The following data apply to Jacobus and Associates (millions of dollars): Cash ................................... $ 400 Fixed assets

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The following data apply to Jacobus and Associates (millions of dollars):

Cash ................................... $ 400
Fixed assets ................... $ 4,300
Sales .............................. $14,600
Net income ....................... $ 730
Quick ratio ............................ 2.0
Current ratio ........................ 3.0
DSO ............................... 40 days
ROE ................................... 12.5%

Jacobus has no preferred stock—only common equity, current liabilities, and long-term debt. Find Jacobus’s (1) accounts receivable, (2) current liabilities, (3) current assets, (4) total assets, (5) ROA, (6) common equity, (7) long-term debt, (8) equity multiplier, (9) profit margin, and (10) total asset turnover. Substitute your calculated profit margin, total asset turnover, and equity multiplier into the DuPont equation and verify that resulting ROE is 12.5%.

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Corporate Finance A Focused Approach

ISBN: 978-1337909747

7th edition

Authors: Michael C. Ehrhardt, Eugene F. Brigham

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