Francis Roman
FIN100.2
Chapter 3 Homework #18
1. Given
NWC = 1570
Cur. Liabilities = 4380
Inventory = 1875
Equation
NWC = Current Assets  Current Liabilities
1570 = (1875 + x)  4380
x = 4075
Current Assets = 5950
Current Ratio = Current Assets/Current Liabilities
Current Ratio =
5950/4380
Quick Ratio = (Current Assets  Inventory)/Current Liabilities
Quick Ratio = (5950  1875)/4380
Solution
Current Ratio = 1.36
Quick Ratio = .93
2. Given
Sales = 24,000,000
Total Assets = 18,000,000
Total Debt = 7,000,000
Profit Margin = 8%
Equation
Profit Margin = Net Income/Sales
8% = NI/24,000,000
NI= 1,920,000
ROA = Net Income/Total Assets
ROA = 1920000/18000000
ROA=.107
Total Equity = Total Assets  Total Debt
Total Equity = 18000000  7000000
Total Equity = 11000000
ROE=Net Income/Total Equity
ROE = 1920000/11000000
ROE = .1745
Solution
NI = 1.92 Million
ROE = 10.67%
ROA = 17.45%
3. Given
Current Accts Rec = 387615
Credit Sales = 2945600
Equation
Receivables Turnover = Sales/Accts Recv
Receivables Turnover = 2945600/387615
Receivables Turnover = 7.6
Days' Sales in Receivables = 365 days/Receivables Turnover
Days' Sales in Receivables = 365 days/7.6
Days' Sales in Receivables = 48.03
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Solution
Receivables Turnover = 7.6
Days' Sales in Receivables = 48.03
On average, it takes 48 days for credit customers to pay off their accounts.
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 Spring '08
 staff
 Balance Sheet, Generally Accepted Accounting Principles, total equity, Receivables Turnover

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