FI515 wk2 Homework - P/E Ratio = 24/1.5 =16.0 3.5 Profit...

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Samuel Osei FI515 Wk 2 Homework 3.1 DSO=20. Average Sales per Day is 20,000. Let R represent Receivables. DSO=Receivable/Average Sales per Day 20 = R/20,000 20 x 20,000 = R. R is therefore 400,000 3.2 Equity multiplier = Total assets/common stockholder equity =TA/{TA-DC}, where DC = debt capital. Using Algebraic calculation __TA = 2.5 TA= 2.5{TA} -2.5{DC} TA-DC 2.5 {DC} = 1.5{TA} TA/DC = 1.5/2.5 = 0.6x100 = 60% Debt Ratio = 60% 3.3 Stock Price is $75 per share, Total Assets $10b, Current Liabilities $ 1b, Long term liability $3b, Common equity $6b, Common stock outstanding $800 m. Market /Book Ratio= Market price per share/ Book value per share =75/book Value per share. Book Value per Share = Common Equity/ Shares Outstanding=6,000,000,000/800,000,000=7.5 M/B ratio = 75/7.5=10 3.4. EPS $1.50, Cash Flow per Share $3.00, Price Cash Flow Ratio 8.0, P/E Ratio is Price per Share/ Earnings Per Share Price per Share= (Cash Flow per Share $3.00 x Cash Flow Ratio 8.0) = 3 x 8 = 24
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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=CA-INV/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.

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FI515 wk2 Homework - P/E Ratio = 24/1.5 =16.0 3.5 Profit...

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