4-17 4-18 TIE RATIO AEI Incorporated has $5 billion in assets, and its tax rate is 40%. Its basic earn ing power (BEP) ratio is 10%, and its return on assets (ROA) is 5%. What is AEI's times- interest-earned (TIE) ratio? CURRENT RATIO The Petry Company has $1,312,500 in current assets and $525,000 m current liabilities. Its initial inventory level is $375,000, and it will raise funds as additions notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? 4-19 DSO AND ACCOUNTS RECEIVABLE Harrelson Inc, currently has $750,000 in accounts receivable, and its days sales outstanding (DSO) is 55 days. It wants to reduce its 150 35 days by pressuring more of its customers to pay their bills on time. If this policy 15 adopted, the company's average sales will fall by 15%. What will be the level of accou receivable following the change? Assume a 365-day year. 4-20 P/E AND STOCK PRICE Fontaine Inc. recently reported net income of $2 milho 500.000 shares of common stock, which currently trades at $40 a share. Fontaine ues to expand and anticipates that 1 year from now, its net income will be $3.25 million Over the next year, it also anticipates issuing an additional 150,000 shares of sto that 1 year from now it will have 650,000 shares of common stock. Assuming For price/earnings ratio remains at its current level, what will be its stock price 1 year income of $2 million. It has now? 0 shares of stock so suming Fontaine's ce 1 year from