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Unformatted text preview: P/E Ratio = 24/1.5 =16.0 3.5 Profit Margin 3%, Equity Multiplier 2.0, Sales $100m, Total assets $50m ROE=ROA= (Profit Margin x {Sales/Total Assets}) ROA= (3% x {100/50=}) = .03x2 = 0.06 ROE = ROA x Equity Multiplier =0.06 x 2.0 = 0.12 or 12% 3.6 ROE= ROA x Equity Multiplier 15=10 (Equity Multiplier) 15/10 = Equity Multiplier Multiplier equity=1.5 ROA= (Profit Margin) x (Total asset turnover) 10=2(Total Asset Turnover) 10/2= Total Asset Turnover Total Asset=5 3.7 Current Ratio = CA/CL. If current assets are 3 million and the current ratio is 1.5, the liabilities are 2 million. i.e. (3 million/ 2 million = 1.5 current ratio.) Inventories have to be 1 million. The quick ratio is current assets = 3 million  1 million inventory / current liabilities of 2 million equal a quick ratio of 1. Quick Ratio=CAINV/CL...
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This note was uploaded on 02/21/2012 for the course FINANCE FI515 taught by Professor Fi during the Spring '09 term at Keller Graduate School of Management.
 Spring '09
 FI

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