1) Calculate Gross Profit Margin (GPM) and SGA percent to Revenue for 2015-2017.

1) Calculate Gross Profit Margin (GPM) and SGA percent to Revenue for 2015-2017. Comment on your findings (trend)
2) Calculate EBITDA, EBIT for years 2015-2017.
3) Calculate Interest Coverage Ratio (Net Interest Paid as a percentage of EBITDA) for 2015-2017. Comment on the ability of the company to meet its interest expense going forward.
4) Calculate Net Profit Margin (NPM) for years 2015-2017. Comment and explain the trend
5) Assume company ABC operates a website that enables customers to purchase goods from various suppliers. Customers pay the company in advance, and orders are nonrefundable. The suppliers deliver the goods directly to the customer, and ABC receives a 10% commission. Should ABC report
a) Total Revenues equal to 100% of the sales amount (gross)
b) Total Revenues equal to 10% of the sales amount (net)?
6) Which combination of depreciation methods and useful lives is most conservative in the year a depreciable asset is acquired?
a) Straight-line depreciation with a short useful life.
b) Declining balance depreciation with a long useful life.
c) Declining balance depreciation with a short useful life.
7) For 2009, RICCI Products had net income of $1,000,000. At 1 January 2009, there were 1,000,000 shares outstanding. On 1 July 2009, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is RICCI’s basic earnings per share for 2009?
a) $0.80
b) $0.91
c) $0.95
8) The sale of a building for cash would be classified as what type of activity on the cash flow statement?
a) Operating
b) Investing
c) Financing
9) Under which section of a manufacturing company’s cash flow statement are the following activities reported?
Item 1: Purchases of securities held for trading Item 2: Sales of securities considered cash equivalents
a) Both items are investing activities
b) Both items are operating activities
c) Only Item 1 is an investing activity
10) Which of the following is an example of a financing activity on the cash flow statement under US GAAP?
a) Payment of interest
b) Receipt of dividends
c) Payment of dividends
11) You are an equity analyst who is looking to assess whether IBM is likely to retain their current dividend payment policy going forward (2021 and beyond). You have access to past historical data coming from the financial statements released by the company
IBM Financial Statements (Links to an external site.)
a) (2 points) Can IBM continue its current dividend policy? If yes then how. If not, why not?
b) Does IBM have room to take on additional debt? Explain their leverage condition at the end of 2020
c) Calculate IBM’s Debt/Free Cash Flow for years 2017 to 2020. What do you conclude?
12) An analyst gathered the following information from a company’s 2018 financial statements (in $ millions):
Year ended December 31 2017 2018
Net sales 246 255
Cost of goods sold 168 176
Accounts receivable 73 68
Inventory 39 48
Accounts payable 20 23
Based only on the information above, the company’s 2018 statement of cash flows in the direct format would include amounts (in $ millions) for cash received from customers and cash paid to suppliers, respectively, that are closest to:
Cash Received from Customers =
Cash Paid to Suppliers =

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