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FI515_Homework2_EbonyMoore - 3-1 Greene Sisters has a DSO...

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3-1 Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Day Sales Outstanding= Receivables / Average Sales per day AR = 20 X $20000 = $400,000 3-2 Vigo vacations has an equity multiplier of 2.5.The company’s assets are financed assets with some combination of long-term debt and common equity. What is the company’s debt ratio? Equity Multiplier = 2.5 Equity Ratio = 1/EM Equity Ratio = 1/2.5 = 0.40 Debt Ratio + Equity Ratio = 1 Therefore Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60 or 60% 3-3 Winston Washer’s stock price is $75 per share .Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt and $6 billion in common equity. It has 800 million shares of common stock outstanding .What is Winston’s market/ book ratio? Market value per share = $75 common equity = 6,000,000 Shares outstanding = 800 million shares
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