6 FS Analysis Activity ACTIVITY PROBLEMS FOR FINANCIAL MANAGEMENT PDF

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PROBLEM 1. Barnaby Cartage Company has current assets of $800,000 and current liabilities of $500,000. What effect would the following transactions have on the firm’s current ratio (and state the resulting figures)? a. Two new trucks are purchased for a total of $100,000 in cash. b. The company borr...

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PROBLEM 1. Barnaby Cartage Company has current assets of $800,000 and current liabilities of $500,000. What effect would the following transactions have on the firm’s current ratio (and state the resulting figures)? a. Two new trucks are purchased for a total of $100,000 in cash. b. The company borrows $100,000 short term to carry an increase in receivables of the same amount. c. Additional common stock of $200,000 is sold and the proceeds invested in the expansion of several terminals. d. The company increases its accounts payable to pay a cash dividend of $40,000 out of cash.

PROBLEM 2. Using the following information, complete the balance sheet: Long-term debt to equity 0.5 to 1 Total asset turnover 2.5 times Average collection period* 18 days Inventory turnover 9 times Gross profit margin 10% Acid-test ratio 1 to 1 *Assume a 360-day year and all sales on credit.

PROBLEM 3:...