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HW_07_Solutions

# HW_07_Solutions - Solutions to Homework 7 Raffaele B Mari...

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Solutions to Homework 7 Due November 2, 2010 Raffaele B. Mari, CPA Econ 25 Econ of Acctg. EXERCISE 13-9 (a) Current ratio = \$150,000 \$50,000 = 3.00:1 (b) Receivables turnover = \$350,000 \$62,500 (1) = 5.6 times (1) (\$65,000 +\$60,000) 2 (c) Average collection period = 365 days ÷ 5.6 = 65.2 days (d) Inventory turnover = \$198,000 \$55,000 (2) = 3.6 times (2) \$60,000+ \$50,000 2 (e) Days in inventory = 365 days ÷ 3.6 = 101.4 days (f) Cash debt coverage ratio = \$48,000 \$160,000+ \$150,000 2 = .31 times (g) Current cash debt coverage ratio = \$48,000 \$60,000 + \$50,000 2 = .87 times (h) Free cash flow = \$48,000 \$25,000 \$18,000 = \$5,000

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Solutions to Homework 7 Due November 2, 2010 Raffaele B. Mari, CPA Econ 25 Econ of Acctg. PROBLEM 13-5A (a) Ratio Target Wal-Mart (All Dollars Are in Millions) (1) Current (2) Receivables turnover (3) Average collection period (in days) (4) Inventory turnover (5) Days in inventory (6) Profit margin (7) Asset turnover (8) Return on assets (9) Return on common stockholders’ equity (10) Debt to total assets (11) Times interest earned (12) Current cash debt coverage (13) Cash debt coverage (14) Free cash flow 1.32:1 (\$14,706 ÷ \$11,117) 9.8 (\$57,878 ÷ \$5,930) 37.2 (365 ÷ 9.8) 6.5 (\$39,399 ÷ \$6,046) 56.2 (365 ÷ 6.5) 4.8 % (\$2,787 ÷ \$57,878) 1.6 (\$57,878 ÷ \$36,172 a ) 7.7 % (\$2,787 ÷ \$36,172 a ) 18.7 % (\$2,787 ÷ \$14,919 b ) 58 % (\$21,716 ÷ \$37,349) 8.9 (\$5,069 c
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HW_07_Solutions - Solutions to Homework 7 Raffaele B Mari...

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