🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000CA160,000

MGFC30H3 Study Guide - Midterm Guide: United States Treasury Security, Contango, Spot Contract

497 views2 pages
School
UTSC
Department
Finance
Course
MGFC30H3
Professor
Jason Wei

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Gain= ((futures price @ time 0)-x)(# contract futures)(each contract) sh (add margin call to margin acc bal day 4 ,000 to day 5. The additional funds deposited upon a margin call= Clearing house req = (# long/ short contract) x ($ original margin) = initial margin for new contracts. Loss/gain (new-old) x # contracts = $ on existing contracts. Total= initial margin for new gain + loss. investment at r per year for n years: aen*r. Rc = m ln (1+rm/m)m & rm = m(erc/m -1); rc= rate of int cont cpd, rm= equiv rate w/ cpd m times p. a. F = s + cc q y or f = se(r+u-q)t. Y= convenience yield in dollars r: risk-free interest rate u: storage cost and insurance cost per year u: storage cost and insurance cost per year q: yield or return per year. T: time to maturity of futures contract. u: storage cost rf: foreign riskfree interest rate.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Documents

MGFC30H3 Lecture Notes - Arbitrage, Call Option, University Of Toronto Scarborough
greenbee735

Related Questions

Columbia Paper has the following stockholders’ equity account. The firm’s common stock has a current market price of $30 per share. Preferred stock $100,000 Common stock (10,000 shares at $2 par) 20,000 Paid-in capital in excess of par 280,000 Retained earnings 100,000 Total stockholders’ equity $500,000

a.) Show the effects on Columbia of a 5% stock dividend.

b.) Show the effects of (1) a 10% and (2) a 20% stock dividend.

c.) In light of your answers to parts a and b, discuss the effects of stock dividends on stockholders’ equity.

Preferences
§
1
2
3
4
5
6
7
8
9
0
-
=
Backspace
Tab
q
w
e
r
t
y
u
i
o
p
[
]
Return
capslock
a
s
d
f
g
h
j
k
l
;
'
\
shift
`
z
x
c
v
b
n
m
,
.
/
shift
English
Deutsch
Español
Français
Italiano
Português
Русский
alt
alt
Preferences

Just need the last two questions answered A and B at the bottom of the document

You’re the chief financial officer (CFO) of Worldwide
Widget Manufacturing, Inc. The company manufactures and
sells widgets at factories in the United States and internationally.
Listed below are partial financial statements for Worldwide
Widget Manufacturing, Inc. Fill in the missing information in
each of the following financial statements. Answer spaces are
given below.

Worldwide Widget Manufacturing, Inc.
Balance Sheet as of December 31, 2015 and 2014
(in millions of dollars)

2015 2016 2015 2016

Assets

Current Assets:

Liabilities and Equity

Current Liabilities:
Cash and markatable securities $427 $322 Accured wages and taxes $309 $257
Accounts Receivable a.? 259 Accounts payable 381 b.?
Inventory 815 797 Notes Payable $492 $421
Total $1,542 $1,378 Total $1,182 $997
Fixed Assets: Long-term debt: $1,934 c.?
Gross plant and equipment d.? $2,817 Total 3,116 2,956
Less:depreciation 368 254 Stockholder's equity:
Net plant and equipment $2,872 $2,563

Preferred stock

( 30 million shares)

 $30 $30
Other long term assets 521 487 Common stock and paid in surplus (250 million shares) 300 e.?
Retained earnings 1,489 1,142
Total FA f.? $3,050 Total Equity $1,819 $1,472
Total Assets $4,935 $4,428 Total liabilities and equity $4,935 $4,428

A. Accounts receivable for 2015_______300

B. Accounts payable for 2014_______319

C. Gross plant and equipment for 2015_______1959

D. Long-term debt for 2014_______3240

E. Common stock and paid-in surplus (250 million shares) for 2014_______300

F. Total FA for 2015_______3393

Worldwide Widget Manufacturing, Inc. Income Statement for Years Ending December 31, 2015 and 2014(in millions of dollars)

2015 2014
Net Sales g. $2018
Less: Cost of Goods Sold 753 h.?
Gross Profits $1,623 $1,189
Less: Other Operating Expense 423 167
Earnings before interest, taxes, depreciation, and amortization (EBITDA) $1,200 $1,022
Less: Depreciation 114 114
Earning before interest and taxes (EBIT) $1,086 $908

Less: Interest

 i.? 128
Earnings:before Taxes (EBT) $949 $780
Less:Taxes j.? 23
Net Income $664 $546

Less:Preferred stock dividends

 98 98
Net income available to common stock holders $566 $448
Less:Common stock dividends 219 199

Addition to retained earnings

Per common share data:

 $347 $249
Earnings per share (EPS) k.? $1.79
Dividends per share (DPS) $0.88 l. ?
Book Value per share (BVPS) m.? $5.77
Market Value per share (MVPS) $23.97 $22.47

g. Net sales for 2015_______2376
h. Less: Cost of goods sold for 2014_______829
i. Less: Interest for 2015_______137
j. Less: Taxes for 2015_______285
k. Earnings per share (EPS) for 2015_______1.88
l. Dividends per share (DPS) for 2014_______.73
m. Book value per share (BVPS) for 2015_______7.16

Worldwide Widget Manufacturing, Inc.
Statement of Cash Flows for Year Ending December 31, 2015
(in millions of dollars)​

Section A: Cash Flows from operating activities
Net Income n.?

Additions (source of cash):

Depreciation

 114
Increase in accrued wages and taxes o.?
Increase in accounts payable 62

Subtractions (use of cash):

Increase in accounts receivable

 -41
Increase in inventory p.?
Net Cash flow from operating activities q.?

Section B: Cash Flows from investing activities

subtractions:

Increase in fixed assets

-$343
Increase in other long-term assests r.?
Net Cash flow from investing activities s.?

Section C. Cash flows from financing activities

Additions:

Increase in notes payable

t.?
Increase in common and preferred stock 0

Subtractions:

Decrease in long-term debt

 -25

Pay dividends

u.?

Net Cash flow from financing activities

Section D. Net Change in cash and marketable securities

v.?

$105

n. Net income_______664
o. Increase in accrued wages and taxes_______52
p. Increase in inventory_______18
q. Net cash flow from operating activities_______833
r. Increase in other long-term assets_______34
s. Net cash flow from investing activities_______-377
t. Increase in notes payable_______71
u. Pay dividends_______317
v. Net cash flow from financing activities_______-271

Worldwide Widget Manufacturing, Inc.
Statement of Retained Earnings as of December 31, 2015
(in millions of dollars)

Balance of retained earnings, December 31,2014 $1,142
Plus: Net income for 2015 w.?
Less: Cash dividends paid 0 0
Preferred stock x.?
Common Stock 219
Total cash dividends paid 317
Balance of retained earnings, December 31,2015 $1,489

w. Plus: Net income for 2015 _______664
x. Preferred stock _______98

2. You’ll need to compare your company’s ratios with the industry’s standards.

Worldwide Widget Manufacturing, Inc.

Company Industy Comparison
Current Ratio 2.2 times
Quick Ratio 1.1 times
Cash Ratio 0.35 times
Inventory turnover 2 times or 1 time
Days' sales in inventory 135 days or 335 days
Average payment period 110 days
Sales to working capital 3 times
Total asset turnover 0.6 times
Debt-to equity 1.1 times
Profit margin 16.5%
Gross profit margin 48.13%
ROA 8.78%
ROE 19.45%
Divident payout 32%

A. Use the information found in Worldwide Widget Manufacturing’s financial statements
to calculate all of the listed financial ratios in the above table for your
company. Then, for each ratio, provide a comparison of the company’s result
with the industry standards, indicating if your company’s results are lower than,
higher than, slower than, or faster than the industry standards.
B. Calculate your company’s internal and sustainable growth rates.

E13-5 Matching Each Ratio with Its Computational Formula LO 13-4, 13-5, 13-6, 13-7
Match each definition with its related ratios or percentages by selecting the appropriate letter in the drop down provided.
Definitions: Ratios or Percentages Definitions
A. Net Income (before extraordinary items) ÷ Net Sales 1 Profit margin
B. Days in Year ÷ Receivable Turnover ratio 2 Inventory turnover ratio
C. Net Income ÷ Average Stockholders’ Equity 3 Average collection period
D. Net Income ÷ Average Number of Shares of Common Stock Outstanding 4 Dividend yield ratio
E. Return on Equity − Return on Assets 5 Return on equity
F. Quick Assets ÷ Current Liabilities 6 Current ratio
G. Current Assets ÷ Current Liabilities 7 Debt-to-equity ratio
H. Cost of Goods Sold ÷ Average Inventory 8 Price/earnings ratio
I. Net Credit Sales ÷ Average Net Receivables 9 Financial leverage percentage E
J. Days in Year ÷ Inventory Turnover Ratio 10 Receivable turnover ratio
K. Total Liabilities ÷ Stockholders’ Equity 11 Average days’ supply of inventory
L. Dividends per Share ÷ Market Price per Share 12 Earnings per share
M. Market Price per Share ÷ Earnings per Share 13 Return on assets
N. [Net Income + Interest Expense (net of tax)] ÷ Average Total Assets 14 Quick ratio
O. Cash from Operating Activities (before interest and taxes) ÷ Interest Paid 15 Times interest earned
P. Net Sales Revenue ÷ Net Fixed Assets 16 Cash coverage ratio
Q. (Net Income + Interest Expense + Income Tax Expense) ÷ Interest Expense 17 Fixed asset turnover ratio