Ejercicios Resueltos Finanzas Corporativas 7 Edico

Case Solutions
Corporate Finance
Ross, Westerfield, and Jaffe
9th edition

1

CHAPTER 2
CASH FLOWS AT WARF COMPUTERS
The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars)
OCF = EBIT + Depreciation – Current taxes
OCF = $1,332 + 159 – 386
OCF = $1,105
To calculate the cash flow from assets, we need to find the capital spending and change in networking capital. The capital spending for the year was:
Capital spending
Ending net fixed assets
– Beginning net fixed assets
+ Depreciation
Net capital spending

$2,280
1,792
159
$ 647

And the change in net working capital was:
Change in net working capital
Ending NWC
– Beginning NWC
Change in NWC

$728
586
$142

So, the cash flow from assets was:
Cash flow from assetsOperating cash flow
– Net capital spending
– Change in NWC
Cash flow from assets

$1,105
647
142
$316

The cash flow to creditors was:
Cash flow to creditors
Interest paid
– Net New Borrowing
Cash flow to Creditors

$95
20
$75

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The cash flow to stockholders was:
Cash flow to stockholders
Dividends paid
– Net new equity raised
Cash flow to Stockholders

$212
–29
$241The accounting cash flow statement of cash flows for the year was:
Statement of Cash Flows
Operations
Net income
Depreciation
Deferred taxes
Changes in assets and liabilities
Accounts receivable
Inventories
Accounts payable
Accrued expenses
Other

$742
159
109
(31)
14
17
(99)
(9)

Total cash flow from operations

$902

Investing activities
Acquisition of fixed assetsSale of fixed assets
Total cash flow from investing activities

$(786)
139
$(547)

Financing activities
Retirement of debt
Proceeds of long-term debt
Notes payable
Dividends
Repurchase of stock
Proceeds from new stock issues
Total cash flow from financing activities

$(98)
118
5
(212)
(40)
11
$(216)

Change in cash (on balance sheet)

$39

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Answers to questions1. The firm had positive earnings in an accounting sense (NI > 0) and had positive cash flow from
operations and a positive cash flow from assets. The firm invested $142 in new net working capital
and $647 in new fixed assets. The firm was able to return $241 to its stockholders and $75 to
creditors.
2. The financial cash flows present a more accurate picture of the company since it accuratelyreflects
interest cash flows as a financing decision rather than an operating decision.
3. The expansion plans look like they are probably a good idea. The company was able to return a
significant amount of cash to its shareholders during the year, but a better use of these cash flows may
have been to retain them for the expansion. This decision will be discussed in more detail later in thebook.

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CHAPTER 3
RATIOS AND FINANCIAL PLANNING AT
EAST COAST YACHTS
1.

The calculations for the ratios listed are:
Current ratio = $14,651,000 / $19,539,000
Current ratio = 0.75 times
Quick ratio = ($14,651,000 – 6,136,000) / $19,539,000
Quick ratio = 0.44 times
Total asset turnover = $167,310,000 / $108,615,000
Total asset turnover = 1.54 times
Inventory turnover =$117,910,000 / $6,136,000
Inventory turnover = 19.22 times
Receivables turnover = $167,310,000 / $5,473,000
Receivables turnover = 30.57 times
Total debt ratio = ($108,615,000 – 55,341,000) / $108,615,000
Total debt ratio = 0.49 times
Debt-equity ratio = ($19,539,000 + 33,735,000) / $55,341,000
Debt-equity ratio = 0.96 times
Equity multiplier = $108,615,000 / $55,341,000
Equity multiplier = 1.96times
Interest coverage = $23,946,000 / $3,009,000
Interest coverage = 7.96 times
Profit margin = $12,562,200 / $167,310,000
Profit margin = 7.51%
Return on assets = $12,562,200 / $108,615,000
Return on assets = 11.57%
Return on equity = $12,562,000 / $55,341,000
Return on equity = 22.70%

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2.

Regarding the liquidity ratios, East Coast Yachts current ratio is below t he median...