Question

Please show work, or steps so i can see how to do the remaining questions for the other years! Thanks

1.What is the Free Cash Flow of Diamond Construction for 2015?

2.What is the WACC for Diamond Construction?

3.Quick ratio in 2016?

4.Current ratio in 2016?

Inventory turnover in 2017?

Total Asset turnover in 2017?

DSO in 2016?

Income Statements for Diamond Construction Company
	2015	2016	2017
Sales	9,445,842	10,390,426	11,637,277
COGS	7,367,757	8,104,532	9,077,076
Gross Income	2,078,085	2,285,894	2,560,201
Depr & Amort	150,000	160,000	170,000
SG&A Overhead	350,000	385,000	423,500
Total Operating Costs	7,867,757	8,649,532	9,670,576
EBIT	1,578,085	1,740,894	1,966,701
Interest Expense	76,543	71,285	67,857
EBT	1,501,542	1,669,609	1,898,845
Taxes (35%)	525,540	584,363	664,596
Net Income	976,002	1,085,246	1,234,249
Dividends
Dividend Payout ratio
Additional Information About Diamond Construction Company
Number of shares out	1,000,000	1,000,000	1,000,000
Firm Beta	1.15
Equity risk premium	6.20%
Marginal debt cost	4.50%
Risk free rate (20 yr)	3.00%
Stock price at 12/31	$25.50	$30.00	$33.15
Long term growth rate (free cash flow)	4.50%

Answer 1

1. Free cash flow 2015 = Cash flow from operating activities- Capital Expenditure

= EBIT-Dep-Tax -Cap exp

=1578085-150000-525540-0=902545

2.Re= Rf+(Rm-Rf)beta

=3+(6.20-3)1.15

=6.68%

WACC = (E/V x Re) + ((D/V x Rd) x (1 – T)

=((25.5+30+33.15)/3*1000000)*6.68%/31250955+1700955/31250955*4.5%(1-35%)

V= 76543/4.5%[phone]= 31250955(inteeest/debt rate+ equity)

WACC=6.47%( values are on approx basis)

3.quick ratio= quick assets/ current liabilities ( data not available)

4. Current Ratio= Current Assets/ Current Liabilities ( data not available)

Inventory Turnover Ratio=Revenue from operations/ Average Inventory( Data not available)

Asset Turnover Ratio= Revenue from operations/ Average total Assets( Data not available)