Question: Tinsley, Inc., wishes to maintain a growth

> Katlin contributes land to a partnership with a basis of $44,000 and an FMV of $56,000 in 2017. In 2019, when the FMV of the land is $58,000, the partnership distributes the land to Baily, another partner. Which of the following is true? a. Katlin recog

> Molly, a 30% partner in XYZ Partnership, has a basis of $55,000 in her partnership interest. She receives a cash distribution of $54,000 at year-end. The distribution has what tax effect on Molly? a. No gain or loss is recognized, and she has a $55,000

> Partner Beth has a basis of $10,000 in a partnership at the beginning of the year. She receives $6,000 in cash distributions, her distributive share of income is $5,000, and she receives a land distribution with a basis of $8,000 (FMV $20,000). What is B

> All of the following items usually affect the basis of a partnership interest except: a. Cash or property contributed. b. Guaranteed payments. c. Partnership income or loss items. d. A partner’s share of recourse liabilities.

> Maggie and Davis are equal partners in a partnership. When forming the partnership, Davis contributed a building with an FMV of $550,000 and a basis of $175,000. During the first year of operations, the partnership earned $170,000 in ordinary income and

> The amount of savings bond interest exempt from tax is limited when an individual is single and his or her AGI reaches a. $121,600. b. $81,100. c. $79,550. d. $96,100.

> The calculation of a partner’s basis in his or her partnership interest is mandatory in which of the following situations? a. In a partnership loss year. b. At the liquidation or disposition of a partner’s interest. c. When the partner receives non liqu

> Retish is a 10% partner in a partnership. The partnership pays Retish a guaranteed payment of $45,000 per year. If the partnership’s ordinary income is $38,000 before considering the guaranteed payment, the partnership will report ordinary income of how

> A partner’s share of ordinary income or loss and separately stated items is reported to the partner via what form? a. Form 1065. b. Form 1040, Schedule SE. c. Form 1065, Schedule K-1. d. Form 1065, Schedule D.

> Which of the following items from a partnership go into the calculation of a partner’s self- employment income? a. Rental income. b. Dividend income. c. Interest income. d. § 179 expense.

> All of the following are considered separately stated items to a partnership except: a. Charitable contributions. b. § 179 expense. c. Depreciation. d. Capital gains and losses.

> Styron is a partner in Styron, Lee, & Jane Partnership. Styron owned 25% from January 1, 2019, to June 30, 2019, when he bought Lee’s 25% interest. He owned 50% for the rest of the year. The partnership had ordinary income of $88,000 and $12,000 in long-

> Which of the following is considered when calculating ordinary income for a partnership? a. Dividend income. b. § 179 expense. c. Guaranteed payments to partners. d. Capital gains and losses.

> Shelly contributed the following business assets to S&S Partnership on March 3, 2019: Basis FMV Date Purchased by Shelly Equipment $75,000 $ 45,000 07/01/18 Acct. Rec. $ 0 $100,000 Various What is the basis in the equipment and t

> Allie contributed the following business assets to ASW Partnership on August 1, 2019: What is the holding period for the building and the inventory to ASW Partnership? a. Building—long-term capital or § 1231 asset. b. Bui

> Jake has a Schedule C with the following assets: Jake contributes these assets to form AJ Partnership and receives a 50% interest. AJ’s basis in the assets is: a. Cash $4,500; A/R $0; building $155,000. b. Cash $4,500; A/R $10,000; b

> For 2019, how can the amount of the sales tax deduction be determined?

> George and Debbie were legally married on December 31, 2019. Can they file their 2019 income tax return using the status of married filing jointly? Why or why not? What other filing status choices do they have, if any?

> Find the APR, or stated rate, in each of the following cases:

> Find the EAR in each of the following cases:

> In the previous problem, suppose a sales associate told you the policy costs $525,000. At what interest rate would this be a fair deal? Problem 10: The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your he

> The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $30,000 per year forever. If the required return on this investment is 5.6 percent, how much will you pay for the policy?

> Mendez Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? Year ………………….. Cash Flow 1 ……………………

> You’re trying to save to buy a new $275,000 Ferrari. You have $50,000 today that can be invested at your bank. The bank pays 4.8 percent annual interest on its accounts. How long will it be before you have enough to buy the car?

> According to the Census Bureau, in October 2019, the average house price in the United States was $368,600. In October 2000, the average price was $197,700. What was the annual increase in the price of the average house sold?

> At 4.3 percent interest, how long does it take to double your money? To quadruple it?

> Assume the total cost of a college education will be $325,000 when your child enters college in 18 years. You presently have $85,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college educat

> Solve for the unknown number of years in each of the following:

> Given the following information for Troiano Pizza Co., calculate the depreciation expense: Sales = $76,800; Costs = $36,900; Addition to retained earnings = $6,800; Dividends paid = $2,370; Interest expense = $5,300; Tax rate = 22 percent.

> Solve for the unknown interest rate in each of the following:

> For each of the following, compute the present value:

> You expect to receive $10,000 at graduation in two years. You plan on investing it at 11 percent until you have $60,000. How long will you wait from now?

> For each of the following, compute the future value:

> Suppose you are still committed to owning a $275,000 Ferrari (see Problem 9). If you believe your mutual fund can achieve an annual rate of return of 11.2 percent and you want to buy the car in 9 years (on the day you turn 30), how much must you invest t

> Refer back to the Series EE savings bonds we discussed at the very beginning of the chapter. a. Assuming you purchased a $50 face value bond, what is the exact rate of return you would earn if you held the bond for 20 years until it doubled in value? b.

> The “Brasher doubloon,” which was featured in the plot of the Raymond Chandler novel, The High Window, was sold at auction in 2018 for a reported $5.5 million. The coin had a face value of $15 when it was first issued in 1787 and had been previously sold

> In 1895, the first U.S. Open Golf Championship was held. The winner’s prize money was $150. In 2019, the winner’s check was $2.25 million. What was the percentage increase per year in the winner’s check over this period? If the winner’s prize increases a

> You have just received notification that you have won the $2 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you’re around to collect), 80 years from now. What is the present value of you

> Imprudential, Inc., has an unfunded pension liability of $450 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 5.2 per

> Nightwish Corp. shows the following information on its 2021 income statement: Sales = $336,000; Costs = $194,700; Other expenses = $9,800; Depreciation expense = $20,600; Interest expense = $14,200; Taxes = $21,275; Dividends = $21,450. In addition, you’

> First City Bank pays 7.5 percent simple interest on its savings account balances, whereas Second City Bank pays 7.5 percent interest compounded annually. If you made a deposit of $8,600 in each bank, how much more money would you earn from your Second Ci

> Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the dividend payout ratio is constant. What is the projecte

> The most recent financial statements for Tran Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-equity ratio. What is the maximum dollar increase in sal

> For the company in Problem 6, what is the sustainable growth rate? Problem 6: The most recent financial statements for Mandy Co. are shown here: Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 p

> The most recent financial statements for Mandy Co. are shown here: Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. What is the internal growth rate?

> The most recent financial statements for Assouad, Inc., are shown here: Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 40 percent dividend payout ratio. As with ever

> The most recent financial statements for Mixton, Inc., are shown here: Assets and costs are proportional to sales. Debt and equity are not. A dividend of $1,400 was paid, and the company wishes to maintain a constant payout ratio. Next yearâ&#128

> Based on the result in Problem 30, show that the internal and sustainable growth rates are as given in the chapter. Problem 30: Define the following: S = Previous year’s sales A = Total assets E = Total equity g = Projected growth in sales PM = Profit

> The most recent financial statements for Camryn, Inc., are shown here (assuming no income taxes): Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,164

> Klingon Widgets, Inc., purchased new cloaking machinery three years ago for $6 million. The machinery can be sold to the Romulans today for $5.4 million. Klingon’s current balance sheet shows net fixed assets of $3.5 million, current liabilities of $945,

> Redo Problem 26 using sales growth rates of 30 and 35 percent in addition to 20 percent. Assume the firm wishes to maintain its debt-equity ratio. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine th

> Redo Problem 24 using sales growth rates of 15 and 25 percent in addition to 20 percent. Illustrate graphically the relationship between EFN and the growth rate, and use this graph to determine the relationship between them. At what growth rate is the EF

> In Problem 24, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain c

> In Problem 24, suppose the firm was operating at only 80 percent capacity in 2020. What is EFN now? Problem 24: The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will rema

> The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current

> Calculate the internal growth rate for the company in Problem 22. Now calculate the internal growth rate using ROA × b for both beginning of period and end of period total assets. What do you observe? Problem 22: Deprey, Inc., had equity of $153,000 at

> Deprey, Inc., had equity of $153,000 at the beginning of the year. At the end of the year, the company had total assets of $215,000. During the year, the company sold no new equity. Net income for the year was $29,000 and dividends were $6,400. What is t

> You’ve collected the following information about Caccamisse, Inc.: Sales = $255,000 Net income = $19,200 Dividends = $7,500 Total debt = $67,000 Total equity = $77,000 What is the sustainable growth rate for the company? If it does grow at this rate, how

> Based on the following information, calculate the sustainable growth rate for Hendrix Guitars, Inc.: Profit margin = 5.9% Total asset turnover = 1.15 Total debt ratio = .45 Payout ratio = 40%

> In Question 1, assume the company pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements and determine the external financing needed. Question 1: Consid

> What happens to the future value of a perpetuity if interest rates increase? What if interest rates decrease?

> A firm wishes to maintain an internal growth rate of 6.4 percent and a dividend payout ratio of 25 percent. The current profit margin is 5.7 percent, and the firm uses no external financing sources. What must total asset turnover be?

> Gamgee Co. wishes to maintain a growth rate of 11 percent per year, a debt-equity ratio of .75, and a dividend payout ratio of 25 percent. The ratio of total assets to sales is constant at .65. What profit margin must the firm achieve?

> For the company in Problem 16, suppose fixed assets are $590,000 and sales are projected to grow to $910,000. How much in new fixed assets are required to support this growth in sales? Assume the company wants to operate at full capacity.

> Pinnacle Mfg., Inc., is currently operating at only 94 percent of fixed asset capacity. Current sales are $830,000. How fast can sales grow before any new fixed assets are needed?

> Assuming the following ratios are constant, what is the sustainable growth rate? Total asset turnover = 3.20 Profit margin = 5.2% Equity multiplier = .95 Payout ratio = 35%

> Based on the following information, calculate the sustainable growth rate for Kayla’s Heavy Equipment: Profit margin = 7.3% Capital intensity ratio = .95 Debt-equity ratio = 1.05 Net income = $84,000 Dividends = $24,000

> If Premier Corp. has an ROE of 14.1 percent and a payout ratio of 25 percent, what is its sustainable growth rate?

> If Fairlane Co. has an ROA of 8.3 percent and a payout ratio of 35 percent, what is its internal growth rate?

> From the previous two questions, prepare a pro forma balance sheet showing EFN, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio. Problem 10: The balance sheet for the Heir Jordan Corpora

> The balance sheet for the Heir Jordan Corporation follows. Based on this information and the income statement in the previous problem, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, wh

> The 2020 balance sheet of Osaka’s Tennis Shop, Inc., showed $780,000 in the common stock account and $4.78 million in the additional paid-in surplus account. The 2021 balance sheet showed $965,000 and $5.04 million in the same two accounts, respectively.

> Consider the following simplified financial statements for the Wesney Corporation (assuming no income taxes): The company has predicted a sales increase of 15 percent. It has predicted that every item on the balance sheet will increase by 15 percent as

> Based only on the following information for Ortiz Corp., did cash go up or down? By how much? Classify each event as a source or use of cash. Decrease in inventory ……………………………….. $425 Decrease in accounts payable ……………………… 230 Increase in notes payable

> Jackson Corp. has a profit margin of 5.8 percent, total asset turnover of 1.75, and ROE of 13.85 percent. What is this firm’s debt-equity ratio?

> If Rogers, Inc., has an equity multiplier of 1.43, total asset turnover of 1.87, and a profit margin of 6.05 percent, what is its ROE?

> Bolton Corp. had additions to retained earnings for the year just ended of $435,000. The firm paid out $245,000 in cash dividends, and it has ending total equity of $5.7 million. If the company currently has 175,000 shares of common stock outstanding, wh

> Mobius, Inc., has a total debt ratio of .57. What is its debt-equity ratio? What is its equity multiplier?

> The Top Corporation has ending inventory of $426,287, and cost of goods sold for the year just ended was $4,738,216. What is the inventory turnover? The days’ sales in inventory? How long on average did a unit of inventory sit on the shelf before it was

> Dahlia Corp. has a current accounts receivable balance of $513,260. Credit sales for the year just ended were $4,986,340. What is the receivables turnover? The days’ sales in receivables? How long did it take on average for credit customers to pay off th

> Cage Corp. has current liabilities of $415,000, a quick ratio of .86, inventory turnover of 10.3, and a current ratio of 1.34. What is the cost of goods sold for the company?

> Whipporwill, Inc.’s, net income for the most recent year was $19,382. The tax rate was 21 percent. The firm paid $3,681 in total interest expense and deducted $4,738 in depreciation expense. What was the cash coverage ratio for the year?

> The 2020 balance sheet of Osaka’s Tennis Shop, Inc., showed long-term debt of $2.25 million, and the 2021 balance sheet showed long-term debt of $2.66 million. The 2021 income statement showed an interest expense of $305,000. What was the firm’s cash flo

> In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $1.25 to go buy $50 worth of groceries, then your child makes twice as much on the trip as we do.â€&

> The Mikado Company has a long-term debt ratio of .35 and a current ratio of 1.45. Current liabilities are $1,140, sales are $8,370, profit margin is 8.3 percent, and ROE is 16.5 percent. What is the amount of the firm’s net fixed assets?

> Denver, Inc., has sales of $14.2 million, total assets of $11.3 million, and total debt of $4.9 million. If the profit margin is 5 percent, what is net income? What is ROA? What is ROE?

> A company has net income of $213,700, a profit margin of 7.1 percent, and an accounts receivable balance of $126,385. Assuming 65 percent of sales are on credit, what is the company’s days’ sales in receivables?

> Y3K, Inc., has sales of $5,987, total assets of $2,532, and a debt-equity ratio of .57. If its return on equity is 11 percent, what is its net income?

> Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work. Based on the balance sheets given for Just Dew It, calculate the following financial ratios for each year: a. Current ratio. b. Qui

> Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work. For each account on this company’s balance sheet, show the change in the account during 2021 and note whether thi

> Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work. Prepare the 2021 combined common-size, common-base year balance sheet for Just Dew It.

> Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work. Prepare the 2021 common-base year balance sheet for Just Dew It.

> Just Dew It Corporation reports the following balance sheet information for 2020 and 2021. Use this information to work. Prepare the 2020 and 2021 common-size balance sheets for Just Dew It.

> Specialized ratios are sometimes used in specific industries. For example, the book-to-bill ratio is closely watched for semiconductor manufacturers. A ratio of .93 indicates that for every $100 worth of chips shipped over some period, only $93 worth of

> Kodi Company has a debt-equity ratio of .63. Return on assets is 8.4 percent, and total equity is $645,000. What is the equity multiplier? Return on equity? Net income?

> The market value of the equity of Nina, Inc., is $755,000. The balance sheet shows $63,000 in cash and $220,000 in debt, while the income statement has EBIT of $95,000 and a total of $178,000 in depreciation and amortization. What is the enterprise value

> Dexter, Inc., had a cost of goods sold of $75,318. At the end of the year, the accounts payable balance was $18,452. How long on average did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply?

> SDJ, Inc., has net working capital of $2,630, current liabilities of $5,970, and inventory of $3,860. What is the current ratio? What is the quick ratio?

> Some recent financial statements for Smolira Golf Corp. follow. Use this information to work. What is Tobin’s Q for Smolira Golf? What assumptions are you making about the book value of debt and the market value of debt? What about t

> Some recent financial statements for Smolira Golf Corp. follow. Use this information to work. Smolira Golf Corp. has 15,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2021 was $79. What is the price-ear