Module 4 Critical Thinking Assignment: Financial Ratios and Basics of Time Value of Money (TVM) *Complete the problems from Module 3 and Module 4 in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys. Problem 4-1: Compound Interest To what amount will the following investments accumulate? a. 4,500 SAR invested for 8 years at 10% compounded annually b. 10,000 SAR invested for 10 years at 10% compounded annually c. 8,000 SAR invested for 7 years at 12% compounded annually d. 20,000 SAR invested for 6 years at 5% compounded annually Problem 4-2: Future value calculations You are hoping to purchase a house in the future and recently received an inheritance of 100,000 SAR. You like to use your inheritance for a down payment for the house. a. If you use your inheritance in an account that generates 6% returns compounded annually, how many years will it take before your money grows to 750,000SAR? b. If you let your money grow for 15 years at 8%, how much will you have in your account? Problem 4-3: Present value calculations What is the present value of the following future amounts? a. 15,500 SAR received from 5 years from now at 8%. b. 105,500 SAR received from 10 years from now at 10% c. 35,500 SAR received from 15 years from now at 12%. d. 10,500 SAR received from 8 years from now at 7%. Problem 4-4 Financial Ratios The Balance Sheet and the Income Statement for ABC Manufacturing Corporation are as follows: DATA (All amounts in SAR unless otherwise indicated, all sales are on credit and no hard keys.) Balance Sheet: ABC Corporation Balance Sheet 2019 Cash 310 Accounts receivable 685 Inventories 600 Other current assets 105 Total current assets 1,700 Gross fixed assets 3,750 Accumulated depreciation -1,500 Net fixed assets 2,250 Total assets 3,950 LIABILITIES (DEBT) AND EQUITY Accounts payable 350 Short-term notes payable 250 Total current liabilities 600 Long-term debt 950 Total liabilities 1,550 Common stock (par & paid in capital) 1,050 Retained earnings 1,475 Total common equity 2,400 Total liabilities and equity 3,950 ABC Corporation Income Statement 2019 Sales 6,000 Cost of goods sold -3,700 Gross profits 2,300 Operating expenses: Selling and G&A expenses -820 Depreciation expenses -340 Total operating expenses -1,160 Operating income (earnings before interest and taxes) 1,140 Interest expense -200 Earnings before taxes 940 Income taxes -230 Net Income 710 Number of shares (thousands) 160 Dividends (thousands) 120 Market price per share 40 Calculate the following ratios: Current ratio Acid-test ratio Days in receivables Days in inventories Operating return on assets Operating profit margin Total asset turnover Fixed asset turnover Debt ratio Times interest earned Return on equity Earnings per share Dividends per share Price/Earnings Book value per share Market/Book Problem 4-5: Present value of annuity calculations What is the present value of a 5-year annuity that pays 800SAR, given a 8% discount rate? Problem 4-6: Future value of annuity calculations Find the future value at the end of year 5 of an annuity that pays 800SAR per year for 5 years compounded at 8% annually. What would be the future value of this annuity? Problem 4-7: Annuity Payments You want to have 1,000,000SAR in 30 years by making equal end-of-the-year deposits into a tax-deferred account paying 7.75% annually. What annual amount should you deposit?