1. ABC Company has the following financial data points shares outstanding 20 million, current stock price $10/share, assets $250 million, liabilities $100 million, net income $40 million. Please calculate the following:

Market to book ratio

PE ratio

Given the companys market to book ratio do you believe the companys management has done a good job at creating shareholder value?

If the industry average PE ratio is 7X earnings is ABC companys stock under or overvalued and why

2. For number one above please describe why these ratios are important to an equity analyst and describe ways in which a company can improve these ratios.

3. For number two above please describe why these ratios are important to a credit analyst and how a company can improve them.

4. XYZ Company has the following financial data points accounts receivable $250,000, annual sales $1,200,000, inventory $150,000, cost of goods sold $600,000 and accounts payable $150,000. Please calculate the following.

Days sales outstanding

Inventory turnover

Days sales in inventory

Days payable outstanding

Days in the operating cycle or conversion period