Module 4 Critical Thinking Assignment:
Financial Ratios and Basics of Time Value of Money (TVM)
*Complete the problems from Module 3 and Module 4 in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.
Problem 41: Compound Interest
To what amount will the following investments accumulate?
a. 4,500 SAR invested for 8 years at 10% compounded annually
b. 10,000 SAR invested for 10 years at 10% compounded annually
c. 8,000 SAR invested for 7 years at 12% compounded annually
d. 20,000 SAR invested for 6 years at 5% compounded annually
Problem 42: Future value calculations
You are hoping to purchase a house in the future and recently received an inheritance of 100,000 SAR.
You like to use your inheritance for a down payment for the house.
a. If you use your inheritance in an account that generates 6% returns compounded annually, how many years will it take before your money grows to 750,000SAR?
b. If you let your money grow for 15 years at 8%, how much will you have in your account?
Problem 43: Present value calculations
What is the present value of the following future amounts?
a. 15,500 SAR received from 5 years from now at 8%.
b. 105,500 SAR received from 10 years from now at 10%
c. 35,500 SAR received from 15 years from now at 12%.
d. 10,500 SAR received from 8 years from now at 7%.



The Balance Sheet and the Income Statement for ABC Manufacturing Corporation are as follows: 

DATA (All amounts in SAR unless otherwise indicated, all sales are on credit and no hard keys.) 

Balance Sheet: 

ABC Corporation Balance Sheet 


2019 


Cash 
310 

Accounts receivable 
685 

Inventories 
600 

Other current assets 
105 

Total current assets 
1,700 

Gross fixed assets 
3,750 

Accumulated depreciation 
1,500 

Net fixed assets 
2,250 

Total assets 
3,950 


LIABILITIES (DEBT) AND EQUITY 

Accounts payable 
350 

Shortterm notes payable 
250 

Total current liabilities 
600 

Longterm debt 
950 

Total liabilities 
1,550 

Common stock (par & paid in capital) 
1,050 

Retained earnings 
1,475 

Total common equity 
2,400 

Total liabilities and equity 
3,950 


ABC Corporation Income Statement 
2019 


Sales 
6,000 

Cost of goods sold 
3,700 

Gross profits 
2,300 

Operating expenses: 

Selling and G&A expenses 
820 

Depreciation expenses 
340 

Total operating expenses 
1,160 

Operating income (earnings before interest and taxes) 
1,140 

Interest expense 
200 

Earnings before taxes 
940 

Income taxes 
230 

Net Income 
710 


Number of shares (thousands) 
160 

Dividends (thousands) 
120 

Market price per share 
40 

Calculate the following ratios: 

Current ratio 

Acidtest ratio 

Days in receivables 

Days in inventories 

Operating return on assets 

Operating profit margin 

Total asset turnover 

Fixed asset turnover 

Debt ratio 

Times interest earned 

Return on equity 

Earnings per share 

Dividends per share 

Price/Earnings 

Book value per share 

Market/Book 
Problem 45: Present value of annuity calculations
What is the present value of a 5year annuity that pays 800SAR, given a 8% discount rate?
Problem 46: Future value of annuity calculations
Find the future value at the end of year 5 of an annuity that pays 800SAR
per year for 5 years compounded at 8% annually. What would be the future value of this annuity?
Problem 47: Annuity Payments
You want to have 1,000,000SAR in 30 years by making equal endoftheyear deposits into a taxdeferred account paying 7.75% annually. What annual amount should you deposit?