Task: For the 12 months ended December 31, 2005, Quintero Corporation Posted the following financial results: Sales of $96.8 million, cost of goods sold of $72.0 million, overhead expenses of $5.5 million, depreciation of $2.3 million, and interest expense of $7.0 million. During the Fiscal year, capital spending totaled $97.8 million and the company borrowed $55.0 million via bonds due in 2035. It paid a common dividend of $1.00/share on 1.1 million shares. Its average assets during the year were $207.3 million, and net working capital increased $5 million from the prior year. The balance at the reporting date from long-term debt is $169.4 million and the owner's equity is $68.1 million. Quintero is subject to a combined federal and state tax rate of 35%.
1. What is Quintero's net income?
a. 6.5 million
b. 8. 0 million
c. 10.0 million
d. 54.8 million
2. What is the net profit margin?
a.6.71%
b. 8.26%
c. 10.33 %
d. 56.61%
3. What is ROA?
a. 6.51%
b. 7.23%
c. 8.20%
d. 29.81%
4. What is ROE?
a. 9.94%
b. 12.22%
c. 15.29%
d. 83.78%
5. What is the "times interest earned" ratio?
a. 0.929
b. 1.43
c. 2.43
d. 13.83
6. What us the total amount that should be reported as cash flow from operating activities on the cash flow statement?
a. 3.8 million
b. 6.5 million
c. 8.8 million
d. 13.8 million
7. What is the total amount that should be reported as cash flow from investing activities on the cash flow statement?
a. (42.8) million
b. (55.0) million
c. (97.8) million
d. (152.8) million
8. What is the total amount that should be reported as cash flow from financing activities on the cash flow statement?
a. 53.9 million
b. 55.0 million
c. 97.8 million
d. 160.4 million
9. If Quintero decides next year to issue $30 million of long term debt and it does not issue additional common stock, what will be the impact to the ROE is net income grows by 11%, assuming Quintero's plowback ration is 0%?
a. ROE would increase
b. ROE would decrease
c. ROE would remain unchanged
d. Not enough information to answer this