TOPIC C – posted ThursdayFinancial analysis is commonly called ratio analysis. As this introductory video discusses there are a variety of ratios in each category of analysis (profitability, liquidity, solvency…)Launch External ToolHere are some exercises in applying ratio analysis1) Burts TVs has current liabilities of $24.1 million. Cash makes up 32 percent of the current assets and accounts receivable makes up another 12 percent of current assets. Burts current ratio = 1.04 times. What is the value of inventory listed on the firms balance sheet?2) Last year Café Creations, Inc. had an ROA of 32%, a profit margin of 12.7%, and sales of $3.3 million. What is Café Creationss total assets?3) You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $520,000, Accounts receivable = $720,000, Inventory = $420,000, Accrued wages and taxes = $42,000, Accounts payable = $120,000, and Notes payable = $920,000. What is Cypresss net working capital?4) Barnyard, Inc.s 2008 income statement lists the following income and expenses: EBIT = $505,500, Interest expense = $42,000, and Taxes = $157,500. Barnyards has no preferred stock outstanding and 110,000 shares of common stock outstanding. What are its the 2008 earnings per share?TOPIC B – posted TuesdayThe best example of cash management can be found in the Statement of Cash Flows. Heres a review of this financial statement and its significance. To clarify why this statement is so crucial, it helps to understand that figures on an income statement may not represent the actual cash inflows and outflows for a firm during a given period of time. https://www.youtube.com/watch?v=mZBjsIYrLvM#1)Are these sources or uses of cash? What type of cash management activity is being described? (only pick 4-5)Payment of long-term debtCash sale of landPurchase of long-term investmentAcquisition of building by cash paymentPurchase of treasury stockIssuance of common stock for cashSale of long-term investmentIssuance of long-term note payable to borrow cashPayment of cash dividendAcquisition of equipment by issuance of a note payable#2) Under the indirect method, what is the effect on cash of these events (source/use)?Accrual of salary expenseDecrease in accrued liabilitiesDepreciation of equipmentIncrease in prepaid expensesLoss on sale of equipmentDecrease in merchandise inventoryAcquisition of equipment by issuance of a note payableAmortization of intangible assetsNet incomeIncrease in accounts payable#2) Suppose that you are considering a stock investment in one of two firms (AllDebt, Inc., and AllEquity, Inc.), both of which operate in the same industry and have identical operating incomes of $5 million. AllDebt, Inc., finances its $12 million in assets with $11 million in debt (on which it pays 10 percent interest) and $1 million in equity. AllEquity, Inc., finances its $12 million in assets with no debt and $12 million in equity. Both firms pay 30 percent tax on their taxable income. Calculate the cash flow that each firm has available to pay its debt and stockholders#3) In 2008, Upper Crust had cash flows from investing activities of ?$260,000 and cash flows from financing activities of ?$161,000. The balance in the firms cash account was $88,000 at the beginning of 2008 and $116,000 at the end of the year. What was Upper Crusts cash flow from operations for 2008?TOPIC A – posted SundayThis week we begin to examine Financial Management, which is very different from Accounting. Finance is all about sourcing and using cash, preferably someone elses. Look at the Cash Flow Statement and answer twoof these questions:1) What are the components of the cash conversion cycle (CCC) and how a financial manager might influence improving the CCC. Which component would you concentrate on if you wish to improve this measure of cash flow from operating activities.2) Why is there a concern if the current ratio is increasing over time?3) Describe the three key cash-related activities of a firm (look at the Statement of Cash Flows)4) How do financial managers determine the amount of cash needed, taking into account investment opportunities and day-to-day operations?5) Suppose three optometrists wished to form a business that was expected to last until the oldest one was about to retire. The three had known each other since college and were close friends who trusted one another. What type of firm might be appropriate? Present your argument for this opinion. What are the advantages and disadvantages of being asmall business owner, apartner, or astockholder?