Question

1. Firestone company has EBIT of $10,350 and NI of $2,528.50. The tax rate is 35%. What is the Interests coverage ratio?

2. If the days of sales in inventory for British company is 31 days and the days of sales outstanding is 22 days. What is the inventory turnover rate?

3. If the average selling period for American Eagle company is 85 days, and the cost of goods sold for the year are $1,250,000. What is the average value of the firm's inventory?

4. If you know that the days of sales in inventory for PEPSI is 40 days and the days of sales outstanding is 24 days. The firm has sales of $491,600 and costs of goods sold of $407,300. What is the accounts receivable turnover rate?

5. Yorkshire Inc., has total equity of $639,400 and net income of $51,700. The debt-equity ratio is 0.55 and the total asset turnover is 1.4. What is the profit margin?

6. Dixons Inc., has sales of $510,400, total equity of $250,000, a profit margin of 8 percent and a debt-equity ratio of .60. What is the return on assets?

7. Zaro stores has total assets of $248,000 and an equity multiplier of 2.5. What is the debt-equity ratio?

8.         ABC firm has cash of $1,600, accounts receivable of $2,500, inventory of $1,900, and net working capital of $500. What is the cash ratio?

9.      XYZ firm had year end 2004 and 2005 retained earnings balances of $670,000 and $560,000, respectively. The firm paid $10,000 in dividends in 2005. What is the firm’s net profit after taxes in 2005?

10.       Marasi, Inc., has net income of $180,000, a book value per share of $52.50, and 120,000 shares of stock outstanding. If you know that the market-to-book ratio is 1.6. What is the price-earnings ratio?

Answer 1

1.
=EBIT/Interest
=EBIT/(EBIT-Net Income/(1-tax rate))
=10350/(10350-2528.50/(1-35%))
=1.6021672

2.
=365/days of sales in inventory
=365/31
=11.7741935

3.
=cost of goods sold/365*average selling period
=1250000/365*85
=291095.8904110

4.
=365/days sales oustanding
=365/24
=15.2083333

5.
=Net Income/Equity*1/Total Asset turnover*1/(1+Debt Equity ratio)
=51700/639400*1/1.4*(1/(1+0.55))
=3.73%

6.
=Sales*Profit Margin/(Equity+Equity*Debt Equity Ratio)
=510400*8%/(250000+250000*0.60)
=10.21%

7.
Debt Equity Ratio=Equity Multiplier-1=2.5-1=1.50

8.
=Cash/Current Liabilities
=Cash/(Current Assets-Working Capital)
=1600/(2500+1900+1600-500)
=0.2909091

9.
=Retained Earnings Balance for 2005-Retained Earnings Balance for 2004+Dividends for 2005
=560000-670000+10000
=-100000.00

10.
=Book Value per share*Market Book ratio/(Net Income/Number of shares)
=52.50*1.6/(180000/120000)
=56.00