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Ch3_Solutions

# Ch3_Solutions - Finance 323 Chapter 3 Homework Solutions 1a...

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Finance 323 Chapter 3 Homework Solutions 1a. Current Ratio = Current Assets / Current Liabilities PY: 142,679 / 188,094 = 0.758551575 0.76 times 1b. Quick Ratio = (Current Assets – Inventory) / Current Liabilities PY: ( 142,679 61,815 ) / 188,094 = 0.429912703 0.43 times 1c. Cash Ratio = Cash / Current Liabilities CY: \$12,676 / 201,990 = 0.062755582 0.06 times 2a. Total Asset Turnover = Sales / Total Assets CY: \$864,500 / = 1.056591505 1.06 times 2b. Inventory Turnover = Cost of Goods Sold / Inventory CY: 432,900 / = 5.664525078 5.66 times 2c. Receivables Turnover = Sales / Accounts Receivable CY: \$864,500 / = 11.069142125 11.07 times 3a. Total Debt Ratio = Total Debt / Total Assets Total Debt = Current Liabilities + Long Term Debt PY: ( 188,094 + 130,000 ) / = 0.460886902 0.46 times 3b. Debt - Equity Ratio = Total Debt / Total Equity PY: ( 188,094 + 130,000 ) / = 0.854898356 0.85 times 3c. Equity Multiplier = Total Assets / Total Equity = 1 + (Debt - Equity Ratio) PY: \$690,178 / = 1.854898356 1.85 times 1 + ( Debt - Equity Ratio) 1 + 0.854898356 1.85 times 3d. Times Interest Earned = EBIT / Interest Expense CY: 350,600 / 24,065 = 14.568875961 14.57 times 3e. Cash Coverage Ratio = (EBIT + Depreciation) / Interest Expense CY: ( 350,600 + 81,000 ) / 24,065 = 17.934760025 17.93 times 1

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4a. Profit Margin = Net Income / Sales CY: \$195,921 / \$864,500 = 0.226629265 22.66% 4b. Return on Assets (ROA) = Net Income / Total Assets CY: \$195,921 / \$ 818,197 = 0.239454557
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Ch3_Solutions - Finance 323 Chapter 3 Homework Solutions 1a...

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