Assignment:
Question 1. Suppose a company has $350,000 in current assets. The company’s current ratio is 1.25, and its quick ratio is 0.8. Compute the company’s current liabilities and inventories.
Question 2. Compute the price earnings (P/E) ratio given the following.
Earnings per share: $1.70
Cash flow per share: $2.50
Price/cash flow ratio: 7.0 times
Question 3. Suppose a company has a profit margin of 2.5% and an equity multiplier of 2.0. Its sales are $50,000. The common equity is $25,000. Compute its return on common equity (ROE).
Question 4. The balance sheet and income statement for a company are shown below.
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Balance Sheet
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Cash
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$45,500
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Accounts Payable
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$98,000
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Receivables
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256,000
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Notes Payable
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39,000
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Inventories
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141,500
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Other Current Liabilities
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121,000
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Total Current Assets
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$443,000
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Total Current Liabilities
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$258,000
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Net Fixed Assets
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160,500
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Long-term debt
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147,500
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Total Liabilities
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$405,500
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Common equity
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262,000
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Total Assets
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$603,500
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Total Liabilities and equity
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$667,500
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Income Statement
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Sales
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$1,404,500
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Cost of goods sold
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1,240,000
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Selling, general, and administrative expenses
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91,000
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Earnings before interest and taxes (EBIT)
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$73,500
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Interest expense
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12,500
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Earnings before taxes (EBT)
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$61,000
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Federal and state income taxes (40%)
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24,400
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Net income
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$36,600
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Compute the following ratios for the company.
a) Current ratio
b) Quick ratio
c) Inventory turnover ratio
d) Days sales outstanding (Assume 365 days in a year)
e) Fixed assets turnover ratio
f) Total assets turnover ratio
g) Debt ratio
h) Times-interest-earned ratio
Provide complete and step by step solution for the question and show calculations and use formulas.