(FIN 622) CORPORATE FINANCE
Solution Idea of Assignment No. 1
Q # 1:
(a) Current Ratio:
Current Assets / Current Liabilities
166,689 / 219,186 = 0.76
(b) Quick Ratio:
Quick Assets = Total Current Assets – Inventory
166,689 - 104,339 = 62,350
Quick Assets / Current Liabilities
62,350 / 219,186 = 0.28
(c) Cash Ratio:
Cash + Cash Equivalents / Current Liabilities
18,288 + 0 / 219,186 = 0.0834
(d) Total Debt Ratio:
Total Assets = Total Equity + Total Debt
Total Assets – Total Equity / Total Assets
748,879 – 339,693 / 748,879 = 0.5463
(e) Debt Equity Ratio:
Total Liabilities / Total Shareholder Equity
409,186 / 339,693 = 1.20Q # 2:
Req (i):
= CCF x {[(1+i/m) nxm-1] / (i/m)}
= 850 x {[(1+0.08/4)6x4-1] / (0.08 / 4)}
= 850 x {[(1+0.02)24-1] / (0.02)}
= 850 x {[1.608-1] / (0.02)]
= 850 x {[0.608] / (0.02)}
= 850 x 30.4
= 25,840 Ans
Req (ii):
= CCF x {[(1+i/m) nxm-1] / (i/m)}
= 1700 x {[(1+0.09/2)6x2-1] / (0.09 / 2)}
= 1700 x {[(1+0.045)12-1] / (0.045)}
= 1700 x {[1.6958814] / (0.045)]
= 1700 x {[0.6958814] / (0.045)}
= 1700 x 15.4640312
= 26,288.853 Ans
Req (iii):
Second plan would be more feasible keeping the value of saving in
consideration.
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