1. If one companys Equity Multiplier ratio equals 1.3, what is its Debt/Equity ratio?

2. Mudvayne, Inc. has a 9 percent ROA and a 15 percent payout ratio.

(a) What is the companys retention ratio?

(b) What is the companys internal growth rate? What does internal growth rate mean?

(c) Why does internal growth rate has a positive relationship with retention ratio?

3. Crash Davis Driving School has a 13.1 percent ROE and a 30 percent payout ratio. What is the companys sustainable growth rate? What does sustainable growth rate mean?

4. Young Truckling, Inc. has a current stock price of $46. For the past year, the company had net income of $6,250,000, total equity of $21,580,000, sales of $39,000,000, and 4.1 million shares of stock outstanding.

(a) What are earnings per share (EPS) of the company?

(b) What is the Price-earnings (P/E) ratio of the company?

(c) What is the Market-to-book (M/B) ratio of the company?

(d) Based on the companys P/E and M/B information, how do you think this companys growth potential?

5. The Allen Corporation had sales of $65 million last year, total assets of $42 million, and total liabilities of $20 million. The interest rate on the companys debt is 6 percent and its tax rate is 30 percent. The operating profit margin was 12 percent. What was the firms last years operating income and net income? What was return on equity? Assume that interest needs to be paid on all liabilities.

6. Last year, Davies Inc. had an increase of retained earnings of $58,000. There are currently 22,000 common stock shares outstanding and the firm paid a $1.60 dividend per share last year. What was the firms net income?

7. Green Inc.s balance sheet shows a stockholders equity value of $750,500. The firms earnings per share was $3. Resulting in a P/E ratio of 12.25. What is the firms stock price? There are 50,000 shares of common stock outstanding. What is the M/B ratio? What do the two market ratios indicate about how shareholders view Green Inc.?