Homework Answers
1. Current ratio = Current assets/Current liabilities = Accounts receivable + Inventory/Accounts payable = 50,000+25,000/50,000 = 75,000/50,000 = 1.50 (excluding cash)
2. Debt to equity ratio is calculated by dividing total debt by total equity.
Total debt is long term debt = 1.25,000, equity is calculated by adding common stock and retained earnings i.e. 75000 + 150000=225000
D/E=125000/225000=0.556
3. ROE = Return on equity = Net income / Equity = 100,000/(75,000+150000)*100 = (100,000/225,000)*100 = 44.4%
Equity is calculated by adding common stock and retained earnings i.e. 75000 + 150000=225000
4. Retention rate is the left amount after dividends are paid, here 50% of net income is paid as dividends and hence retention ratio is 50% means 50% of net income is paid as dividends and 50% is retained by the company
Hence RR=50%
ROE =44.4%
Forward internal growth rate = (ROE x RR) / [1 – (ROE x RR)]
= 44.4% *(50%)/(1-44.4%*50%) = 28.6%
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Find the profit margin, ROA, and ROE for each period.
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3. Calculate the internal growth rate and sustainable growth rate for S&S Air. What do these numbers mean? 4. S&S Air is planning for a growth rate of 12 percent next year. Calculate the EFN for the company assuming the company is operating at full capacity (Hint: beside sales also assume that Costs of goods sold, Other expenses, all company assets and Accounts payable grow with 12%). Can the company's sales increase at this growth rate? S&S AIR, INC. 2012...
1) the times interest earned ratio
2) the debt to equity ratio
3) the gross margin percentage
4) the return on total assets (total assets at the beginning
of last hear were 13,070,000)
5) the return on equity(stockholders equity at the beginning
of last year totaled 7,990,250)
no change in common stock over two years
6) ks the companys financial leverage positive ir
negative?
$ 960.000 2,700.000 3.600.000 260.000 7.520.000 9.520.000 $17,040,000 $ 1.200.000 300,000 1.800.000 2.000.000 200.000 5,500,000 9.050.000...
Long-term debt ratio Times interest earned Current ratio Quick ratio Cash ratio Inventory turnover Average collection period 0.6 5.0 73 days Use the above information from the tables to work out the following missing entries, and then calculate the company's return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.) INCOME STATEMENT (Figures in $ millions) Net sales...
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