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4-23
RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow. The
firms debt is priced at par, so the ma Barry Computer Company: Income Statement for Year Ended
December 31, 2019 (in Thousands)
Sales
$1,607,500
Cost of goods sold

Need help with A

Transcribed image text: 4-23 RATIO ANALYSIS Data for Barry Computer Co. and its industry averages follow. The firm's debt is priced at par, so the market value of its debt equals its book value. Since dol- lars are in thousands, number of shares are shown in thousands too. a. Calculate the indicated ratios for Barry. b. Construct the DuPont equation for both Barry and the industry. c. Outline Barry's strengths and weaknesses as revealed by your analysis. d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2019. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations are needed.) Barry Computer Company: Balance Sheet as of December 31, 2019 (in Thousands) Cash $ 77,500 Accounts payable Receivables 336,000 Other current liabilities Inventories 241,500 Notes payable to bank Total current assets $ 655,000 Total current liabilities Long-term debt Net fixed assets 292,500 Common equity (36,100 shares) Total assets $ 947,500 Total liabilities and equity $129,000 117,000 84,000 $330,000 256,500 361,000 $947,500 Barry Computer Company: Income Statement for Year Ended December 31, 2019 (in Thousands) Sales $1,607,500 Cost of goods sold Materials $717,000 Labor 453,000 Heat, light, and power 68,000 Indirect labor 113,000 Depreciation 41,500 1,392,500 Gross profit $ 215,000 Selling expenses 115,000 General and administrative expenses 30,000 Earnings before interest and taxes (EBIT) 70,000 Interest expense 21,000 Earnings before taxes (EBT) 49,000 Federal and state income taxes (25%) 12,250 Net income $ 36,750 Earnings per share Price per share on December 31, 2019 $ $ 1.018 12.00 Ratio Barry Industry Average 2.0x Current 1.3% Quick Days sales outstanding Inventory turnover Total assets turnover Profit margin ROA 35 days 6.7x 3.0x 1.6% 4.8% 12.1% ROE ROIC 9.49 TIE 3.5X 47.0% Debt/Total capital M/B 4.22x 13.27 P/E EV/EBITDA 9.14 *Calculation is based on a 365-day year.

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Question 3 2018:

Suppose that the current one-year interest rate is at 2%, the two-year rate is at
2.5% and the three-year rate is at 3%. A trader quotes the one-year rate, one
year forward as 2.8%. Assume that there is no bid-ask spread (i.e., you can lend
and borrow at the same rate) and that no other trader is quoting in the forward
market.
a) What is the one-year forward rate for a contract that expires in one year (i.e.,
the forward rate for a contract to lend or borrow in one year for one year)?

b) Describe a trade that you could implement to profit from this quote.

c) How would you trade if the one-year forward rate quoted by the trader was
3.3%?

d) If your forecast is that the yield curve will be the same next year, how can
you trade to benefit from this prediction, if possible?

e) Calculate the one-year forward rate for a contract that expires in three years.

f) Briefly explain whether the forward curve described by the one-year forward
rates in parts (a) and (e) is in contango or backwardation.

g) Suppose the forward curve consists of the following forward rates:
1-year spot rate: 2.0%
1-year rate, one year forward: 3.0%
1-year rate, two years forward: 4.0%
What is the value per £100 of par value of a three-year bond with a coupon
of 4% with interest payments paid annually?

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Question 1c 2018:

c)

Given the data in the table below, calculate the number of 3-year treasury
note futures contracts required to hedge USD 1 mil

d) Assume that the current date is 10 January 2018. Calculate the accrued
interest for the cheapest-to-deliver note in the table in part (c), which pays
interest semi-annually on 15 April and 15 October. Show your workings.

Transcribed image text: Given the data in the table below, calculate the number of 3-year treasury note futures contracts required to hedge USD 1 million of the Treasury 2% Dec 2021 note. Cheapest-to-deliver note into the 3-year Treasury 2% treasury note futures Dec 2021 note contract CUSIP 912828U81 912828222 Coupon 2% 1.625% Maturity 31/12/2021 15/10/2020 Price 99.175% 98.873% Accrued interest 0.055% (10 days) 0.387% Yield 2.229% 2.055% Modified duration 3.84 2.70 Conversion factor 0.8906 Contract size (USD) 100,000 Day count convention act/365 Note: Prices are quoted in decimal notation rather than the standard 1/32 notation for U.S. treasury notes.

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Hospital A sold 45 units @ $55.00 and had a beginning inventory of 60 units @ $18 and had purchased 25 units at $20 and another purchase of 35 units @ $22. Taxes were $300.00 and operating expenses were $575.00.

Prepare an inventory analysis to exhibit FIFO and LIFO.

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(Future value)  You are hoping to buy a house in the future and recently received an inheritance of ​$16,000. You intend to use your inheritance as a down payment on your house. a.  If you put your inheritance in an account that earns 8 percent interest compounded​ annually, how many years will it be before your inheritance grows to ​$35,000​? b.  If you let your money grow for 10 years at 8 percent​, how much will you​ have? c.  How long will it take your money to grow to ​$35,000 if you move it into an account that pays 3 percent compounded​ annually? How long will it take your money to grow to ​$35,00 if you move it into an account that pays 13 percent​? d.  What does all this tell you about the relationship among interest​ rates, time, and future​ sums?

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key differences between a European put and European call?

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Question 2b 2017:

You are given the following information about three bonds.
Bond
Annualized
Modified
Duration
Annualized
Convexity
A Yield
11.

Transcribed image text: You are given the following information about three bonds. Bond Annualized Modified Duration Annualized Convexity A Yield 11.1 13362 133bps NX 2.54 3.82 8.51 22.7 125bps - 3.4 130bps Rank the three bonds in terms of the interest rate risks, measured by the potential percentage price decrease due to an unexpected variation in financial market conditions. The increases in the yield to maturity (column 'A Yield' in the table above) represent the 'worst case' for the scenario being considered.

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Question 5 2016:

ABC Bank raises funding through fixed rate retail bonds and lends to clients for
periods of up to 5 years on a floating rate

Transcribed image text: ABC Bank raises funding through fixed rate retail bonds and lends to clients for periods of up to 5 years on a floating rate basis. On 16th July it raised US$50 million in a 1-year bond at a coupon of 4% and lent the entire sum on the same day to a client for 1 year at a margin of 75 basis points above 3-month LIBOR. Both the bond and the loan are due for repayment on a bullet basis, with interest payable quarterly in arrears. In order to protect itself against falling interest rates, ABC Bank also purchased an interest rate floor on 16th July at 3.5% for the entire period at a cost of 3bp. Assume that 3-month LIBOR is set at the following rates for each of the interest periods: Period 1: 3.75% Period 2: 3.50% Period 3: 3.25% Period 4: 3.15% Required: (i) Calculate the net income to ABC Bank for this transaction. Notes: Assume that each 3-month period expires on a business day. Each interest period should be calculated on the actual number of days expired (i.e. actual days/number of days in a year). All payments are due on the last day of the relevant interest period. • Ignore any capital requirements connected with the transaction. An

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P6-22 (similar to)
Yield to maturity The bond shown in the following table pays interest annually
copy its contents into a sp
Transcribed image text: P6-22 (similar to) Yield to maturity The bond shown in the following table pays interest annually copy its contents into a spreadsheet) (Cick on the icon located on the top-right comer of the data table below in order to Par value Coupon interest rate 14 % Years to maturity Current value $100 17 $140 a. Calculate the yield to matunty (YTM for the bond b. What relationship exsts betwoon the coupon interest rate and yield to matunity and the par value and market value of a bond? Explan a. The yeld to maturity (YTM) for the bond is% (Round to two decimal places) Enter your answer in the answer box and then click Check Answer part remaining Check Answer Cear A gelete ort sc 144 & 7 backspacs 6 R T K G H J F pause .. LL

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QUESTION 25

  1. There three sources of return for a fixed-rate bond. Which of the following is not one of them?

a.

Receipt of scheduled coupon payments

b.

Reinvestment of received scheduled principal payments

c.

Potential capital gains or losses on the sale of the bond prior to maturity

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