Question 1 | ||||||||||||
1a) A company has $1 billion of sales and $50 million of net income. Its total assets are $500 million, financed half by debt and half by common equity. What is its profit margin? What is its ROA? | ||||||||||||
4 | ||||||||||||
Sales ($M) | ||||||||||||
Net income ($M) | ||||||||||||
Total assets ($M) | ||||||||||||
Debt ratio | ||||||||||||
Profit margin | ||||||||||||
Sales ($M) | ||||||||||||
Net income ($M) | ||||||||||||
Total assets ($M) | ||||||||||||
Debt ratio | ||||||||||||
ROA | ||||||||||||
1b) A company has a profit margin of 6%, a total asset turnover ratio of 2, and an equity multiplier of 1.5. What is its ROE? | ||||||||||||
3 | ||||||||||||
Profit margin | ||||||||||||
Total asset turnover | ||||||||||||
Equity multiplier | ||||||||||||
ROE | ||||||||||||
Tony Tony, a small-size investment company, has the following Balance sheet. | ||||||||||||
Cash | $47 | |||||||||||
Accounts receivable | $35 | |||||||||||
Inventories | $117 | |||||||||||
Net fixed assets | $585 | |||||||||||
Total assets | $784 | |||||||||||
Accounts payable | $20 | |||||||||||
Accruals | $10 | |||||||||||
ST debt | $25 | |||||||||||
LT debt | $200 | |||||||||||
Total common equity | $529 | |||||||||||
$784 | ||||||||||||
1c) What is Tony Tony's Debt-to equity ratio? | 3 | |||||||||||
Total debt | ||||||||||||
Total common equity | ||||||||||||
Debt-to-equity ratio | ||||||||||||
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