1. Calculate working capital and current ratio Firm Q has short-term debt of $14,000, land of $85,000, merchandise inventory of $31,000, cash of $9,000, property, plant, and equipment of $330,000, accounts payable of $16,000, long-term debt of $60,000, accounts receivable of 17,000, common stock of $300,000, and retained earnings of $82,000.
Required:
Calculate Firm Q’s working capital and current ratio.
2.Compare investment alternatives Your friend has two investment opportunities that she is considering and has asked for your advice regarding how she should proceed. One will have an 9% rate of return on an investment of $12,000; the other will have a 12% rate of return on an investment of $15,000. She would like to take advantage of the higher-yielding investment but has only $12,000 available.
Required:
What is the maximum rate of interest that your friend should be willing to pay to borrow the $3,000 needed to take advantage of the higher yield?
3.ROI analysis using the DuPont model
a. Firm A has a margin of 7%, sales of $980,000, and ROI of 19.6%. Calculate the firm’s average total assets.
b. Firm B has net income of $259,200, turnover of 0.9, and average total assets of $1,800,000. Calculate the firm’s sales, margin, and ROI. Round your percentage answer to one decimal place.
c. Firm C has net income of $45,360, turnover of 1.4, and ROI of 12.6%. Calculate the firm’s margin, sales, and average total assets. Round your percentage answer to one decimal place.
4.ROI analysis using the DuPont model
a. Firm D has net income of $54,000, sales of $1,200,000, and average total assets of $750,000. Calculate the firm’s margin, turnover, and ROI.
b. Firm E has net income of $132,000, sales of $2,200,000, and ROI of 9.6%. Calculate the firm’s turnover and average total assets.
c. Firm F has ROI of 12%, average total assets of $1,500,000, and turnover of 0.8. Calculate the firm’s sales, margin, and net income. Round your answers to the nearest whole numbers.
5.Calculate ROE At the beginning of the year, the net assets of Shannon Co. were $492,600. The only transactions affecting stockholders’ equity during the year were net income of $70,200 and dividends of $15,400.
Required:
Calculate Shannon Co.’s return on equity (ROE) for the year. Round your percentage answer to one decimal place.
