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BA 350 WEEK 8 FINAL EXAM

BA 350 Week 8 Final Exam Sum Solution ( 100% Correct All Sum + Steps by Steps Calculation with details)

2-4 – (Income Statement)

Pearson Brothers recently reported an EBITDA of $7.5 Million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for depreciation and amortization?

2-7 – (Corporate Tax Liability)

The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charge of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the company’s marginal and average tax rates on taxable income?

Chapter 3 Problem 3-8, 3-10

3-8 – (Profit Margin and Debt Ratio)

Assume you are given the following relationships for the Clayton Corporation: Sales/total assets 1.5 Return on assets (ROA) 3% Return on equity (ROE) 5% Calculate Clayton’s profit margin and debt ratio.

3-10 – (Times-interest-earned ratio)

The Manor Corporation has $500,000 of debt outstanding, and it pays an interest rate of 10% annually: Manor’s annual sales are $2 million, its average tax rate is 30%, and its net profit margin on sales is 5%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is Manor’s TIE ratio?

Chapter 12 Problem 12.1 12-4

12.1 – (AFN Equation)

Baxter Video Product’s sales are expected to increase by 20% from $5 million in 2010 to $6 million in 2011. Its assets totaled $3 million at the end of 2010. Baxter is already at full capacity, so its assets must grow at the same rate as projected