Assignment 1: Chapter 2 Mini Case: “Financial Statement and Cash Flow Analysis” In the mini case in our textbook we were given an account balance sheet for Jaeden Industries as of December 31, 2010 along with their income statement and balance sheet from the previous year. It also stated that the firm’s dividend payout ratio is 25% and the tax rate is 34%. The firm’s stock price on December 31, 2009, was $ 42.89 and on December 31, 2010, it was $ 56.82. In part A of our assignment it asks us to use the financial statements in the text to determine Jaeden’s free cash flow, liquidity, debt and profitability ratios, and market ratios for year 2010. Part A Jaeden’s Free Cash Flow The measure of free cash flow (FCF) is the amount of cash flow available to investors; the providers of debt and equity capital. It represents the net amount of cash flow remaining after the firm has met all operating needs and has made all required payments on both long- term (fixed) and short- term (current) investments (Graham, Megginson, Smart pg. 34). However, in order to determine the free cash flow you have to obtain the operating cash flow (OCF), which are cash inflows and outflows directly related to the production and sale of products or services. OCF = [Earnings before interest and taxes (EBIT) × (1 - T)] + Depreciation (T=.34%) OCF = (42000000-26460000-1621000-800000) x (1 – T) + Depreciation OCF = 13119000 x (1 - .34) + 800000 OCF = 9458540 Now that we have the OCF we can solve for the FCF FCF = OCF – Capital Expenditures + Depreciation – Networking Capital FCF = 9458540 – 2932000 – (4530181-190000-150000) FCF = 9458540 – 2932000 – 4190181 FCF = 2336359 Jaeden’s free cash flow is 2336359 Jaeden’s Liquidity Our textbook states that liquidity ratios measure a firm’s ability to satisfy its short-term obligations as they come due. Current ratio and quick ratio are two measures of liquidity. Current Ratio is defined as current assets divided by current liabilities and it is used to measure a firm’s ability to meet short-term obligations. Current assets include cash, marketable securities, accounts receivable, and inventory. Current liabilities include accounts payable, notes payable, and accruals. Quick ratio is somewhat similar except it excludes a certain asset that is, inventory. Inventory turnover provides a measure of how quickly a firm sells its goods (Graham, Megginson, Smart pg. 43). Inventory turnover can be converted into average age turnover simply by dividing the turnover figure by the amount of days in a year. Current Ratio = Current Assets / Current Liabilities Current Ratio = (3689000 + 5423000 + 1836000 + 4118000) / (3136000 + 706000 + 500000) Current Ratio = 15066000 / 4342000 Current Ratio = 3.469829572 Quick Ratio = Current Assets – Inventory / Current Liabilities Quick Ratio = (3689000 + 5423000 + 1836000) – 4118000 / (3136000 + 706000 + 500000) Quick Ratio = (10948000 – 4118000) / (3136000 + 706000 + 5000 ...

1. Assignment 1: Chapter 2 Mini Case: “Financial Statement and
Cash Flow Analysis”
In the mini case in our textbook we were given an account
balance sheet for Jaeden Industries as of December 31, 2010
along with their income statement and balance sheet from the
previous year. It also stated that the firm’s dividend payout
ratio is 25% and the tax rate is 34%. The firm’s stock price on
December 31, 2009, was $ 42.89 and on December 31, 2010, it
was $ 56.82. In part A of our assignment it asks us to use the
financial statements in the text to determine Jaeden’s free cash
flow, liquidity, debt and profitability ratios, and market ratios

2. for year 2010.
Part A
Jaeden’s Free Cash Flow
The measure of free cash flow (FCF) is the amount of cash
flow available to investors; the providers of debt and equity
capital. It represents the net amount of cash flow remaining
after the firm has met all operating needs and has made all
required payments on both long- term (fixed) and short- term
(current) investments (Graham, Megginson, Smart pg. 34).
However, in order to determine the free cash flow you have to
obtain the operating cash flow (OCF), which are cash inflows
and outflows directly related to the production and sale of
products or services.
OCF = [Earnings before interest and taxes (EBIT) × (1 - T)] +
Depreciation (T=.34%)
OCF = (42000000-26460000-1621000-800000) x (1 – T) +
Depreciation
OCF = 13119000 x (1 - .34) + 800000
OCF = 9458540
Now that we have the OCF we can solve for the FCF
FCF = OCF – Capital Expenditures + Depreciation –
Networking Capital
FCF = 9458540 – 2932000 – (4530181-190000-150000)
FCF = 9458540 – 2932000 – 4190181
FCF = 2336359
Jaeden’s free cash flow is 2336359
Jaeden’s Liquidity

3. Our textbook states that liquidity ratios measure a firm’s ability
to satisfy its short-term obligations as they come due. Current
ratio and quick ratio are two measures of liquidity. Current
Ratio is defined as current assets divided by current liabilities
and it is used to measure a firm’s ability to meet short-term
obligations. Current assets include cash, marketable securities,
accounts receivable, and inventory. Current liabilities include
accounts payable, notes payable, and accruals. Quick ratio is
somewhat similar except it excludes a certain asset that is,
inventory. Inventory turnover provides a measure of how
quickly a firm sells its goods (Graham, Megginson, Smart pg.
43). Inventory turnover can be converted into average age
turnover simply by dividing the turnover figure by the amount
of days in a year.
Current Ratio = Current Assets / Current Liabilities
Current Ratio = (3689000 + 5423000 + 1836000 + 4118000) /
(3136000 + 706000 + 500000)
Current Ratio = 15066000 / 4342000
Current Ratio = 3.469829572
Quick Ratio = Current Assets – Inventory / Current Liabilities
Quick Ratio = (3689000 + 5423000 + 1836000) – 4118000 /
(3136000 + 706000 + 500000)
Quick Ratio = (10948000 – 4118000) / (3136000 + 706000 +
500000)
Quick Ratio = 2.521418701
Inventory Turnover = Cost of Goods Sold (COGS) / Inventory
Inventory Turnover = (42000000 x .63) / 4118000
Inventory Turnover = 26460000 / 4118000
Inventory Turnover = 6.425449247
Average Age Turnover = 365 / 6.425448247
Average Age Turnover = 56.80536659

4. Jaeden’s Debt and Profitability Ratios
In the previous equations, we dealt with current assets and
current liabilities. However now, we will deal with total assets
and total liabilities. Total assets include current assets plus
fixed assets minus accumulated depreciation. To get the total
liabilities, we will use their current liabilities
plus their long-term debt. In this section, we will be
determining Jaeden’s debt ratio, debt-to-equity ratio, assets-to-
equity ratio, and times interest earned for the year 2010. The
debt ratio measures the proportion of total assets financed by
the firm’s creditors. To obtain the debt ratio, you would divide
total liabilities by total assets. Assets-to-equity ratio is a
measurement of the proportion of total assets financed by a
firm’s equity. It is calculated as total assets divided by
common stock equity. It is an alternative measure that focuses
solely on the firm’s long- term debt is the debt-to- equity ratio.
Debt-to- equity ratio is calculated as long-term debt divided by
stockholder’s equity. The times interest earned ratio measures
the firm’s ability to make contractual interest payments. Times
interest earned equals earnings before interest and taxes (EBIT)
divided interest expense (Graham, Megginson, Smart pg. 45).
Debt Ratio = Total Liabilities / Total Assets
Debt Ratio = 4342000 + 3046000 /15066000 + (14811000 –
5160000)
Debt Ratio = (7388000 / 24717000) x 100
Debt Ratio = 29.89035886

5. Assets-to-equity Ratio = Total Assets / Common Stock Equity
(common stock, paid-in capital excess, and retained earnings)
Assets-to-equity Ratio = 24717000 / (4000000 + 4500000 +
1628819)
Assets-to-equity Ratio = (24717000 / 10128819)
Assets-to-equity Ratio = 2.440264753
Debt-to-equity ratio = Long-term debt / Stockholder’s equity
(common stock equity plus preferred stock)
Debt-to-equity ratio = (3046000) / (10128819 + 100000) x 100
Debt-to-equity ratio = 29.77860885
Time interested earned = EBIT / Interest Paid (.10%)
Time interested earned = 13119000 / 1311900
Time interested earned = 10
Jaeden’s Market Ratios
Market ratios relate the firm’s market value, as measured by its
current share price, to certain accounting values. These ratios
provide insight into how investors think the firm is performing,
and they also reflect the common stockholders’ assessment of
the firm’s past and expected future performance (Graham,
Megginson, Smart pg. 49). The market tends to focus two
which are the price/earnings (P/E) ratio and the market/book
(M/B) ratio. The price/ earnings (P/ E) ratio measures the
amount investors are willing to pay for each dollar of the firm’s
earnings. The market/book ratio relates the market value of the
firm’s shares to their book value.
Price/earnings (P/E) ratio = Market price per share of common
stock / Earnings per share
Price/earnings (P/E) ratio = 56.82 / 7.79
Price/earnings (P/E) ratio = 7.293966624
Market/book ratio = Market Value per share of common stock /

6. Book value per share of common stock
Market/book (M/B) ratio = 56.82 / (10128819 / 100000)
Market/book (M/B) ratio = 56.82 / 10.128819
Market/book (M/B) ratio = 5.609735943
Part B
In this part of the assignment, we will look at the strengths and
weaknesses of Jaeden’s Industries. There was an increase in
Jaeden’s earnings per share from 2009 to 2010. This shows that
they earned more in 2010 on each outstanding share of common
stock. The higher the operation profits margin, the better and,
in this case, their profit margin was much higher in 2010 than
2009. This was also the case with their gross margin profit.
The increase in their sales was also a great thing for their
industries. The above statements are a few of Jaeden’s
strengths. Times interested earned ratio is an area that they
could improve in. Instead of this number increasing it actually
dropped. The higher this number indicates a greater capacity
for them to meet scheduled payments. Another weak area is
their inventory balance turnover. Jaeden’s Industries has to
figure out a way to lower its balance turnover instead of
increasing it.

7. Reference
Graham, J. R., Smart, S. B., & Megginson, W. L. (2010).
Corporate finance. Australia: South-Western Cengage Learning.

8. Writing Assignment #4: Reflective Essay
Introduction:
Now that you are nearing the completion of WRTG 101, you
have reached a time when it can be
useful to you to reflect and evaluate your learning experience.
In a fast-paced course such as this
one, you have worked hard and quickly to complete your
assignments according to the
instructions given to you. Now is the opportunity for you to
consider the experiences you had
had in writing throughout this course and how those experiences
might be useful to you in future
courses.
This assignment asks you to reflect and consider the work you
have done, how successfully
you feel you have completed it, and how the skills and
strategies you have learned in
completing this work may help you in your future studies.
Since this assignment is reflective and self-evaluating, using
“I, me, my” should be acceptable
as you write this essay.
The Assignment:
This assignment calls for you to write an essay of 800-1000
words, double spaced. The essay
should have the following academic essay elements:

9. • a clear introduction, body, and conclusion
• a clearly identifiable thesis statement in the introduction
• evidence based upon your recollections and any material from
the course (whether from
the texts, the online resources, the course modules, the feedback
to drafts, or the
conference topics) that you might find relevant to mention in
your discussion
Length and Format:
The essay should be 800-1000 words
In addition, the paper should be formatted according to APA
style in accordance with the
video tutorial you observed in class, How to format your paper
according to APA style.
• Use one-inch margins.
• Double space.
• Use size 12 Times New Roman font.
• Include a running head.
• Include page numbers.
• Include a title page.
• An abstract is not required.
Possible approaches for the reflective essay in WRTG 101:

10. On the following two pages, you will see descriptions of two
examples of approaches you can
take in your reflective essay. Each approach has three (3) parts.
Be sure that you understand
clearly what is expected of you. If you have questions, be sure
you ask your instructor. You
should choose only one of these tasks, and you may not choose
any other topic.
Approach One: Self-Evaluating Your Research Essay
Assignment
What You Must do:
In this essay, you will evaluate your work on the research essay
assignment. Your purpose is
to evaluate whether you chose wisely in selecting your topic for
research writing, if you used
your research successfully, and how well you believe you
completed the assignment.
How You Might Do This:
Since your essay uses a traditional structure for academic
writing, you could try the following
technique:
1. Decide what your thesis should say and design your
introduction to lead to your thesis.
The thesis might begin with a phrase such as, “My research

11. essay turned out successfully
because…” or “My research assignment became problematic due
to….” Your
introduction can, of course, briefly describe your assignment.
2. Describe and analyze the following in the body of your essay:
a. your topic and why you chose it (this should go beyond mere
interest and consider
whether you thought carefully enough about the research
potential/problems your
topic posed);
b. how/why you made research material decisions and conducted
research in the
manner you did. In this section, you will want to comment on
the databases you
searched on in the UMUC Information and Library Services
interface. You might
also comment on key words on which you searched, new key
words you came up
with during your searches, and your experience in retrieving
full-text articles.
c. how your process worked out as you completed it. In this
analysis, please account
for both successes and difficulties.
3. Discuss your reflection and future application in the
conclusion of your essay. You will
want to bothreflect on what you have discussed and look
towards future research
assignments. You will explain how the lessons you learned
from this assignment can
help you correct flaws you feel you had in your process and can
remind you of good

12. practices you followed that can make future research projects
successful. You should also
give yourself a “grade” on, not the essay itself, but on your
research process and
experience.
Approach Two: Reflecting on Your Experiences Throughout
the Eight Weeks:
What You Must Do:
In this essay, you will evaluate your learning experience in
WRTG 101. Your purpose is to
estimate where you think your writing skills were when you
began the course and, by examining
the work you did in WRTG 101, determine as best you can the
skills that this course helped you
learn and develop.
How You Might Do This:
Since your essay uses a traditional structure for academic
writing, you could try the following
technique:
1. Think of your thesis as a “then and now” proposition. Your
essay’s introduction can offer
readers a brief look at why you took WRTG 101 and lead to a
thesis statement that begins
with a phrase such as “I began WRTG 101 with “X” writing
skills; now I…”

13. 2. Discuss when/where/why you learned particular skills.
Remembering how you
completed assignments as well as any materials you find in the
classroom that you think
are relevant (these can come from Course Content, conferences,
the texts, the online
resources, the Course Modules, the feedback you received on
drafts of essays, the
discussions in the classroom areas, etc.), discuss
when/where/how/why you learned
particular skills that helped you complete assignments
successfully and increase your
writing skill set.
In analyzing your acquisition of skills, it will be helpful to
consider the course outcomes
for WRTG 101. They are as follows:
• apply the writing process to develop essays using various
rhetorical patterns in
order to inform and persuade an audience
• construct unified, coherent, and well-supported paragraphs
using principles of
persuasion and exposition
• demonstrate accurate grammar and mechanics in writing
• analyze source material in order to integrate valid and reliable
sources using
accepted documentation style
In writing this section of the essay, please be specific. You
might refer to specific
grammatical issues (outcome #3) and the process of developing

14. a topic (outcome #1). Or
you might refer to challenges you had in writing paragraphs
(outcome #2) and how the
development of the paragraphs caused you to evaluate your
thesis (outcome #1). These
are just some suggestions to help you develop your points that
you want to make for your
essay.
Do not be afraid to discuss any areas in which you felt you did
not achieve as much as
you would have liked to or wish you could have had more
instruction or practice. This
information will be very helpful to your instructor.
3. In your conclusion, consider the skills you feel you are
taking away from WRTG 101 and
how these skills will help you in future courses you take.
Consider also areas you think
you will want to continue to try to improve.
Writing Assignment #4: Reflective EssayThe
Assignment:Length and Format:Possible approaches for the
reflective essay in WRTG 101:Approach One: Self-Evaluating
Your Research Essay AssignmentApproach Two: Reflecting on
Your Experiences Throughout the Eight Weeks: