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Here are comparative balancesheets and an income statement:

	2023	2022
Cash	525	450
Accounts Receivable	1700	1600
Inventory	550	750
Equipment (net)	2500	2100
Total Assets	5275	4900	Sales	7800
			COGS	-4200
			Wages	-1800
Accounts Payable	910	710	Depreciation	-500
Long Term Debt	1900	1900	Selling and Admin	-850
			Interest	-200
Capital Stock	1200	1200	Pretax Income	250
Retained Earning	1265	1090	Taxes 30%	75
Shareholders Equity	2465	2290	Income	175
Total Liabilities andShareholder Equity	5275	4900

1. Compute the following figures

a. Accounts Receivable Turnover

b. Days in Accounts Receivable

c. Inventory Turnover

d. Days in Inventory

e. Purchases

f. Accounts Payable Turnover

g. Days in Accounts Payable

h. Operating Cycle

i. Cash conversion days

j. Earnings Before Interest and Taxes (NOPAT)

k. Return on Assets

l. Profit Margin

m. Asset Turnover

n. Return on Common Equity

2. Consider the valuation model of Equation 7.6 (Chapter 7, page 7-8, or page 276 hardcopy). Use a discount rate of 5 percent.

a. What are the Normal Earnings for 2023.

b. What are the Abnormal Earnings for 2023.

c. An analyst reports to you a forecast of $70 as a likely permanent annuity of abnormal earnings beginning with 2024. At the discount rate of 5 percent, what is the Present Value of Abnormal Earnings as of December 31, 2023.

d. What is the value of the company,using the valuation model of Equation7.6 (Chapter 7, page 7-8, or page 276 hardcopy), and your computation in c?

Value(January 1, 2024) = Book Value(January 1, 2024) + PresentValue of AbnormalEarnings

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