Question 1

Adell Furniture has a profit margin of 8.2 percent on sales of $211,000.The common size ratio of dividends is .03 and total assets are $196,000.What is the plowback ratio?

Accepted Answer

The plowback ratio is calculated as 1 minus the dividend payout ratio. First, calculate the net income: $211,000 * 8.2% = $17,302. Then, calculate dividends: $17,302 * 3% = $519.06. The dividend payout ratio is $519.06 / $17,302 = 0.03. Therefore, the plowback ratio is 1 - 0.03 = 0.97 or 97%. However, the choices seem to be incorrect, and the closest option is D) 63.41 percent, which might be due to a miscalculation in the problem setup.

Question 2

It is important to review not just the Current Ratio, but also the Quick Ratio and Cash Ratio because:

Accepted Answer

The answer of It is important to review not just...

Question 3

Mercier United has net income of $128,470.There are currently 32.67 days' sales in receivables.Total assets are $1,419,415, total receivables are $122,306, and the debt-equity ratio is .40.What is the return on equity?

Accepted Answer

The answer of Mercier United has net income of $128,470.There...

Question 4

Taylor, Inc.has sales of $11,898, total assets of $9,315, and a debt-equity ratio of .55.If its return on equity is 14 percent, what is its net income?

Accepted Answer

The answer of Taylor, Inc.has sales of $11,898, total assets...

Question 5

The Texas Rustler has total assets of $645,563 and an equity multiplier of 1.22.What is the debt-equity ratio?

Accepted Answer

The debt-equity ratio is calculated as (1 - equity multiplier) / equity multiplier. In this case, the debt-equity ratio is (1 - 1.22) / 1.22 = 0.22.

Question 6

Peterboro Supply has a current accounts receivable balance of $391,648.Credit sales for the year just ended were $5,338,411.How long did it take on average for credit customers to pay off their accounts during the past year? Assume a 365-day year.

Accepted Answer

The answer of Peterboro Supply has a current accounts receivable...

Question 7

Which of the following is true regarding the Internal Growth Rate?

Accepted Answer

It represents the maximum possible growth rate a firm can achieve without external equity financing while maintaining a constant debt-equity ratio.

Question 8

Sunshine Rentals has a debt-equity ratio of .67.The return on assets is 8.1 percent, and total equity is $595,000.What is the net income?

Accepted Answer

The answer of Sunshine Rentals has a debt-equity ratio of...

Question 9

Donegal's Industrial Products wishes to maintain a growth rate of 6 percent a year, a debt-equity ratio of .45, and a dividend payout ratio of 30 percent.The ratio of total assets to sales is constant at 1.25.What profit margin must the firm achieve?

Accepted Answer

The answer of Donegal's Industrial Products wishes to maintain a...

Question 10

Use the following financial information to answer this question.  
What are the values of the three components of the DuPont identity? Use ending balance sheet values.

Accepted Answer

The answer of Use the following financial information to answer...

Question 11

A firm wishes to maintain an internal growth rate of 4.5 percent and a dividend payout ratio of 60 percent.The current profit margin is 7.5 percent and the firm uses no external financing sources.What must be the total asset turnover?

Accepted Answer

The answer of A firm wishes to maintain an internal...

Question 12

Suppose Healey Corp.has the following characteristics:
Shares outstanding: 68,500
Current share price: $13.50
Total debt: $438,500
Total cash: $63,100
Based on the formula above, what is the enterprise value of this company?

Accepted Answer

The answer of Suppose Healey Corp.has the following characteristics:
Shares outstanding:...

Question 13

Last year, Teresa's Fashions earned $2.03 per share and had 15,000 shares of stock outstanding.The firm paid a total of $16,672 in dividends.What is the retention ratio?

Accepted Answer

The retention ratio is calculated as (1 - (dividends paid / net income)). In this case, the dividends paid were $16,672 and the net income was $2.03 * 15,000 = $30,450. Therefore, the retention ratio is (1 - (16,672 / 30,450)) = 45.25%.

Question 14

For the most recent year, Wilson Enterprises had sales of $689,000, cost of goods sold of $492,300, depreciation expense of $61,200, additions to retained earnings of $48,560, and dividends per share of $2.18.There are 12,000 shares of common stock outstanding and the tax rate is 35 percent.What is the times interest earned ratio?

Accepted Answer

The answer of For the most recent year, Wilson Enterprises...

Question 15

Last year, a firm earned $67,800 in net income on sales of $934,600.Total assets increased by $62,000 and total equity increased by $43,500 for the year.No new equity was issued and no shares were repurchased.What is the retention ratio?

Accepted Answer

The retention ratio is calculated as (Net Income - Dividends) / Net Income. Since no new equity was issued and no shares were repurchased, the increase in equity ($43,500) represents retained earnings. Thus, the retention ratio is $43,500 / $67,800 = 0.6416 or 64.16 percent.

Question 16

Lawler's BBQ has sales of $311,800, a profit margin of 3.9 percent, and dividends of $4,500.What is the plowback ratio?

Accepted Answer

The answer of Lawler's BBQ has sales of $311,800, a...

Question 17

A fire has destroyed a large percentage of the financial records of the Strongwell Co.You have the task of piecing together information in order to release a financial report.You have found the return on equity to be 13.8 percent.Sales were $979,000, the total debt ratio was .42, and total debt was $548,000.What is the return on assets?

Accepted Answer

The answer of A fire has destroyed a large percentage...

Question 18

High Road Transport has a current stock price of $5.60.For the past year, the company had net income of $287,400, total equity of $992,300, sales of $1,511,000, and 750,000 shares outstanding.What is the market-to-book ratio?

Accepted Answer

The answer of High Road Transport has a current stock...

Question 19

Turner's Store had a profit margin of 6.8 percent, sales of $498,200, and total assets of $542,000.If management set a goal of increasing the total asset turnover to 1.10 times, what would the new sales figure need to be, assuming no increase in total assets?

Accepted Answer

To achieve a total asset turnover of 1.10 times with total assets of $542,000, the sales need to be $542,000 * 1.10 = $596,200.

Quiz 3: Working With Financial Statements