Financial Management

Lecturer : Prof. Eduardus Tandelilin, Ph.D

Irwan Arfandi Bachtiar 0850035

Magister Manajemen
Fakultas Ekonomika Dan Bisnis
Universitas Gadjah Mada
2008
Problem 3.4

Firm’s taxable Income = $10,500,000

a. Tax bill = $3,400,000 + (0.35*500,000) = $3,575,000

b. Interest tax bill = $113,900 + (0.34*665,000) = $340,000
c. Dividend tax bill = $1,000,000*[(0.3)(0.35)] = $105,000
Problem 3.7

Sales = $12,000,000; Cost = 75% of sales; Depreciation = $1,500,000;

Tax rate = 40%

a. The income statement:

Sales $12,000,000
Operating cost (ex. Depreciation) 9,000,000
Depreciation 1,500,000
EBIT 1,500,000
Interest -
EBT 1,500,000
Tax (40%) 600,000
Expected Net Income $900,000
Net Cash Flows = 900,000 + 1,500,000 = $2,400,000
b. The income statement:
Sales $12,000,000
Operating cost (ex. Depreciation) 9,000,000
Depreciation 3,000,000
EBIT 0
Interest -
EBT 0
Tax (40%) -
Expected Net Income $0
Net Cash Flows = 0 + 3,000,000 = $3,000,000
c. The income statement:
Sales $12,000,000
Operating cost (ex. Depreciation) 9,000,000
Depreciation 750,000
EBIT 2,250,000
 Interest -
EBT 2,250,000
Tax (40%) 900,000
Expected Net Income $1,350,000
Net Cash Flows = 1,350,000 + 750,000 = $2,100,000
d. Halved, because Net Income will increase.

Problem 13.4

Double Wide Dealer

ROA : 10 %
Profit Margin : 2 %
ROE : 15 %
a) Total Assets x Profit = ROA

Total Assets = ROAProfit Margin = 102=5 %

b) Equity Multiplier = ROEROA= 1510=1.5 x

Problem 13.10

Hott Meister

Debt Ratio : 50 %
Total Assets : 1.5 x
Quick Ratio : 0.8 x

(DSO) Days Sales Outstanding : 36.5 days

Gross Profit Margin = 25 %

Inventory Turn Over = 5 x
Total Assets = $ 300,000
Long Term Debt = $ 60,000
R/E = $ 97,500

Debt Ratio = Total DebtTotal Assets= 50 %

• Debt Ratio300,000=0.50
• Debt Ratio (X) = 150,000
• Total Debt = APshort term liabilities+ long term liabilities
150,000 = AP+ 60,000
AP = $ 90,000
Total Assets Turn Over = SalesTotal Assets

• 1.5 = Sales300,000 Sales = $ 450,000

Inventory Turn Over = Sales Inventory

• 5= $ 450,000Inventory  Inventory = $ 90,000

Total Liability and Equity = AP + Long Term Debt + Common Equity + RE = Total
Assets

= 90,000 + 150,000 + X + 97,500 = 300,000

common equity (x)= 37,500

DSO = ARSales365

X = 45,000

Quick Ratio = current assets-Inventorycurrent liabilities

0.8 = (cash+ AR+Inventory)-InventoryA/P

0.8 = Cash+45,00090,000

Cash = $ 27,000

Total Assets = Cash + A/R + Inventory + Fixed Assets

300,000 = 27,000 + 45,000 + 90,000 + FA

FA = $ 138,000