1. The following information is available for Green Lake. Ltd:

Net profit margin: 9%

Net sales: $620,000.

Total shares outstanding: 25,000 at a market price of $35/share

Required:

a) Calculate the price-earnings ratio of Green Lake. (5 marks)

ANSWER a):

b) Total Tools Ltd. sells 20,000 toolkits a year at an average price per set of $120. All sales are credited with terms of 2/10, net 45. The discount amount is applied to a customer's account only after receiving and processing payments. Total Tool Ltd has found that 80% of its customers take advantage of the discounted price.

Required:

What is the amount of the firm's average accounts receivable? Assume a 365-day year. (5 marks)

ANSWER b):