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

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Unformatted text preview: 3-1Greene 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 dayAR = 20 X $20000 = $400,0003-2Vigo 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 = 2.5Equity 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%3-3Winston 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 sharesMarket-to-book ratio = market value per share/(common equity/number of shares outstanding)Market-to-book ratio = $75/(6,000,000/800,000,000)Market-to-book ratio = $75/(6,000,000/800,000,000)market-to-book ratio = $75/7.5market-to-book ratio = 10...
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This note was uploaded on 10/02/2011 for the course FINANCE 515 taught by Professor Mclean during the Spring '08 term at Keller Graduate School of Management.

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

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