment Week 2 - Maya Wulansari - 09111840000040

This document provides financial data for A.L Kaiser & Company. It asks to calculate various financial metrics and figures including: (1) Kaiser's accounts receivable is $111.1 million (2) If Kaiser reduces its days sales outstanding from 40.55 to 30.4 days, it could generate $23.8 million in additional cash. (3) If this cash was used to buy back common stock, reducing equity, the return on equity would decrease from 12% to 14.82% and return on assets would decrease from 8.33% to 9.6%.

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552 views

Assignment Week 2 - Maya Wulansari - 09111840000040

This document provides financial data for A.L Kaiser & Company. It asks to calculate various financial metrics and figures including: (1) Kaiser's accounts receivable is $111.1 million (2) If Kaiser reduces its days sales outstanding from 40.55 to 30.4 days, it could generate $23.8 million in additional cash. (3) If this cash was used to buy back common stock, reducing equity, the return on equity would decrease from 12% to 14.82% and return on assets would decrease from 8.33% to 9.6%.

Uploaded by

mayasari
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Nama : Maya Wulansari

Nrp : 09111840000040
Financial Management B

The following data apply to A.L Kaiser & Company (millions of dollars):
Cash and equivalent $ 100.00
Fixed assets 283.50
Sales 1,000.00
Net income 50.00
Current liabilities 105.50
Notes payables to bank 20.00
Current ratio 3.00 X
DSO* 40.55 days
ROE 12.00%
*This calculation is based on a 365-day year.
Kaiser has no preferred stock-only common equity, current liabilities, and long-term debt.
a. Find Kaiser’s
(1) Account receivable
(2) Current assets
(3) Total assets
(4) ROA
(5) Common equity
(6) Quick ratio
(7) Long-term debt
b. In part a, you should have found that Kaiser’s account receivable (AyR) $111.1
million. If Kaiser could reduce its DSO from 40.55 days to 30.4 days while holding
it her things constant, how much cash would cash would it generate? If this cash
werw used to buy back common stock (at book value), thus reducing common
equity, how would this affect (1) the ROE, (2) the ROA.
Answer:
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
a. (1) DSO = 𝑆𝑎𝑙𝑒𝑠
365
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
40.55 = 1000
365

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
40.55 =
2.7397

Account receivable = 40.55 x 2.7397


Account receivable = $ 111.1

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
(2) Current ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
3 =
105.50

Current assets = 3 x 105.50


Current assets = $ 316.50

(3) Total Assets = Current assets + Fixed assets


= 316.50 + 105.50
= $ 600.00

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
(4) ROA = x 100%
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
50
= x 100%
600

= 0,083 x 100%
= 8,33 %

𝑅𝑂𝐴 𝑋 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠


(5) Common equity =
𝑅𝑂𝐸
8,33% 𝑋 600
=
12%
50
=
0,12

= 416.67
𝐶𝑎𝑠ℎ+ 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
(6) Quick ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑙𝑖𝑡𝑖𝑒𝑠
100+111.1
=
105.50
211.1
=
105.50

=2

(7) Total liabilities = Total assets – Total equity


= 600 – 416.67
= 183.33

(8) Long-term debt = Total liabilities – Current liabilities


= 183.3 – 105.50
= 77.83
𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
B. DSO = 𝑆𝑎𝑙𝑒𝑠
365

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
30.4 = 1000
365

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒
30.4 =
2.7397

Account receivable = 30.4 x 2.7397


Account receivable = $ 83,288

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 1 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 1


=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 2 𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 2
316.50 111.1
=
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 2 83.288
316.50 𝑥 83.288
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 2 =
111.1
26360,652
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 2 =
111.1

𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔 𝟐 = 𝟐𝟑𝟕, 𝟐𝟔𝟗


Total Assets = Current assets + Fixed assets
= 237.269 + 283.50
= $ 520.769

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
(1) ROE = x 100%
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
50.00
= x 100%
𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦
50.00
= x100%
(520.769−183.33)

50.00
= x100%
337,439

= 0.1482
= 14.82 %

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
(2) ROA = x 100%
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
50
= x 100%
520.769

= 0,096 x 100%
= 9.6%

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