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Suppose that you are given the following data for Niles Company : Note: The data and calculations are based on a 3 6 5 day
Suppose that you are given the following data for Niles Company : Note: The data and calculations are based on a day year. Cash and equivalents $ Fixed assets $ Sales $ Net income $ Current liabilities $ Current ratio DSO ROE The current ratio is equal to Plugging in the relevant values for the current ratio and current liabilities, and then solving yields a current assets value of Adding fixed assets to current assets yields a value of total assets of The days sales outstanding DSO ratio is equal to Plugging in the relevant values for the DSO ratio and sales, and then solving yields an accounts receivable balance of Return on equity ROE is to Plugging in the relevant values for ROE and net income yields a value of total common equity of approximately Recall that Total AssetsTotal Liabilities and Equity. Mathematically, total liabilities and equity is equal to Plugging in the relevant values for total liabilities and equity, current liabilities, and equity calculated using the previous identify and then solving for longterm debt, yields a longterm debt of Return on assets ROA is equal to the product of profit margin multiplied by total assets turnover, which is equivalent to Plugging in the relevant values for net income and total assets yields an ROA of approximately Recall the following identity: Current AssetsCash and equivalentsAccounts ReceivableInventories. The quick ratio is equal to Plugging in the relevant values for current assets, current liabilities, and inventories calculated using the previous identity yields a quick ratio of approximately Suppose that Niles could reduce its DSO from to Given the formula for DSO from the video, as well as the same annual sales of $ the new value accounts receivable associated with the new DSO must be all else equal. The change or the absolute value of the difference between the original and new values in accounts receivable represents an amount of approximately in cash generated. As a result of the stock buy back, the ROA and ROE both Suppose Niles uses the cash generated by the lower DSO to buy back common stock at book value, thus reducing common equity. As a result of this new, lower, DSO, total debt and total capital This means that the total debttotal capital ratio must Suppose that the following data is given for Niles Company Cash and Equivalents: $ Fixed Assets: $ Sales: $ Net Income: $ Current Liabilities: $ Current Ratio: DSO: ROE: Accounts Receivable would be Current Assets Total Assets ROA Common Equity Quick Ratio Long Term Debt Suppose that niles could reduce it's DSO from to and use the cash that was generated to buy back common stock at book value would the following options Increase, Decrease or stay the Same: Accounts Receivable ROA ROE Total DebtTotal Capital Ratio
Suppose that you are given the following data for Niles Company :
Note: The data and calculations are based on a day year.
Cash and equivalents $
Fixed assets $
Sales $
Net income $
Current liabilities $
Current ratio
DSO
ROE
The current ratio is equal to Plugging in the relevant values for the current ratio and current liabilities, and then solving yields a current assets value of Adding fixed assets to current assets yields a value of total assets of
The days sales outstanding DSO ratio is equal to Plugging in the relevant values for the DSO ratio and sales, and then solving yields an accounts receivable balance of Return on equity ROE is to Plugging in the relevant values for ROE and net income yields a value of total common equity of approximately Recall that Total AssetsTotal Liabilities and Equity. Mathematically, total liabilities and equity is equal to Plugging in the relevant values for total liabilities and equity, current liabilities, and equity calculated using the previous identify and then solving for longterm debt, yields a longterm debt of
Return on assets ROA is equal to the product of profit margin multiplied by total assets turnover, which is equivalent to Plugging in the relevant values for net income and total assets yields an ROA of approximately Recall the following identity: Current AssetsCash and equivalentsAccounts ReceivableInventories. The quick ratio is equal to Plugging in the relevant values for current assets, current liabilities, and inventories calculated using the previous identity yields a quick ratio of approximately Suppose that Niles could reduce its DSO from to
Given the formula for DSO from the video, as well as the same annual sales of $ the new value accounts receivable associated with the new DSO must be all else equal. The change or the absolute value of the difference between the original and new values in accounts receivable represents an amount of approximately in cash generated. As a result of the stock buy back, the ROA and ROE both Suppose Niles uses the cash generated by the lower DSO to buy back common stock at book value, thus reducing common equity. As a result of this new, lower, DSO, total debt and total capital This means that the total debttotal capital ratio must
Suppose that the following data is given for Niles Company
Cash and Equivalents: $
Fixed Assets: $
Sales: $
Net Income: $
Current Liabilities: $
Current Ratio:
DSO:
ROE:
Accounts Receivable would be
Current Assets
Total Assets
ROA
Common Equity
Quick Ratio
Long Term Debt
Suppose that niles could reduce it's DSO from to and use the cash that was generated to buy back common stock at book value would the following options Increase, Decrease or stay the Same:
Accounts Receivable
ROA
ROE
Total DebtTotal Capital Ratio
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