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EGM-Q03-soln - Quiz#3 EGM 320 Solutions Sections A B Spring...

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Quiz #3 - EGM 320 – Solutions - Sections A & B - Spring 2008 The following are the best response 1. C Days Sales Outstanding = 30 (receivable are collected in 30 days) 30 = Receivables/Avg. Sales per day = REC/(1800/360) Receivables = 150 Current Assets = Receivables + Cash + Inventory = 150 + 200 + 200 = 550 Current ratio = 4.4 = 550/CL CL = 125 2. B Total Assets = Current Assets + Fixed Assets = (550+300) and CL = 125 Now ( Assets – Liabilities –Preferred Stock = Common Stockholders Equity ) Therefore with no preferred stock with Average Equity of 500 we can write 500 = Total Assets - CL – LTL = 850 -125 - LTL LTL = 225 3. C PM = Net Inc/Sales = 460/1800 = 25.55 % 4. B ITR= Sales/Inventory = 1800/200 = 9 5. C 6. D Income statement 7. B 8. B NOT Equivalent For the first diagram: P = $10 M ( P/F, 10% , 1) + $12 M ( P/F, 10% , 2) + $8 M ( P/F, 10% , 3) + $6M ( P/F, 10% , 4) = $10 M (0.9091 ) + $12 M (0.8264 ) + $8 M (0.7513 ) + $6 M (0.6830) = $29 . 1 million.
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