Re: [ vuZs.net ] FIN 630 & CS507

Respected Asrar, 

Don't you think, company's dividend growth rate has been increased by 30%? 

As we see, company pays $5 this year and $5.30 next year. Haven't it increased?

Then why you didn't mentioned it in your formula?

On Sat, Nov 12, 2011 at 12:23 AM, mc080204494 Asrar Tariq <mc080204494@vu.edu.pk> wrote:

this is final shape of the fin 630 assignment check it out

and if is their mistake then correct it plz and SHukria reply me asap 

Solution of Question no.1:-

 

Quick Ratio / Acid Test Ratio = (current assets – Inventory) / (current Liabilities)

Quick Ratio / Acid Test Ratio = ((937.000 + 200,000) – 212,000) / 409,000

Quick Ratio / Acid Test Ratio = (1137, 000 – 212,000) / 409,000

Quick Ratio / Acid Test Ratio = (925,000) / 409,000

Quick Ratio / Acid Test Ratio = 2.261 times

 

Interest coverage Ratio = EBIT / Interest expenses

Interest coverage Ratio = (50, 15,000 / 2550, 000)

Interest coverage Ratio = 19.67 %

 

Earnings per Share = Profit available to Shareholders / Average common shares outstanding

Earnings per Share = (3,09,40,000 – 12,30,000) / 2000000

Earnings per Share = 14.85 Rs.

 

Net Profit Margin = (Net Income/ Net Sales)* 100

Net Profit Margin = (3, 09, 40,000 / 105, 000,000) * 100

Net Profit Margin = (0.477) * 100

Net Profit Margin = 29.46 %

 

  

Intrinsic Value of Stock = Future Value / Expected ROI ^{Number of Years}   

Intrinsic Value of Stock = D1/(r-g)

Intrinsic Value of Stock = 5.30 / (12% - 0) ¹

Intrinsic Value of Stock = 5.30/ (12-0) = 5.30/ (12%)

Intrinsic Value of Stock = 44.16

Solution of Question no.2:-

 

Ratio	Industry Average	Company Ratio Ranking	Ranking (Poor / Good)
Quick	1.75 Times	2.26 times	Good
Net Profit Margin	35%	29.47 %	Poor
Interest coverage	16 Times	19.67 Times	Good
Earning per share	Rs. 1.35	Rs. 14.85	Good

 

 

On Fri, Nov 11, 2011 at 11:25 PM, mc100203620 Rozy <mc100203620@vu.edu.pk> wrote:

        

 

Solution of Question no.1:-

 

Acid Test Ratio = Current assets-Inventories-prepaid expense / Current Liabilities

       = (200,000 + 937,000 – 212,000) / 409,000 = 2.262

       =2.26 Times 

 

 

Net Profit Margin = (Net Profit after Taxation / Net Sales)*100

            = (30940000/105000000)*100

            =29.47%

 

Times Interest Earned =EBIT / interest Expense

       =50, 150000/ 2, 550000

       =19.67 Times

 

Earning per Share= (Net income – Dividends on preferred stock) / average outstanding shares

 =30940000-1230000/2000000

            =14.85

 Intrinsic value of stock = D1/ (r-g)

         = 5.30/ (12-0)

        = 5.30/ (12%)

        = 44.16

 

Solution of Question no.2:-

 

Ratios	Industry Average	Company's ratio	Ranking (Poor/good)
Quick	1.75 Times	2.26 Times	Good
Net Profit Margin	35%	29.47%	Poor
Interest Coverage	16 Times	19.67 Times	Good
Earning per share	Rs. 1.35	Rs.14.85	Good

 

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Regards, 

Misbah Yousuf

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