Accounting Assignment
a. Ferrell Inc. recently reported net income of $8 million. It has 720,000 shares of common stock, which currently trades at $55 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $12.8 million. Over the next year, it also anticipates issuing an additional 252,000 shares of stock so that 1 year from now it will have 972,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.
b. Ingraham Inc. currently has $500,000 in accounts receivable, and its days sales outstanding (DSO) is 44 days. It wants to reduce its DSO to 20 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 10%. What will be the level of accounts receivable following the change? Assume a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.
c. The Stewart Company has $1,167,500 in current assets and $513,700 in current liabilities. Its initial inventory level is $268,525, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar.
d. The W.C. Pruett Corp. has $250,000 of interest-bearing debt outstanding, and it pays an annual interest rate of 8%. In addition, it has $600,000 of common stock on its balance sheet. It finances with only debt and common equity, so it has no preferred stock. Its annual sales are $1.6 million, its average tax rate is 40%, and its profit margin is 7%. What are its TIE ratio and its return on invested capital (ROIC)? Round your answers to two decimal places.
TIE x
ROIC %
e. A firm has a profit margin of 7% and an equity multiplier of 1.3. Its sales are $130 million, and it has total assets of $78 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places.
f. A company has an EPS of $2.70, a book value per share of $27.81, and a market/book ratio of 2.8x. What is its P/E ratio? The stock price should be rounded to the nearest cent. Do not round intermediate calculations. Round your answers to two decimal places.
g. Edelman Engines has $18 billion in total assets of which cash and equivalents total $120 million. Its balance sheet shows $2.7 billion in current liabilities of which the notes payable balance totals $1.02 billion. The firm also has $8.1 billion in long-term debt and $7.2 billion in common equity. It has 300 million shares of common stock outstanding, and its stock price is $26 per share. The firm's EBITDA totals $0.936 billion. Assume the firm's debt is priced at par, so the market value of its debt equals its book value. What are Edelman's market/book and its EV/EBITDA ratios? Do not round intermediate calculations. Round your answers to two decimal places.
M/B: x
EV/EBITDA:
h. Henderson's Hardware has an ROA of 12%, a 8% profit margin, and an ROE of 19%.
• What is its total assets turnover? Do not round intermediate calculations. Round your answer to two decimal places.
• What is its equity multiplier? Do not round intermediate calculations. Round your answer to two decimal places.
i. Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has 5.2 million shares outstanding. The firm's total capital is $120 million and it finances with only debt and common equity. What is its debt-to-capital ratio? Round your answer to two decimal places.
Format your assignment according to the give formatting requirements:
a. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
b. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
c. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.