BCOR 340 Chpt.3

Jupiter Explorers has $9,200 in sales. The profit margin is 3 percent. There are 4,400 shares of stock outstanding, with a price of $1.50 per share. What is the company's price-earnings ratio?

23.91 times Earnings per share = ($9,200 × .03)/4,400 = $.06273 Price-earnings ratio = $1.50/$.06273 = 23.91 times

What is the days' sales in receivables for 2017?

33.79 days Receivables turnover = $9,290/$860 = 10.8023 times Days' sales in receivables = 365 days/10.8023 = 33.79 days

Motor Works has total assets of $919,200, long-term debt of $264,500, total equity of $466,900, net fixed assets of $682,800, and sales of $1,021,500. The profit margin is 6.2 percent. What is the current ratio?

Current ratio = ($919,200 - 682,800) / ($919,200 - 264,500 - 466,900) = 1.26

Turner's Store had a profit margin of 6.8 percent, sales of $498,200, and total assets of $542,000. If management set a goal of increasing the total asset turnover to 1.10 times, what would the new sales figure need to be, assuming no increase in total assets?

Total asset turnover = 1.10 ×$542,000 = $596,200

A firm has inventory of $46,500, accounts payable of $17,400, cash of $1,250, net fixed assets of $318,650, long-term debt of $109,500, and accounts receivable of $16,600. What is the common-size percentage of the equity?

Total assets = Total liabilities and equity = $1,250 + 16,600 + 46,500 + 318,650 = $383,000 Equity common-size percentage = ($383,000 - 17,400 - 109,500) / $383,000 = .6687, or 66.87 percent

Wiley's has total equity of $679,400, long-term debt of $316,900, net working capital of $31,600, and total assets of $1,123,900. What is the total debt ratio?

Total debt ratio = ($1,123,900 - 679,400) / $1,123,900 = .40

The sustainable growth rate is based on the premise that:

the debt-equity ratio will be held constant.

A firm has total debt of $1,470 and a debt-equity ratio of .32. What is the value of the total assets?

$6,063.75 $1,470/Total equity = .32 Total equity = $4,593.75 Total assets = $1,470 + 4,593.75 = $6,063.75

What were the total dividends paid for 2017?

$833 million Retention ratio = ($740 million - 490 million)/$1,083 million = .231 Dividends paid = (1 - .231) × $1,083 million = $833 million

What are the values of the three components of the DuPont identity? Use ending balance sheet values.

.1153; 1.01; 1.9080 Profit margin = $3,540 /$30,710 = .1153 Total asset turnover = $30,710/$30,406 = 1.01 Equity multiplier = $30,406/($6,200 + 9,736) = 1.9080

A firm has sales of $1,040, net income of $208, net fixed assets of $508, and current assets of $264. The firm has $83 in inventory. What is the common-size balance sheet value of inventory?

10.75% Total assets = $508 + 264 = $772 Common-size value of inventory = $83/$772 = .1075, or 10.75%

The Green Giant has a 5 percent profit margin and a 34 percent dividend payout ratio. The total asset turnover is 1.6 times and the equity multiplier is 1.5 times. What is the sustainable rate of growth?

8.60% Return on equity = .05 × 1.60 × 1.50 = .120 Sustainable rate of growth = [.120 × (1 - .34)]/{1 - [.120 × (1 - .34)]} = .0860, or 8.60 percent

Mario's Home Systems has sales of $2,740, costs of goods sold of $2,080, inventory of $488, and accounts receivable of $422. How many days, on average, does it take Mario's to sell its inventory?

85.63 days Inventory turnover = $2,080/$488 = 4.2623 Days' sales in inventory = 365 days/4.2623 = 85.63 days

What is the cash coverage ratio for 2017?

Cash coverage ratio = ($1,865 + 435 )/$110 = 20.91 times

Mistletoe Gifts has $93,840 in total assets, depreciation of $2,106, and interest of $1,214. The total asset turnover rate is .94. Earnings before interest and taxes are equal to 19 percent of sales. What is the cash coverage ratio?

Cash coverage ratio = [.19 × .94 × $93,840)] + $2,106] / $1,214 = 15.54

Galaxy Sales has sales of $938,300, cost of goods sold of $764,500, and inventory of $123,600. How long on average does it take the firm to sell its inventory?

Days' sales in inventory = 365 / ($764,500 / $123,600) = 59.01 days

Samuelson's has a debt-equity ratio of 26 percent, sales of $8,000, net income of $2,400, and total debt of $12,200. What is the return on equity?

Debt-equity ratio = .26 = $12,200/Total equity Total equity = $46,923.08 Return on equity = $2,400/$46,923.08 = 0.0511, or 5.11%

Windswept, Inc., has 330 million shares of stock outstanding. Its price-earnings ratio for 2017 is 24. What is the market price per share of stock?

Earnings per share = $841/330 = $2.548485 Price = $2.548485 × 24 = $61.16

BR Trucking has total sales of $911,300, a total asset turnover of 1.1, and a profit margin of 5.87 percent. Currently, the firm has 18,500 shares outstanding. What are the earnings per share?

Earnings per share = (.0587 ×$911,300)/18,500 = $2.89

What is the fixed asset turnover for 2017?

Fixed asset turnover = $13,850/$4,160 = 3.33 times

How many dollars of sales were generated from every dollar of fixed assets during 2017?

Fixed asset turnover = $5,770/$3,280 = 1.76 Sales generated = $1 × 1.76 = $1.76

A firm wishes to maintain an internal growth rate of 4.5 percent and a dividend payout ratio of 60 percent. The current profit margin is 7.5 percent and the firm uses no external financing sources. What must be the total asset turnover?

Internal growth rate = .045 = [.075 ×TAT ×(1 -.60)]/{1 - [.075 ×TAT ×(1 -.60)]} TAT = 1.44

A firm has a return on equity of 20 percent. The total asset turnover is 1.9 and the profit margin is 8 percent. The total equity is $5,400. What is the net income?

Net income = .20 × $5,400 = $1,080

Taylor, Inc. has sales of $11,898, total assets of $9,315, and a debt-equity ratio of .55. If its return on equity is 14 percent, what is its net income?

Net income = [$9,315 / (1 + .55)]× .14 = $841.35

Lawler's BBQ has sales of $311,800, a profit margin of 3.9 percent, and dividends of $4,500. What is the plowback ratio?

Plowback ratio = 1 - [$4,500/(.039 ×$311,800)] = .6299, or 62.99 percent

The Kids' Mart has a market-to-book ratio of 3.3, net income of $87,100, a book value per share of $18.50, and 7,500 shares of stock outstanding. What is the price-earnings ratio?

Price-earnings ratio = (3.3 ×$18.50)/($87,100/7,500) = 5.26

What is the quick ratio for 2017?

Quick ratio = ($2,675 - 1,635)/$1,285 = .81 times

The Inside Door has total debt of $208,600, total equity of $343,560, and a return on equity of 13.27 percent. What is the return on assets?

Return on assets = (.1327× $343,560)/($208,600 + 343,560)= .0826, or 8.26 percent

What is the return on equity for 2017?

Return on equity = $595/($2,910 + 720) = 16.39%

A firm has a current ratio of 1.4 and a quick ratio of .9. Given this, you know for certain that the firm:

has positive net working capital.