Response to the following:
Be sure to show all work and/or use Excel formulas to demonstrate how you arrived at your answer.
(1) DSO Greene Sisters has a DSO of 20 days. The company's average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.
(2) Debt Ratio Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in long-term debt. What is the debt ratio?
(3) Market/Book Ratio Winston Watch's stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston's market/book ratio?
(4) Price/Earnings Ratio Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?
(5) ROE Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are $100 million, and it has total assets of $50 million. What is its ROE? Intermediate
(6) DuPont Analysis Gardial& Son has an ROA of 12%, a 5% profit margin, and a return on equity equal to 20%. What is the company's total assets turnover? What is the firm's equity multiplier?
(7) Current and Quick Ratios Ace Industries has current assets equal to $3 million. The company's current ratio is 1.5, and its quick ratio is 1.0. What is the firm's level of current liabilities? What is the firm's level of inventories?
(8). Future Value of a Single Payment If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
(9). Present Value of a Single Payment What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?
(10). Future Value: Ordinary Annuity versus Annuity Due What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be?
(11). Present Value of an Annuity Find the present value of the following ordinary annuities.$400 per year for 10 years at 10% $200 per year for 5 years at 5% $400 per year for 5 years at 0% Now rework parts a, b, and c assuming that payments are made at the beginning of each year; that is, they are annuities due.
(12). Uneven Cash Flow Stream Find the present values of the following cash flow streams. The appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course.
Note that, when working with the calculator's cash flow register, you must enter CF0=0CF0=0. Note also that it is quite easy to work the problem with Excel,
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yr
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Cash stream A
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Cash stream B
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1
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100
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300
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2
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400
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400
|
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3
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400
|
400
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|
4
|
400
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400
|
|
5
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300
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100
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What is the value of each cash flow stream at a 0% interest rate?