Finance Chapter 4 Review

Perez Electronics Corp. has reported that its net income for 2006 is $1,276,351. The firm has 420,000 shares outstanding and a PE ratio of 11.2 times. What is the firm's share price? (Round your intermediate and final answer to two decimal places.)

$34.05 Net income = $1,276,351 Share outstanding = 420,000 EPS = $1,276,351 ÷ 420,000 = $3.04 per share PE ratio = 11.2 times Price-earnings ratio = Price per share ÷ EPS 11.2 = Price per share ÷ $3.04 Price per share = 11.2 × $3.04 = $34.05

Saunders, Inc., has a ROE of 18.7 percent, an equity multiplier of 2.53 times, sales of $2.75 million, and a total assets turnover of 2.7 times. What is the firm's net income? (Round your final answer to two decimal places.)

$514,250

If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of $3,436,812, what is its level of receivables? (Round your final answer to the nearest dollar.)

$881,234 Accounts receivables turnover=(Net sales)/(Accounts receivables)=3,436,812/x=3.9 Accounts receivables=3,436,812/3.9=881.234

If a company's net profit margin is -5 percent, its total asset turnover is 1.5 times, and its financial leverage ratio is 1.2 times, its return on equity is closest to:

-9.0 percent. Return on equity=(net income)/(total equity)=(net income)/(net sales)*(net sales)/(total assets)*(total assets)/(total equity) Return on equity = -5% × 1.5 × 1.2 = -9.0%

Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio? (Round your final answer to two decimal places.)

0.60

Lionel, Inc., has current assets of $623,122, including inventory of $241,990, and current liabilities of $378,454. What is the quick ratio? (Round your final answer to two decimal places.)

1.01 Quick Ratio=(Current assets - Inventory)/(Current liabilities)=($623,122 - $241,990)/$378,454=1.01

Bobcat Industries has a net profit margin of 3%, a total asset turnover of 2 times; and a debt ratio of 40%. What is the firm's ROE?

10%

Dreisen Traders has total debt of $1,233,837 and total assets of $2,178,990. What are the firm's equity multiplier and debt-to-equity ratio? Round your final answers to two decimal places.

2.31; 1.31 Debt = $1,233,837 Total Assets = $2,178,990 Debt ratio = $1,233,837 ÷ $2,178,990 = 0.57 Equity multiplier = Total assets ÷ Equity = 1 ÷ (Equity / Total assets) = 1 ÷ (1 - Debt / Total assets) = 1 ÷ (1 - 0.57) = 2.31 Equity multiplier = 1 + (Debt-to-equity) Debt-to-equity ratio = Equity multiplier - 1 = 2.31 - 1 = 1.31

Juventus Corp has total assets of $4,744,288, total debt of $2,912,000, and net sales of $7,212,465. Their net profit margin for the year is 18 percent. What is Juventus's return on assets (ROA)? (Round intermediate calculations to nearest dollar and percentage answer to one decimal place.)

27.4% Net profit margin=(Net income)/Sales=x/7,212,465=0.18 Net income=1,298,244 ROA=(Net income)/(Total assets)=1,298,244/4,744,288=27.4%

Jet, Inc., has net sales of $326,352, accounts receivables of $98,765, and inventory of $72,989. What is the firm's accounts receivables turnover?

3.3 times

Andrade Corp has debt of $2,834,950, total assets of $5,178,235, sales of $8,234,121, and net income of $812,355. What is the firm's return on equity? Round your final answer to one decimal place.

34.7% Total equity = Total assets - Total liabilities = $5,178,235 − $2,834,950 = $2,343,285 Return on equity = Net income ÷ Total equity = ($812,355 ÷ $2,343,285 ) = 34.67%

Tigger Corp. has reported the financial results for the year-ended 2006. Based on the information given, calculate the firm's gross profit margin and operating profit margin. Round your final answers to one decimal place. Net sales = $4,156,700 Net income = $778,321 Cost of goods sold = $2,715,334 EBIT = $1,356,098

34.7%; 32.6% Gross profit margin=(Net sales-Cost of goods sold)/(Net Sales)= ($4,156,700 - $2,715,334)/($4,156,700 )=34.675% Operating profit margin=EBIT/(Net Sales)=1,356,098/($4,156,700 )=32.624%

RTR Corp. has reported a net income of $812,425 for the year. The company's share price is $13.45, and the company has 312,490 shares outstanding. Compute the firm's price-earnings ratio. (Round your final answer to two decimal places.)

5.17 times Net income = $812,425 Share price = $13.45 Shares outstanding = 312,490 EPS = $812,425 ÷ 312,490 = $2.60 per share Price to Earnings ratio = 13.45/2.60 = 5.17

ReelTime Video has reported a total asset turnover of 2.3 times and an ROA of 17% and ROE of 25%. What is the firm's net profit margin?

7.4%

The most useful way to prepare a common size income statement is to express each account item as a percentage of:

net sales.