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FIN 534 Homework Set 1

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FIN 534 – Homework Set #1

Directions: Answer the following questions on a separate document. Explain how you reached the answer
or show your work if a mathematical calculation is needed, or both. Submit your assignment using the
assignment link in the course shell. This homework assignment is worth 100 points.
Use the following information for Questions 1 through 4:
Assume that you recently graduated and have just reported to work as an investment advisor at the one
of the firms on Wall Street. You have been presented and asked to review the following Income
Statement and Balance Sheets of one of the firm’s clients. Your boss has developed the following set of
questions you must answer.
Income Statements and Balance Sheet

1. What is the free cash flow for 2014?
2. Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No
changes in operations occurred. What would happen to reported profit and to net cash flow?
3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income
statement data. What can you say about the company’s liquidity position in 2013?
4. Use the extended DuPont equation to provide a summary and overview of company’s financial
condition as projected for 2014. What are the firm’s major strengths and weaknesses?

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