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A firm has sales of $500, total assets of $300, and a debt/equity ratio of 2.00. If its return on equity is 15 percent, what

  1. A firm has sales of $500, total assets of $300, and a debt/equity ratio of 2.00. If its return on equity is 15 percent, what is its net income?

  1. You have the following data for a company. What is the return on assets (ROA)? Return on equity = 15%; Earnings before taxes = $50,000; Total asset turnover = 1.2; Profit margin = 7.5%; Tax rate = 35%.

  1. A company has net income of $218,000, a profit margin of 8.70%, and an accounts receivable balance of $132,850. What is the companys days sales in receivables?

  1. Pearces has a long-term debt ratio of .45 and a current ratio of 1.25. Current liabilities are $875, sales are $5,780, profit margin is 9.5%, and ROE is 18.5%. What is the amount of net fixed assets?

Forecasted Balance Sheet as of December 31, 2010

Cash

$ 72,000

Accounts receivables

$ 439,000

Accounts and notes payable

$ 432,000

Inventories

$ 894,000

Accruals

$ 170,000

Total current assets

$1,405,000

Total current liabilities

$ 602,000

Land and building

$ 238,000

Long-term debt

$ 404,290

Machinery

$ 132,000

Common stock

$ 575,000

Other fixed assets

$ 61,000

Retained earnings

$ 254,710

Total assets

$1,836,000

Total liabilities and equity

$1,836,000

Forecasted Income Statement for 2010

Sales

$4,290,000

Cost of goods sold

$3,580,000

Per-Share Data

Gross operating profit

$ 710,000

EPS

$ 4.71

General admin & selling expenses

$ 236,320

DPS

$ 0.95

Depreciation

$ 159,000

P/E Ratio

5.00

Misc.

$ 134,000

Market price

$ 23.57

Earnings before Taxes

$ 180,680

Number of shares outstanding

23000

Taxes

$ 72,272

Net Income

$ 108,408

Industry Financial Ratios

Hopes Financial Ratios

Ratio/Comment

Quick Ratio

1x

Quick Ratio

Current Ratio

2.7x

Current Ratio

Inventory Turnover

7x

Inventory Turnover

Days Sales Outstanding

40 days

Days Sales Outstanding

Fixed Asset Turnover

13x

Fixed Asset Turnover

Total Asset Turnover

2.6x

Total Asset Turnover

Return on Assets

9.10%

Return on Assets

Return on Equity

18.20%

Return on Equity

Debt Ratio

55%

Debt Ratio

Profit Margin on Sales

3.50%

Profit Margin on Sales

P/E Ratio

6x

P/E Ratio

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