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FIN_3716_Quiz_4_solutions

# FIN_3716_Quiz_4_solutions - A 15.01 percent B 15.68 percent...

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FIN 3716 Quiz #4 Key 1. A firm has a debt-equity ratio of 62 percent, a total asset turnover of 1.39, and a profit margin of 7.8 percent. The total equity is \$672,100. What is the amount of the net income? A. \$118,048 B. \$119,600 C. \$120,202 D. \$121,212 E. \$124,097 Using the Du Pont identity: Total assets = (1 + .62) \$672,100 = \$1,088,802; Total sales = \$1,088,802 1.39 = \$1,513,434.78; Net income = \$1,513,434.78 .078 = \$118,048 2. Katrina's Fury has \$697,400 in sales. The profit margin is 3.4 percent and the firm has 12,500 shares of stock outstanding. The market price per share is \$33. What is the price-earnings ratio? Earnings per share = (.034 \$697,400) 12,500 = .1.89693; Price-earnings ratio = \$33.00 1.89693 = 17.3965 = 17.4 3. A firm has sales of \$1,640, net income of \$135, net fixed assets of \$1,200, and current assets of \$530. The firm has \$280 in inventory. What is the common-size statement value of inventory?

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Unformatted text preview: A. 15.01 percent B. 15.68 percent C. 16.18 percent D. 30.42 percent E. 52.83 percent Common-size inventory = \$280 (\$1,200 + \$530) = .1618497 = 16.18 percent 4. At the beginning of the year, long-term debt of a firm is \$68,700 and total debt is \$71,425. At the end of the year, long-term debt is \$92,460 and total debt is \$95,609. The interest paid is \$5,412. What is the amount of the cash flow to creditors? A. \$18,348 B. \$12,936 C. \$2,414 D. \$23,760 E. \$29,172 Cash flow to creditors = \$5,412 (\$92,460 \$68,700) = \$18,348 5. The Picture Frame has beginning net fixed assets of \$32,681 and ending net fixed assets of \$33,127. During the year, assets with a combined book value of \$932 were sold. Depreciation for the year was \$5,364. What is the amount of net capital spending? A. \$5,311 B. \$5,406 C. \$5,810 D. \$6,289 E. \$6,742 Net capital spending = \$33,127 \$32,681 + \$5,364 = \$5,810...
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