Jack Nicklaus Corporation Balance Sheet Jack Nicklaus Corporation Income Statement for year 1 Current Ratio = Current

Statement for year 1 Current Ratio = Current Assets = 1,660 = 1.6436 times
December 31, 2020 ($ millions) ending December 31, 2020 ($ millions) Current Liabilities 1,010
$
Assets Liabilities Sales (Cash and Credit) 5,200 2 Quick Ratio = Cash & Account Receivables = 990 = 0.9802 times
$ $ Cost of goods sold (3,200) Current Liabilities 1,010
Cash 600 Accounts Payable and accruals 900 Gross profit 2,000
Account Receivables 390 Short-term notes payables 110 3 Average Collection Period = Accounts Receivables = 390 = 71.1750 days
Inventories 450 Total current liabilities 1,010 Operating Expenses: (Annual Credit Sales/365) 5.48
Other current assets 220 Marketing, general and administrative expenses 330
Total current assets 1,660 Long-term debt 50 Depreciation expense 300 4 Accounts Receivable Turnover = Credit Sales = 2,000 = 5.1282 times
Total liabilities 1,060 Total Operating expenses 630 Accounts Receivable 390
Gross fixed assets 3,700
Accumulated depreciation (500) Equity Operating profit (operating income) 1,370 5 Inventory Turnover = Cost of Goods Sold = 3,200 = 7.1111 times
Net fixed assets 3,200 Common stock 2,100 Inventory 450
Retained earnings 1,700 Interest expense (20)
Total common equity 3,800 Earnings before taxes 1,350 = Sales = 5,200 = 11.5556 times
Income taxes (270) Inventory 450
Total Assets 4,860 Total liabilities and equity 4,860 Net income 1,080
6 Operating Return = Operating Return = 1,370 = 0.2819 or 28.1893%
Notes: On Assets Total Assets 4,860
Annual Credit Sales per day 5.48
Annual Credit Sales 2,000 7 Operating Profit Margin = Operating Profit = 1,370 = 0.2635 or 26.3462%
Price per share 30 Sales 5,200
Earning per share 0.70
Equity Book value per share 5.30 8 Total Asset Turnover = Sales = 5,200 = 1.0700 times
Total Assets 4,860

9 Fixed Asset Turnover = Sales = 5,200 = 1.6250 times

Fixed Assets 3,200

10 Debt Ratio = Total Debt = 1,060 = 0.2181 or 21.8107%

Total Assets 4,860

11 Times Interest Earned = Operating Income = 1,370 = 68.5000 times

Interest 20

12 Return On Equity = Net Income = 1,080 = 0.2842 or 28.4211%

Common Equity 3,800

13 Price / Earnings Ratio = Price per share = 30 = 42.8571 times

Earnings per share 0.70

14 Price / Book Ratio = Price per share = 30 = 5.6604 times

Equity Book Value per share 5.30
refer slide 5-6 Simple interest calculation
Principal = RM100.00
Interest p.a. = 6% p.a
# of years = 3 years
Int paid = prin x int x # of yrs = RM18.00
Total to be paid = RM118.00

refer slide 5-11 Compounding interest calculation

PV = -RM100.00
interest p.a. = 6% p.a
# of years = 3 years
FV = ?
FV = PV (1+i)n = ?
FV = 100 (1+0.06)3 = RM119.1016
Interest paid = RM19.1016
refer slide 5-14 FV calculation
PV = -RM500.00
interest p.a. = 8% p.a
# of years = 7 years
FV = ?
FV = PV (1+i)n = ?
FV = 500 (1+.08)7 = RM856.9121 500 * ( 1 + 0.08 ) ˄ 7 =

500 * ( 1 + 0.08 ) xy 7 =

refer slide 5-18 PV calculation

FV = -500
discount rate p.a. = 6% p.a
# of years = 10 years
PV = ?
PV = FV / (1+i)n = ?
PV = 500 / (1+0.06)10 = RM279.1974
refer slide 5-27 FV Annuity calculation
PV = RM0.00
PMT = RM500.00
interest p.a. = 6% p.a
# of years = 5 years

Refer table pg 11 FVA = PMT (FVIFAi,n) = ?

FVA = 500(5.6371) = (RM2,818.55)

refer slide 5-30 PV Annuity calculation

FV = RM0.00
PMT = RM500.00
discount rate p.a. = 6% p.a
# of years = 5 years

PVA = PMT (PVIFAi,n) = ?

Refer table pg 9 PVA = 500 (4.2124) = (RM2,106.1819)

refer slide 5-34 PMT calculation

FV = RM0.00
PV = RM6,000.00
discount rate p.a. = 15% p.a
# of years = 4 years

PMT (what is installments?) = ?

PMT = (RM2,101.5921)

PVA = PMT (PVIFA i,n)

PMT = PVA / PVIFA i,n
refer table pg 9 PMT = 6,000 / 2.8550
PMT = - 2,101.59
Question

Initial Outlay = RM 8,000

Interest rate = 8% catering DeeJay Tents
RM RM RM
Year Project A Project B Project C total Pro B total Pro C
2000 1 2,000 1,000 2,000 1,000 2,000
4000 2 2,000 2,000 3,000 3,000 5,000
6000 3 2,000 4,000 4,000 7,000 9,000
8000 4 2,000 4,000 5,000 11,000
5 2,000 5,000 6,000
 PAYBACK PERIOD

Initial Outlay = 8000

Project A
= Initial Outlay / Annual CF = 8000 / 2,000 = 4 years

Project B
= 3 + (Initial Outlay - Absolute Value)/CF following year = 3 + (8,000-7,000)/4,000 = 3.25 years

Project C
= 2 + (Initial Outlay - Absolute Value)/CF following year = 2+(8000-5000)/4000 = 2.75 years
Initial Outlay = 8,000
Interest = 8%
pg 8 pg 8 pg 8
Project A CF refer table Project B CF refer table Project C CF refer table
Y1 2000 x 0.9259 = 1,851.80 Y1 1000 x 0.9259 = 925.90 Y1 2000 x 0.9259 = 1,851.80
Y2 2000 x 0.8573 = 1,714.60 Y2 2000 x 0.8573 = 1,714.60 Y2 3000 x 0.8573 = 2,571.90
Y3 2000 x 0.7938 = 1,587.60 Y3 4000 x 0.7938 = 3,175.20 Y3 4000 x 0.7938 = 3,175.20
Y4 2000 x 0.7350 = 1,470.00 Y4 4000 x 0.7350 = 2,940.00 Y4 5000 x 0.7350 = 3,675.00
Y5 2000 x 0.6806 = 1,361.20 Y5 5000 x 0.6806 = 3,403.00 Y5 6000 x 0.6806 = 4,083.60
Total PVA 7,985.20 Total PVB 12,158.70 Total PVC 15,357.50
Initial Outlay (8,000.00) Initial Outlay (8,000.00) Initial Outlay (8,000.00)
NPVA (14.80) Reject NPVB 4,158.70 Accept NPVC 7,357.50 Accept
Initial Outlay = 8,000
Interest = 8%
Cash Flow = 2,000
Step 1
PVA = PMT (PVIFA i%, n)

8,000 = 2000 (PVIFA i%, 5)

8000/2000 = (PVIFA i%, 5)
4= (PVIFA i%, 5)
4.0000 = (PVIFA i%, 5)
Step 2
refer table: pg 9
IRR is between 7% - 8%

At 7% 4.1002
IRR 4.0000
At 8% 3.9927
Step 3
= 7%+[(4.1002-4.000) / (4.1002-3.9927)] %
= 7% + 0.1002 / 0.1075 %
= 7% + 0.9320930233 %
= 7.932% < 8% Reject
Cost of Debt

Int of loan kd = 9.75%

Tax rate Tc = 34%

After-tax cost of debt = kd (1 - Tc)

= 0.0975(1 - 0.34)
= 6.4350%

3.3150%
Cost of preferred Stock

Annual Div = $ 4.25

Stock price = $ 58.50
Flotation cost per share = $ 1.375
COPS = ??

Stock div / Net proceeds per share = 4.25 / (58.50 - 1.375)

= 7.4398%

0.074398
Cost of Common Equity

Div this year = 2.20

Div last year = 2.00
Growth = 10%
Stock price = 50.00
Floatation cost per share = 7.50

Kcs = (D1 / Pcs) + g = ( $2.20 / $50 ) + 0.10

= 14.4000%

Kcs = (D1 / NPcs) + g

Kcs = [D1 / (Pcs-float cost)] + g = [ $2.20 / ( $50 - $7.50 ) ] + 0.10
= 15.1765%
COCE CAPM

Beta = 1.4
Krf = 3.75%
Exp Mkt rate (Km) = 12.0%

Kc = Krf + B (Km - Krf) = 0.0375 + 1.4 (0.12 - 0.0375)

= 15.3000%
WACC

Borrow at interest (after-tax) = 6%

Dividend paid = 10%

Debt = 50%
Equity = 50%

( int x Wd ) + ( div x We ) =
(0.06 x 0.50) + (0.10 x 0.50) = 8.0000%
Financial Statements ANSWER
QUESTIONS 1 EBIT
Applicable Tax rate 40% Sales 600
COGS (330)
Texas Income Statement RM’000 Op Exp (115)
Cost of Goods Sold 330 330 Depre Exp (35)
Depreciation Expense 35 35 EBIT 120
Interest Expense 20 20
Operating Expense (excluding depreciation) 115 115 2 Tax liability
Sales 600 600 EBIT 120
Tax ??? ??? Int Exp (20)
EBT 100
Texas Balance Sheet RM’000
Accounts Payable 35 35 Tax
Accounts Receivable 65 65 EBT 100
Accruals 30 30 Applicable Tax 40%
Accumulated Depreciation (175) (175) Tax liability 40
Cash 35 35
Common Stock 120 120 3 Net Income EBT 100
Fixed Assets (gross) 390 390 Tax (40)
Inventory 135 135 Net Income 60
Long Term Debt 200 200
Retained Earnings 65 65 4 Total Assets Total Liability
Cash 35 Accounts Payable 35
Accounts Receivable 65 Accruals 30
Inventory 135 LT Debt 200
Fixed Assets (gross) 390 Total Liability 265
Accumulated Depreciation (175)
Total Assets 450 Total Equity 185

5 Total Equity Total L & Eq 450

Common Stock 120
Retained Earnings 65
Total Equity 185

6 Net Working Capital CA - CL

Current Assets
Cash 35
Accounts Receivable 65
Inventory 135

Current Liability
Accounts Payable (35)
Accruals (30)

NWC 170
Starbucks Corporation Balance Sheet Starbucks Corporation Income Statement for year
December 31, 2014 ($ millions) ending December 31, 2014 ($ millions) 1 Current Ratio = CA = 922 = 1.6673 x
CL 553
Assets Liabilities Sales 4,076
Cost of goods sold (3,207) 2 Ave Coll Period = A/R = 114 = 67.9 days
Cash 350 Accounts Payable and accruals 552 Gross profit 869 Ct Sales 1.68
Account Receivables 114 Short-term notes payables 1
Inventories 342 Total current liabilities 553 Operating Expenses: 3 Op ROA = Op R = 436 = 0.1632 or 16.3%
Other current assets 116 Marketing, general and administrative expenses 227 A 2,672
Total current assets 922 Long-term debt 38 Depreciation expense 206
Total liabilities 591 Total Operating expenses 433 4 Debt ratio = TL = 591 = 0.2212 or 22.1%
Gross fixed assets 2,669 TA 2,672
Accumulated depreciation (919) Equity Operating profit (operating income) 436
Net fixed assets 1,750 Common stock 1,017
Retained earnings 1,064 Interest expense (3)
Total common equity 2,081 Earnings before taxes 433
Income taxes (165)
Total Assets 2,672 Total liabilities and equity 2,672 Net income 268

Notes:
Annual Credit Sales per day 1.68
Annual Credit Sales 611
Price per share 35
Earning per share 0.69
Equity Book value per share 5.32
 Ref Chap 8 POF
BOND VALUATION A year has gone by. Now 9 years. Now int % up A year has gone by. Now 9 years. Now int % drop

Face value / Par value = $ 1,000 Face value / Par value = $ 1,000 Face value / Par value = $ 1,000
Annual Coupon = 8% Annual Coupon = 10.0% Annual Coupon = 6%
Maturity (years) = 10 Maturity (years) = 9 Maturity (years) = 9
PMT = $ 80.00 PMT = $ 80.00 PMT = $ 80.00

1 Present Value 1 Present Value 1 Present Value

(a) Calculator (a) Calculator (a) Calculator
FV = $ 1,000 FV = $ 1,000 FV = $ 1,000
i% = 8% i% = 10% i% = 6%
N = 10 N = 9 N = 9
CPT PV = $ 463.19 CPT PV = $ 424.10 CPT PV = $ 591.90

(b) Manual - PV of Face amount = F / (1+r)t (b) Manual - PV of Face amount = F / (1+r)t (b) Manual - PV of Face amount = F / (1+r)t
= $ 463.19 = $ 424.10 = $ 591.90

2 Annuity PV 2 Annuity PV 2 Annuity PV

(a) Calculator (a) Calculator (a) Calculator
PMT = $ 80.00 PMT = $ 80.00 PMT = $ 80.00
i% = 8% i% = 10% i% = 6%
N = 10 N = 9 N = 9
CPT PV = $ 536.81 CPT PV = $ 460.72 CPT PV = $ 544.14

(b) PV of coupons = C x [1-(1/(1+r)t )]/r (b) PV of coupons = C x [1-(1/(1+r)t )]/r (b) PV of coupons = C x [1-(1/(1+r)t )]/r
= $ 536.81 = $ 460.72 = $ 544.14

3 Total Bond value = $ 463.19 + $ 536.81 3 Total Bond value = $ 424.10 + $ 460.72 3 Total Bond value = $ 591.90 + $ 544.14
= $ 1,000.00 = $ 884.82 = $ 1,136.03
 Ref Chap 8 POF
STOCK VALUATION

1 Valuing PS Annual Div = $ 6.25

Req ROR = 5%

Vps = Ann Div = D = $6.25 = $ 125.00

Req ROR Kps 5%

2 Valuing CS Div Year 0 = $ 2.00

Req ROR = 15%
Div Growth rate = 10%

(a) Div Valuation Mtd

Vcs = Div year 1 = D1 = D0(1+g) = $ 2.20 = $ 44.00
Req ROR - Growth rate (kcs - g) (kcs - g) 5%