Question 1

Rosita's Resources paid $250 in interest and $130 in dividends last year. The times interest earned ratio is 3.8 and the depreciation expense is $60. What is the value of the cash coverage ratio?

Accepted Answer

The cash coverage ratio is calculated as (EBIT + Depreciation) / Interest. Given that the times interest earned ratio is 3.8, we can find EBIT by multiplying the interest ($250) by 3.8, which gives $950. Adding depreciation ($60) gives $1010. Dividing $1010 by the interest ($250) gives a cash coverage ratio of 4.04.

Question 2

Qwik Stop has accounts receivable of $4,830, inventory of $9,083, sales of $38,600, and cost of goods sold of $21,400. How many days does it take the firm to both sell their inventory and collect the payment on the sale?

Accepted Answer

Days' sales in inventory = (Inventory / Cost of goods sold) x 365 days= ($9,083 / $21,400) x 365 days= 160 daysDays' sales outstanding = (Accounts receivable / Sales) x 365 days= ($4,830 / $38,600) x 365 days= 41 daysTotal days = Days' sales in inventory + Days' sales outstanding= 160 days + 41 days= 201 days

Question 3

What was the return on equity for 2018?

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Question 4

Square D's has $42,700 in sales and a profit margin of 7.2 %. There are 5,700 shares of stock outstanding at a market price per share of $13.20. What is the price-earnings ratio?

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Question 5

The Furniture Barn has a profit margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

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Question 6

Life Industries has sales of $46,230, costs of goods sold of $27,742.50, inventory of $675, and accounts receivable of $2,300. How many days, on average, does it take Life Industries to sell the inventory and collect the payment on the sale?

Accepted Answer

To calculate the average days it takes for Life Industries to sell the inventory and collect the payment, we need to find the inventory turnover days and the accounts receivable turnover days and then add them together.1. Inventory Turnover Days = (Inventory / Cost of Goods Sold) * 365   = ($675 / $27,742.50) * 365   = 0.0243 * 365   = 8.87 days (approximately)2. Accounts Receivable Turnover Days = (Accounts Receivable / Sales) * 365   = ($2,300 / $46,230) * 365   = 0.0497 * 365   = 18.17 days (approximately)Adding both gives us 8.87 + 18.17 = 27.04 days.

Question 7

What is the market-to-book ratio if the Smith Co. has 2,603 million shares of common stock outstanding with a current market price of $22 per share?

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Question 8

Use the following statement of financial position and statement of comprehensive income   What is the return on equity for Bluebird for 2018?

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Question 9

A small local company has net income of $200, interest expenses of $50, and depreciation of $51. The corporate tax rate is 50%. What is the cash coverage ratio?

Accepted Answer

The cash coverage ratio is calculated as (Net Income + Interest Expense + Depreciation) / Interest Expense. Here, it's ($200 + $50 + $51) / $50 = $301 / $50 = 6.02, which rounds to 6.0 times, but none of the options match this calculation. Given the options provided, there seems to be a misunderstanding in the calculation or the options given. However, aiming for the closest match or assuming a typo in the question or answer choices, the highest provided option would be the best guess, which is 10.0 times (E). This answer is based on the standard formula but acknowledges a discrepancy in the provided options and the calculated result.

Question 10

Rojers Communications Inc. sells for $34.50 and there are 605 million shares outstanding at the end of 2018. Based on the 2018 annual report, EBIT is $2,024 million, net income is $1,002 million, and depreciation is $1,760 million. What is the Enterprise Multiple?

Accepted Answer

The Enterprise Multiple is calculated as (Market Capitalization + Debt - Cash) / EBITDA. Market Capitalization is $34.50 * 605 million shares. EBITDA is EBIT + Depreciation. The correct calculation results in an Enterprise Multiple of approximately 5.52.

Question 11

Martin's Method Acting School has a current ratio of 2, a quick ratio of 1.8, net income of $180,000, a profit margin of 10%, and an accounts receivable balance of $150,000. What is the firm's average collection period?

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Question 12

Sales are $75,000, cost of goods sold is $35,000 and inventory is $5,000. What is the number of days' sales in inventory?

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Question 13

A firm has 5,000 shares of stock outstanding, sales of $6,000, net income of $800, a price-earnings ratio of 10, and a book value per share of $.50. What is the market-to-book ratio?

Accepted Answer

The market-to-book ratio is calculated by dividing the market value per share by the book value per share. First, find the market value per share: the price-earnings (P/E) ratio is 10, and the earnings per share (EPS) is net income divided by the number of shares, which is $800 / 5,000 = $0.16. Therefore, the market value per share is P/E ratio * EPS = 10 * $0.16 = $1.60. The book value per share is given as $0.50. Thus, the market-to-book ratio is $1.60 / $0.50 = 3.2.

Question 14

On a common size statement of comprehensive income for 2018, earnings before interest and taxes would be assigned a common value of:

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Question 15

Calculate the return on assets given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

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Question 16

What was the profit margin in 2018?

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Question 17

Chadwick, Inc., has 125,000 shares of stock outstanding, sales of $7.2 million, net income of $600,000, a price-earnings ratio of 22, and a book value per share of $36.30. What is the market-to-book ratio?

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Question 18

Calculate price earnings growth ratio given the following information: net income = $750,000; shares outstanding = 500,000; stock price = $28; future earnings growth rate = 6%.

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Question 19

Calculate the return on assets given the following information: common shares outstanding = 300,000; earning per share = $4.00; total assets = $5,000,000; total equity = $3,000,000.

Accepted Answer