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NUS Business School

FIN2004 Finance

Tutorial 1

#1:
Describe the key advantages associated with the corporate form of organization.

#2:
A firm has $520 in inventory, $1,860 in fixed assets, $190 in accounts receivables, $210 in
accounts payable, and $70 in cash. What is the amount of current assets it has?

#3:
Suppose you own stock in a company. The current price per share is $30. Another company has
just announced that it wants to buy your company and will pay $35 per share to acquire all the
outstanding stock. Your companys management plans to accept the offer. Is the management
acting in the shareholders best interest? Why or why not?

#4:
A firm has total debt of $4,620 and a debt-equity ratio of 0.57. What is the value of the total
assets?

#5:
Some recent financial statements for Galaxy United, Inc. will be provided below. Please find the
following financial ratios for Galaxy United (use year-end figures rather than average values
where appropriate):

1) The quick ratio for 2009.
2) How many days of sales are in receivables? (Use 2009 values)
3) What is the price-sales ratio for 2009 if the market price is $18.49 per share?
4) What is debt-equity ratio? (Use 2009 values)
5) What is the cash coverage ratio for 2009?
6) What is the return on equity? (Use 2009 values)
7) What is the amount of the dividends paid for 2009?
8) What is the amount of the cash flow from investment activity for 2009?


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