1. You need a kidney replacement and thus you will be paying for it. The doctor offers
you
two options to pay: $4000 in 4 years or $6500 in 10 years. The current discount rate is
8%.
Which payment option would you prefer?
A. $4000 in 4 years
B. $10000 in 10 years
C. Both are the same
2. Below I show information from United Therapeutics Corporation’s 10-K’s.
2009
2008
Revenue
357,870
BLANK
Cost of product
40,890
BLANK
Net income
19,462
BLANK
Accounts Receivable
28,311 50,626
Inventory
14,372
26,360
Accounts Payable
20,334
18,750
How long does it take United Therapeutics to sell its inventory and collect cash?
(a) about 215 days
(b) about 222 days
(c) about 287 days
(d) Don’t know where you are getting these numbers from but we need more
3.
Use the following data taken from Boston Scientific Corporation’s (ticker symbol BSX)
annual financial report filed with the SEC for the next two questions. All data are in
millions.
20×1
20×0
balance sheet for the year ending 12/31/X1 12/31/X021/12
Current assets
4,061
5,452
Liabilities & equity:
Current liabilities
3,022
3,233
Long-term liabilities
9,854
10,732
Equity
14,199
13,174
Total liabilities + equity
27,075
27,139
partial income statement for the year
Revenue
8,188
8,050
Gross profit
5,612
5,581
Net income
1,025
2,036
4. Calculate BSX’s ROA for 20X1 [express the ROA as 3 decimal digits rather than as a
percentage, so 0.123 not 12.3%. don’t round so both 0.1236 and 0.1234 should be 0.123]
ROA:
Du Pont analysis analyzes the ROA into two multiplicative ratios. Calculate the values
for those ratios for 20X1. Fill in the values below. Express as 3 decimal digits without
rounding.
(a) Name of ratio: Calculated value of ratio:
(b) Name of ratio: Calculated value of ratio:
5. Here are some data extracted from the equity and earnings per share sections from
Tenet Healthcare Corporation’s quarterly filings with the SEC. All dollar figures (other
than earnings per share figures) are in millions.
ction)
as of
6/30/X7
12/31/X6
26
25
Additional paid-in capital
4,391
4,372
Accumulated deficit (retained earnings)
-2,743
-2,610
-1,479
195
-1,479
308
Common stock, $0.05 par value; authorized 1,050,000,000
shares; 530,253,825 shares issued at June 30, 20X7 and
527,384,164 shares issued at December 31, X6
Less common stock in treasury, at cost, 56,811,675 shares
at June 30, X7 and 56,811,675 shares at December 31, X6
Total stockholders equity
Extracts from Tenet Healthcare Corporation’s Income Statement
Earnings per common share
For the Six Months Ending
6/30/20X7
For the Six Months Ending
6/30/20X6
-0.06
-0.95
Tenet paid no dividends in the period. Which of the following statements should
not be inferred about Tenet Healthcare’s first six months of 20X7 from this
information?
(a) Tenet had no material issues of treasury stock for the period.
(b) Tenet had a loss of $133M for the period.
(c) Tenet issued some new stock in the first 6 months of 20X7.
(d) Tenet’s net loss in the first half of 20X7 was larger than its net loss for the same
period of 20X6
6.
Use the following equity section of Wellpoint’s balance sheet for the next two questions (note that 20×2
column is to the right of the 20X1 column):
Equity Section of Balance Sheet Wellpoint, Inc.
[all $ amounts in thousands]
for the year ending:
12/31/X1
Common stock, par value $0.01, shares authorized 300,000,000; shares issued and outstanding: 147,050,143 and
152,758,150 at year end 12/31/X1 and 12/31/X2
1,497
12/31/X2
Additional paid-in capital
1,638,162
2,050,457
Retained earnings
2,315,254
3,250,483
Accumulated other comprehensive income (loss)
21,784
127,439
Total shareholders’ equity
3,976,697
5,429,949
Total liabilities and shareholders’ equity
$11,470,631
$14,788,678
1,570
Calculate the 12/31/X2 book value per share of Wellpoint Inc. “Accumulated other
comprehensive income(loss)” is a kind of retained earnings. Round your answer to the
nearest cent, e.g., $5.2187/share is rounded to 5.22; $5.2127/share is rounded to 5.21.
Answer: [express your answer as just a number: 5.22 or 5.21]
How much cash did Wellpoint receive from issuing new shares of common stock in
20X2?
Express your answer in thousands without rounding (6,267,000 as 6,267; 6,267,300 as
6,267 as well). Notice that Wellpoint already expresses its dollar amounts in thousands.
Answer: [remember no commas or $ signs]
