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SME Company has a debt-equity ratio of .70. Return on assets is 8.5 percent, and total equity is $540,000. a. What is the equity multiplier?
SME Company has a debt-equity ratio of .70. Return on assets is 8.5 percent, and total equity is $540,000. |
a. | What is the equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What is the return on equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c. | What is the net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
Some recent financial statements for Smolira Golf Corp. follow. |
SMOLIRA GOLF CORP. 2017 and 2018 Balance Sheets | ||||||||||||||||
Assets | Liabilities and Owners Equity | |||||||||||||||
2017 | 2018 | 2017 | 2018 | |||||||||||||
Current assets | Current liabilities | |||||||||||||||
Cash | $ | 34,785 | $ | 38,204 | Accounts payable | $ | 37,282 | $ | 42,782 | |||||||
Accounts receivable | 18,001 | 28,126 | Notes payable | 19,408 | 16,500 | |||||||||||
Inventory | 3,730 | 42,792 | Other | 20,224 | 24,954 | |||||||||||
Total | $ | 56,516 | $ | 109,122 | Total | $ | 76,914 | $ | 84,236 | |||||||
Long-term debt | $ | 117,000 | $ | 182,015 | ||||||||||||
Owners equity | ||||||||||||||||
Common stock and paid-in surplus | $ | 55,400 | $ | 55,400 | ||||||||||||
Accumulated retained earnings | 271,867 | 307,704 | ||||||||||||||
Fixed assets | ||||||||||||||||
Net plant and equipment | $ | 464,665 | $ | 520,233 | Total | $ | 327,267 | $ | 363,104 | |||||||
Total assets | $ | 521,181 | $ | 629,355 | Total liabilities and owners equity | $ | 521,181 | $ | 629,355 | |||||||
SMOLIRA GOLF CORP. 2018 Income Statement | |||||||
Sales | $ | 508,454 | |||||
Cost of goods sold | 360,728 | ||||||
Depreciation | 44,963 | ||||||
Earnings before interest and taxes | $ | 102,763 | |||||
Interest paid | 20,083 | ||||||
Taxable income | $ | 82,680 | |||||
Taxes (24%) | 19,843 | ||||||
Net income | $ | 62,837 | |||||
Dividends | $ | 27,000 | |||||
Retained earnings | 35,837 | ||||||
Smolira Golf Corp. has 44,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2018 was $27. |
a. | What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What are the dividends per share? (Round your answer to 2 decimal places, e.g., 32.16.) |
c. | What is the market-to-book ratio at the end of 2018? (Round your answer to 2 decimal places, e.g., 32.16.) |
d. | If the companys growth rate is 5 percent, what is the PEG ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
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