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College of Administrative and Financial Sciences Assignment 1 Principles of Finance (FIN101) Deadline: End of Week 6 (27/02/2021 @ 23:59) Course Name: Principles of Finance Course Code: FIN101 Student’s Name: Semester: 2 CRN: Student’s ID Number: Academic Year: 1441/1442 H, 2nd Term For Instructor’s Use only Instructor’s Name: Students’ Grade: /5 Level of Marks: High/Middle/Low Instructions – PLEASE READ THEM CAREFULLY • This assignment is an individual assignment. • The Assignment must be submitted only in WORD format via allocated folder on Blackboard. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented. This also includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submitted assignments will NOT be entertained. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. Assignment Questions Q1 (1.5 marks) Ahlam Company’s net income for the year 2000, is $3,700,214. The company had an EBITDA of $ 10,125,300, and its depreciation and amortization expense was equal to $2,543,790. The company’s average tax rate is 35 percent. a. What is the amount of interest expenses for the firm? (Show the details of your calculations). b. Prepare a common sized Income Statement if net sales equal $12,000,000. Q2. (1 Mark) The following are accounts balance (in thousands) for Malak Company. Calculate Net Income after-tax (show intermediate steps) t=35% for the year ended December 31, 2020. Net property and equipment $ 2,000 Accounts receivable $3,000 Notes payable $37,000 Revenues $ 983,000 Supply expenses $ 255,000 Depreciation expenses $ 35,000 Labor expense $300,000 Interest Expenses $11,000 Stockholders’ Equity $61,500 Cash & cash equivalents $97,000 Long-term debt $3,500 Q3. Calculate the following ratios from the Balance Sheet and the Income Statement given below: (1.5 Mark) a. Current Ratio b. c. d. e. Debt Ratio Fixed asset turnover Total asset turnover Operating profit margin Balance Sheet: Cash Acct/Rec Inventories Current assets Net fixed assets Total assets Accts/Pay Accrued expenses Short-term N/P Current liabilities Long-term debt Owner’s equity Total liabilities and owners equity Income Statement: Net sales COGS Gross profit Operating expenses Net operating income Interest expense EBT Income taxes Net income 30,000 72,500 50,000 152,500 240,000 392,500 44,500 31,000 9,500 85,000 110,000 197,500 392,500 450,000 220,000 230,000 128,000 102,000 18,500 83,500 33,000 50,500 Q4. Using the values below, answer the questions that follow: (1mark) Amount of annuity: $500 Interest rate: 9% N=10 years a) Calculate the future value of the annuity, assuming that it is (1) An ordinary annuity. (2) An annuity due. b) Compare your findings in parts a(1) and a(2). All else being identical, which type of annuity—ordinary or annuity due—is preferable as an investment? Explain why.
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