Structured Finance Week2 Days Sales Outstanding

Structured Finance Week2 Days Sales Outstanding -...

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Structured Finance Homework_2 Days Sales Outstanding
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Exercise 3.1 (Days Sales Outstanding) DSO = Receivables/Average Sales per Day. = Receivables/Annual Sales/365 Average daily sales =$20,000 DSO = R/AVS R = DSO*AVS R = 20*$20,000 = $400,000. Answer: The level of its accounts receivable is $400,000. Exercise 3.2 (Debt Ratio) Debt Ratio = Total liabilities/Total Assets. Also, Debt Ratio is 1 – 1/Equity Multiplier Equity Multiplier = EM = 2.5 Equity Multiplier = Total Assets/Common Equity Total Assets = EM * Common Equity Debt Ratio = DR= 1-(1/2.5) = 1- 0.4 = 0.6 = 60% Answer: Debt Ratio of Vigo Vacations is equal to 60%. 2
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Exercise 3.3 (Market/book) Stock Price (Market Price) is $75 per share. Market/book = Market Price per share / book value per share Book Value per share is Common Equity/Share Outstanding Common Equity = $6,000,000,000 Shares Outstanding = $800,000,000 M.B = $75 / ($6,000,000,000/$800,000,000) = 10. Answer
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This note was uploaded on 08/22/2011 for the course FIN 798 taught by Professor Chung during the Summer '11 term at DePaul.

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Structured Finance Week2 Days Sales Outstanding -...

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