1.5

Peterboro Supply has a current accounts receivable balance of $391,648. Credit sales for the year just ended were $5,338,411. How long did it take on average for credit customers to pay off their accounts during the past year? Assume a 365-day year.

Days' sales in receivables = 365/($5,338,411/$391,648) = 26.78 days

Lisa has $1,000 in cash today. Which one of the following investment options is most apt to double her money?

8 percent interest for 9 years

You're trying to save to buy a new car valued at $42,650. You have $40,000 today that can be invested at your bank. The bank pays 4.2 percent annual interest on its accounts. How long will it be before you have enough to buy the car for cash? Assume the price of the car remains constant.

chgg $46,650 = $40,000 × (1 + .042)t t = 1.56 years

Discount Outlet has net income of $389,100, a profit margin of 2.8 percent, and a return on assets of 8.6 percent. What is the capital intensity ratio?

Capital intensity ratio = ($389,100/.086)/($389,100/.028) = .33

National Importers paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411. The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784. During the year, the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt. What is the amount of the cash flow from assets?

Cash flow from assets = ($24,615 + 23,800) + ($38,600 − 20,000) = $67,015

During the past year, Rend Yard Services paid $36,800 in interest along with $2,000 in dividends. The company issued $3,000 of stock and $16,000 of new debt. The company reduced the balance due on its old debt by $18,400. What is the amount of the cash flow to creditors?

Cash flow to creditors = $36,800 − 16,000 + 18,400 = $39,200

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900. What is the amount of the cash flow to stockholders for the last year?

Cash flow to stockholders = [$187,000 − 47,900 − (−$28,000)] − $71,400 = $95,700

Al-Sadiq Plumbing Supply currently has $10,500 in cash. The company owes $26,900 to suppliers for merchandise and $47,500 to the bank for a long-term loan. Customers owe the company $33,000 for their purchases. The inventory has a book value of $62,400 and an estimated market value of $65,600. If the store compiled a balance sheet as of today, what would be the book value of the current assets?

Current assets = $10,500 + 33,000 + 62,400 = $105,900

Kat Outfitting currently has $22,500 in cash. The company owes $49,500 to suppliers for merchandise and $52,500 to the bank for a long-term loan. Customers owe the company $41,000 for their purchases. The inventory has a book value of $76,800 and an estimated market value of $72,000. If the store compiled a balance sheet as of today, what would be the book value of the current assets?

Current assets = $22,500 + 41,000 + 76,800 = $140,300

A firm has net working capital of $8,200 and current assets of $37,500. What is the current ratio?

Current ratio = $37,500/($37,500 − 8,200) = 1.28

Stowell Horse Farms has total assets of $689,400, long-term debt of $198,375, total equity of $364.182, net fixed assets of $512,100, and sales of $1,021,500. The profit margin is 6.2 percent. What is the current ratio?

Current ratio = ($689,400 − 512,100)/($689,400 − 364,182 − 198,375) = 1.40

Outdoor Sports paid $12,500 in dividends and $9,310 in interest over the past year. Sales totaled $361,820 with costs of $267,940. The depreciation expense was $16,500 and the tax rate was 21 percent. What was the amount of the operating cash flow?

EBIT = $361,820 − 267,940 − 16,500 = $77,380 Tax = ($77,380 − 9,310) × .21 = $14,294.70 OCF = $77,380 + 16,500 − 14,294.70 = $79,585

Theodoro has just received an insurance settlement of $18,500. She wants to save this money until her daughter goes to college. If she can earn an average of 5.2 percent, compounded annually, how much will she have saved when her daughter enters college 9 years from now?

Future value = $18,500 × (1 + .052)9 = $29,195.33

Prisqua Rentals has inventory of $147,500, equity of $320,000, total assets of $658,800, and sales of $800,780. What is the common-size percentage for the inventory account?

Inventory common-size percentage = $147,500/$658,800 = .2239, or 22.39%

Swearingen United has total owners' equity of $18,800. The firm has current assets of $23,100, current liabilities of $12,200, and total assets of $36,400. What is the value of the long-term debt?

Long-term debt = $36,400 − 18,800 − 12,200 = $5,400

LaMarcus Photography, a sole proprietorship owes $190,874 in taxes on a taxable income of $608,606. The company has determined that it will owe $195,246 in tax if its taxable income rises to $620,424. What is the marginal tax rate at this level of income?

Marginal tax rate = ($195,246 − 190,874)/($620,424 − 608,606) = .37, or 37%

The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920. The depreciation expense for the year is $46,080 and the interest expense is $11,460. What is the amount of the net capital spending?

Net capital spending = $371,920 − 348,200 + 46,080 = $69,800

Sunny Disposition, Incorporated, has net working capital of $32,500, current assets of $59,000, equity of $74,500, and long-term debt of $42,500. What is the amount of the net fixed assets?

Net fixed assets = $42,500 + 74,500 − 32,500 = $84,500

Sunshine Rentals has a debt-equity ratio of .67. The return on assets is 8.1 percent, and total equity is $595,000. What is the net income?

Net income = .081 × (1 + .67) × $595,000 = $80,485.65

Donegal's has compiled the following information: What is the operating cash flow for the year? Sales $406,300, Interest paid 21,200, Long-term debt 248,700, Owners' equity 211,515, Depreciation 23,800, Accounts receivable 24,400, Other costs 38,600, Inventory 41,500, Accounts payable 22,600, Cost of goods sold 218,900, Cash 16,300, Taxes34,100

Operating cash flow = $406,300 − 218,900 − 38,600 − 34,100 = $114,700

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%

Frey's has a profit margin of 3.8 percent on sales of $287,200. The firm currently has 5,000 shares of stock outstanding at a market price of $7.11 per share. What is the price-earnings ratio?

Price-earnings ratio = $7.11/[(.038 × $287,200)/5,000] = 3.26

Prime Electronic Sales has sales of $723,450, total equity of $490,000, a profit margin of 9.3 percent, and a debt-equity ratio of .42. What is the return on assets?

Return on assets = (.093 × $723,450)/[(1 + .42) × $490,000)] = .0967, or 9.67%

Jessica invested $2,000 today in an investment that pays 6.5 percent annual interest. Which one of the following statements is correct, assuming all interest is reinvested?

She could have the same future value and invest less than $2,000 initially if she could earn more than 6.5 percent interest.

Porter Jewelers, a sole proprietorship has a marginal tax rate of 32 percent and an average tax rate of 20.9 percent. If the firm owes $34,330 in taxes, how much taxable income did it earn?

Taxable income = $34,330/.209 = $164,258

Tribeca Movers has sales of $645,560, cost of goods sold of $425,890, depreciation of $32,450, and interest expense of $12,500. The tax rate is 21 percent. What is the times interest earned ratio?

Times interest earned ratio = ($645,560 − 425,890 − 32,450)/$12,500 = 14.98

Efran's Auto Repair has total equity of $815,280, long-term debt of $391,900, net working capital of $49,500, and total assets of $1,292,485. What is the total debt ratio?

Total debt ratio = ($1,292,485 − 815,280)/$1,292,485 = .37

You deposit $1,200 into an account that earns 1.75 percent interest in three years. If you deposit an additional $1,200 in the same account 2 years later, how much would be in the account six years from now?

chgg $1,234.11 + 1,221.00 = $2,485.11

You are due to receive a lump-sum payment of $1,350 in five years. If you could invest that money at 4.5 percent interest for three years, how much would it be worth eight years from now?

chgg $1,540.57