# ch3_pp[1] - Practice Problems for Chapter 3 7 ROE...

• Notes
• 2

This preview shows pages 1–2. Sign up to view the full content.

Practice Problems for Chapter 3 7. ROE = (PM)(TAT)(EM) ROE = (.085)(1.30)(1.35) = .1492 or 14.92% 8. This question gives all of the necessary ratios for the DuPont Identity except the equity multiplier, so, using the DuPont Identity: ROE = (PM)(TAT)(EM) ROE = .1867 = (.087)(1.45)(EM) EM = .1867 / (.087)(1.45) = 1.48 D/E = EM – 1 = 1.48 – 1 = 0.48 9. Decrease in inventory is a source of cash Decrease in accounts payable is a use of cash Increase in notes payable is a source of cash Decrease in accounts receivable is a source of cash Changes in cash = sources – uses = \$400 + 580 + 210 – 160 = \$1,030 Cash increased by \$1,030 17. a. Current ratio = Current assets / Current liabilities Current ratio 2006 = \$112,977 / \$124,541 = 0.91 times Current ratio 2007 = \$118,164 / \$107,477 = 1.10 times b. Quick ratio = (Current assets – Inventory) / Current liabilities Quick ratio 2006 = (\$112,977 – 62,182) / \$124,541 = 0.41 times Quick ratio 2007 = (\$118,164 – 64,853) / \$107,477 = 0.50 times c. Cash ratio = Cash / Current liabilities

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Fall '08
• Selvili
• Balance Sheet, Generally Accepted Accounting Principles, \$15,183, \$16,185, \$255,592

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern