The following data apply to Jacobus and Associates (millions of dollars): Cash ................................... $ 400 Fixed assets
Question:
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%.
Step by Step Answer:
Corporate Finance A Focused Approach
ISBN: 978-1337909747
7th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham