All of the following questions are open-ended problems. You must compute an answer for every problem. For percentage answers, calculate your answer as a percent rounded to 2 decimal places. For example, you would record ROA = .1263974 as 12.64% (note that on D2L you will enter 12.64 without the percent sign). For dollar answers, round to the nearest dollar. For example, you would record $12,345.83943 as $12,346 (note that on D2L you will enter 12346 without a comma and without the dollar sign).
Felton Farm Supplies, Inc. has an ROA (return on assets) of 12 percent, total assets of $400,000 and a net profit margin of 4.5 percent. What are Felton Farm Supplies annual sales?
Krisle and Kringle's debt-to-total assets ratio is 0.54.4 (i.e., debt ratio = 54.4%). What is the company’s debt- to-equity ratio? (Enter answer as a ratio rounded to 2 decimal places – that is, do not convert to a percent; for example, enter 80/35 = 2.2857 as 2.29).
Philips, Inc has a debt ratio of 22.5% and ROE = 15%. What is Phillips’ ROA? (Enter answer as a percent).
A firm has an ROA of 18% and a debt/equity ratio of 0.55. The firm's ROE is _________. (Enter answer as a percent).
Assume that XYZ, Inc. has: Debt ratio = 70% ?Net profit margin = 15% ?Return on assets (ROA) = 7.5%
Find XYZ’s Total Asset Turnover ratio. (Enter answer as a ratio – that is, do not convert to a percent).
Assume that your firm has ROA of 20.5%, ROE of 42% and Total Asset Turnover ratio of 3.5. Calculate the debt ratio for the firm. (Enter answer as a percent).
1. The primary goal of the management of a publicly traded corporation should be to ______________.
a. create jobs
b. promote social good
c. maximize profits
d. maximize shareholder wealth
e. minimiz risk
2. If a?remain the same as they were before net sales increased, the firm’s:
firm’s net sales (i.e., revenue) increases, but total assets, its debt ratio, and its net profit margin and
ROE would not change.
ROE could either increase or decrease depending on the interaction between the equity multiplier and ?the days payable ratio.
ROE would increase.
ROE would decrease.
There is insufficient information to determine the effect on ROE.
3. Which of the following actions would decrease the current ratio (assuming an initial current ratio of 0.8, and current liabilities equal to $1,000,000)?
Borrow $100,000 in short term debt and deposit this money (i.e., $100,000) into the firm’s cash account.
Borrow $200,000 in long-term debt to buy $200,000 worth of additional inventory.
Borrow $50,000 of short-term debt and use the proceeds to pay all operating expenses sooner, thus lowering accruals (i.e., accrued expenses) by $50,000.
Sell $250,000 of fixed assets to pay off an equal amount of long-term debt.
None of the above – that is, none of the actions listed about will decrease the current ratio.