FIN_3716_Quiz_4_solutions

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

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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? A. 15.8 B. 16.2 C. 16.6 D. 17.1 E. 17.4 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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This note was uploaded on 12/14/2010 for the course FIN 3716 taught by Professor Fang during the Fall '10 term at LSU.

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

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