Complete the balance sheet and sales information in the table that follows for XYZ, Inc., using the following financial data provided.

Calculating the value of a firm through the use of discounted cash flow analysis

Corporate Tax Liability and Balance Sheet Analysis

Ratio analysis provides useful information for a company’s operations and financial conditions. Conducting analysis in a mechanical, unthinking manner is dangerous, but when the ratio analysis is used with good judgment, it can provide useful insights into a firm’s operations and identify the right questions to ask.

In this competency assessment, you address the time value of money also known as discounted cash flow analysis. This type of analysis is crucial to being able to viably analyze financial statements.

Problems:

Complete problem: Total Net Operating Capital
XYZ, Inc. reported $20 million in operating current assets, $25 million in net fixed assets, and $6 million in operating current liabilities. How much total net operating capital does XYZ, Inc. have?
Show your work.
Complete problem: Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for XYZ, Inc., using the following financial data:
Show your work.
Total assets turnover: 1.5

Gross profit margin on sales: (Sales – Cost of goods sold)/Sales = 25%

Total liabilities-to-assets ratio: 40%

Quick ratio: 0.80

Days sales outstanding (based on 365-day year): 36.5 days

Inventory turnover ratio: 3.75

Partial Income Statement Information

Sales

Costs of goods sold

Sold

Balance Sheet Information

Cash

Accounts payable

Accounts receivable

Long-term debt

50,000

Inventories

Common Stock

Fixed Assets

Retained earnings

100,000

Total Assets

$400,000

Total liabilities and equity

Complete problem: Yield to Maturity for Annual Payments

XYZ Corporation’s bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $950. What is their yield to maturity? Show your work.
Complete problem: Required Rate of Return
Show your work.
Suppose rRF = 6%; rM = 10%; and rA = 14%

Calculate Stocks A’s beta.
If Stock A’s beta were 2.0, then what would be A’s new required rate of return?
Complete problem: Portfolio Beta

You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio’s new beta be after these transactions? Show your work.

Prepare this Assignment by responding to the problems as an Excel® or Microsoft® Word®, showing all necessary formulas and steps. List each question, followed by your answer.

The Module 2 Competency Assessment has 3 parts.

Part 1 Prepare balance sheet analysis using financial data

Calculate corporate tax liabilities
Calculate liabilities and equity
Part 2 Analyze Portfolio Beta

Calculate stock beta
Part 3 Calculate corporate tax liabilities

Calculate yield to maturity for annual payments
Analyze portfolio beta

Complete the balance sheet and sales information in the table that follows for XYZ, Inc., using the following financial data provided.
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