Define the following terms:

current ratio, quick ratio

incentory turnover ratio, days sales outstanding, fixed assets turnover ratio, total assets turnover ratio

debt ratio,

times interest earned ratio, coverage ratio

profit margin on sales, basic earning power ratio, return of total assets, return on common equity

comparative ratio analysis, benchmarking

Window dressing, seasonal effects on ratios

3-2

Financial ratio analysis is conducted by managers, equity investors, long term creditors, and short term creditors. what is the primary emphasis of each of these groups in evaluating ratios?

3-3

over the past year M.D Ryngaert and CO has realized an increase in its current ratio and a drop in its total assets turnover ratio. However, the companys sales, quick ratio, and fixed assets turnover ratio have remained constant. What explains these changes?

3-4

profit margins and turnover ratios vary from one industry to another. What differences would you expect tp find between grocery chain such as safeway and a steel company? Think particularly about the turnover ratios, the profit margin, and the DuPont equation.

3-1

Greene sisters has a DSO of 20 days. The companys average daily sales are $20,000. What is the levels of its accounts receivable? Assume there are 365 days in a year.

3-3

Winston Watchs stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3billion in long term debt, and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is winstons market/book ratio.

3-4

Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. what is it P/E ratio

3-5

Needham Pharmaceuticals has a profit margins of 3% and an equity multiplier of 2.0. Its sales are $100 million and it has total assets of $50 milllion. What is it ROE?