2fa552594c3771821522e66a9864c6e3_ff413939e67a33bf1a28151cafbaffdb

2fa552594c3771821522e66a9864c6e3_ff413939e67a33bf1a28151cafbaffdb

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Cailin Chen UNI-CC4118 Question 1: (10 Points)                          Refer to the  Financial Statements for MAGC, Enterprises, Inc.  to calculate the  relevant liquidity ratios , efficiency ratios ,profitability ratios , leverage ratios,       and  return on investment ratios  for the firm.  Assume that the firm’s price per share when the financial  statements were prepared was $15  ¼  and that the firm has 95 million shares  outstanding. Liquidity Ratios: - Current Ratio = Current assets ÷ current liability = $1039.8 ÷ $377.8 =  2.75 times - Quick Ratio = Quick Assets  ÷  Current Liability = (Current asset - inventories)  ÷ liabilities = $(1039.8-423.8)/$377.8=  1.63 times Efficiency Ratios: - Asset Turnover Ratio = Net sales / Total assets = $1563.7 / $1889.2 =  0.828  times - Inventory Turnover Ratio = Cost of good sold / average inventory = $1081.1/  $423.8 =  2.55 times Profitability Ratios - Profit Margin Ratio = Net income / net sale = $118.5/ $1563.7 = 0.75781 =  7.58% Leverage Ratios  - Debt to Equity Ratio = Total Debt / Total Equity = $574/ $937.4 =  0.612 times Return on Investment Ratio = Net income / investment = $118.5 / $ 399.4 = 0.29669 =  29.67%   Question 2: (10 Points) The following table shows selected financial data for two (2) national specialty retailers  (in $ millions):  
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  Debt BV Equity MV Equity EBIT Interest  Expense Firm A 1,000 500 800 150 60 Firm B 140 40 60 20 15   a. Calculate the market debt-equity ratio for each firm. Firm A Market debt-equity ratio = 1000/800 =  1.25 Firm B Market Debt-equity ratio = 140/60 =  2.33 b. Calculate the book-debt-equity ratio for each firm. Firm A book-debt-equity = 1000/500 =  2 Firm B book-debt-equity = 140 /40 =  3.5 c. Calculate the interest coverage ratio for each firm. Firm A interest coverage ratio = EBIT / interest expense = 150/60 =  2.5 Firm B interest coverage ratio = 20/15 =  1.33 d. Which is more useful or relevant: the book debt-equity ratio or the market debt-equity  ratio?  Discuss/explain. Market debt-equity ratio is more useful  because due to the changes in the value  of debt and equity, the capital structure shows a different ratio. When new firm are t be  raised on the market value is included, the situations in capital will mot be different  when the firms were initially raised.   Question 3: (10 Points) 1. Dogmatic Enterprises, Inc. has a net profit margin of 7% on sales of $80,000,000. Its  Balance Sheet shows the value of Equity as $50,000,000 and the value of Liabilities as  $30,000,000.  a. Calculate the firm’s Return on Assets (ROA) and Return on Equity (ROE)?
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