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I am stuck with my finance homework.?

5. ABC Company has 10,000 shares of common stock outstanding. The company also has the following amounts in revenue and expense accounts. # of shares outstanding10,000 Taxes10,000 Interest expense10,000 Depreciation expense10,000 Selling, general and administrative expense20,000 Sales revenue100,000 Cost of goods sold30,000 Calculate (a) gross profits. Answers: Sales revenue – Cost of goods sold = 70,000 (b) operating profits. Answer: Sales revenue + taxes / Cost of goods sold = 3.66% (c) net profits before taxes. Answer: (d) net profits after taxes. (e) earnings per share. 6. What is the difference between trend or time-series analysis and cross-section analysis? Answer: With time-series it uses ratios to evaluate a firm’s performance over time. And cross-section analysis uses the ratio to compare different companies at the same point in time. 7. List the five basic categories of financial ratios. Answers: The five basic types of financial ratios are Liquidity ratios, Asset- management ratios, Financial- leverage ratios, Profitability ratios and Market- value ratios. 8. Would a firm’s financial manager prefer that his or her firm has an average collection period of 30 days or 60 days? 9. Which profitability ratio would a firm’s stockholders be most concerned with? 10. Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy. Raw materials and direct labor total $200 per copy. Fixed costs are $250,000. If the firm sells 5,000 units per year, what will be the operating profit margin?

Public Comments

1. DEAR,, YA GIVE ME A MIGRANE!
2. 9. Earnings per share - regardless of how much profit - regardless of how you calculate it - it is all sales minus all expenses - it really matters how much of the profit the board of directors will allocate to paying dividends or earnings per share. If a company hasn't used any profits to increase its profits which theoretically should increase earnings per share in the future and isn't paying dividends now the share holder should be very concerned. Your example failed to include how much a share is valued at. So 10,000 shares distributing $30,000 means that a share holder only will earn $3. per share and he or she has to pay a tax on top of that. If a share sales at $!00 that is only a 3% return if yearly figures. If a share is $50 then that is a 6% return - that might beat the banks or savingsbonds - but they have compounding interest. So the question lacks important information - value of a share (frozen in time). How much will it cost the company to buy back its outstanding shares so that it doesn't have to pay shares? Has this company saturated its market share or can it expand and increase profits - developnew products or services?