Sample problems
—
Ratio analysis
1.
The Charleston Company is a relatively small, privately owned firm.
Last year the company had after
tax income of $15,000, and 10,000 shares were outstanding.
The owners were trying to determine the
market value for the stock, prior to taking the company public.
A similar firm which is publicly traded
had a P/E ratio of 5.0.
Using only the information given, estimate the market of one share of
Charleston's stock.
2.
Manufacturer's Inc. estimates that its interest charges for this year will be $700 and that its net income
will be $3,000.
Assuming its average tax rate is 30%, what is the company's estimated times interest
earned ratio?
3.
Given the following information, compute the value of cost of goods sold for Peterson Brewing
Current liabilities
$340,000
Quick ratio
1.8x
Inventory turnover
6x
Current ratio
3.3x
4.
ABC Co. has a Days Sales Outstanding ratio of 60 days.
Total credit sales for the year were
$2,400,000.
What is the balance in accounts receivable?
5.
A firm has current assets of $50,000 and total assets of $250,000.
The firm's sales are $600,000.
What
is the firm's fixed asset turnover?
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 Fall '10
 thomasrhee
 Ratio Analysis, Ratio, Net Profit Margin, Generally Accepted Accounting Principles, The Charleston Company

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