To find ROE, we need to find total equity.
TE = $17,500,000 – 6,300,000 = $11,200,000
ROE = Net income / TE = 2,320,000 / $11,200,000 = .2071 or 20.71%
3.
Receivables turnover = Sales / Receivables
Receivables turnover = $3,943,709 / $431,287 = 9.14 times
Days’ sales in receivables = 365 days / Receivables turnover = 365 / 9.14 = 39.92 days
The average collection period for an outstanding accounts receivable balance was 39.92
days.
4.
Inventory turnover = COGS / Inventory
Inventory turnover = $4,105,612 / $407,534 = 10.07 times
Days’ sales in inventory = 365 days / Inventory turnover = 365 / 10.07 = 36.23 days
On average, a unit of inventory sat on the shelf 36.23 days before it was sold.
5.
Total debt ratio = 0.63 = TD / TA
Substituting total debt plus total equity for total assets, we get:
0.63 = TD / (TD + TE)
Solving this equation yields:
0.63(TE) = 0.37(TD)
Debt/equity ratio = TD / TE = 0.63 / 0.37 = 1.70
Equity multiplier = 1 + D/E = 2.70
6.
Net income
= Addition to RE + Dividends
= $430,000 + 175,000 = $605,000
Earnings per share
= NI / Shares
= $605,000 / 210,000 = $2.88 per
share
Dividends per share
= Dividends / Shares
= $175,000 / 210,000 = $0.83 per
share
Book value per share
= TE / Shares
= $5,300,000 / 210,000 = $25.24 per
share
Market-to-book ratio
= Share price / BVPS
= $63 / $25.24 = 2.50 times
P/E ratio
= Share price / EPS
= $63 / $2.88 = 21.87 times