Lorna Dome's times-interest-earned ratio is 4.2. has an annual interest expense of $30,000. Given the following cash flows for the project, calculate the present value of inflows for the project.Ī) $450,000 B) $350,000 C) $250,000 D) $550,000 is analyzing a project that has a profitability index of 2.5. ) A stock with a beta greater than 1.0 has returns that are _ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _ volatile than those of the market portfolio. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Gina's plan is to invest her money by depositing into an IRA at the end of every year. ) Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Cash disbursements for the month of July are expected to be: 17) _Ī) $105,000. June's sales are expected to be $100,000, and July's sales are expected to be $150,000. Depreciation amortized on a monthly basis is $2,000. In addition, the firm incurs the following costs every month and pays for them in the month the expenses are incurred: wages/salaries of $10,000, rent of $4,000, and miscellaneous cash expenses of $1,000. In any month, the firm makes purchases of 60% of that month's sales, which are paid the following month. ) Your firm is trying to determine its cash disbursements for the next two months (June and July). The total debt ratio for the firm is 50%. has a total asset turnover of 2.5 and a net profit margin of 3.5%. Which of the following has a beta of zero? 10) _Ī) A high-risk asset B) A risk-free asset 6) _Ĭonsidering each action independently and holding other things constant, which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)? 7) _ī) A decrease in the firm's accounts receivable average collection periodĬ) A decrease in the expected growth rate in salesĭ) An increase in the firm's profit marginĮ) A decrease in the firm's inventory turnover Millers Metalworks, Inc, has a total asset turnover (sales/assets) of 2.5 and a net profit margin (net income/sales) of 3.5. Assume an initial current ratio greater than 1.0. Other things held constant, an increase in _ will decrease the current ratio. Sales = 1.8(TA) = 1.Your firm has the following income statement items: sales of $50,250,000 income tax of $1,744,000 operating expenses of $10,115,000 cost of goods sold of $35,025,000 and interest expense of $750,000. Calculate Millers's return on equity (net income/equity). The total debt ratio (debt/assets) for the firm is 75. Millers Metalworks, Inc, has a total asset turnover (sales/assets) of 2.5 and a net profit margin (net income/sales) of 3.5. 5 and a total debt of $200,000, then fixed assets are: Millers Metalworks, Inc, has a total asset turnover (sales/assets) of : 165216. If Power-On has a total asset turnover of 1.8, a fixed asset turnover of 3.2, a debt ratio of. have if the firm has a current ratio of 2.5, a quick ratio of 1.2, and current liabilities of $12,000? Gray’s credit sales are $98,000 and its average collection period is 40 days. Assuming that Williamson wants to maintain an inventory turnover of 5.0, calculate their projected level of inventory. Williamson has projected sales to increase 50% and expects the new gross margin ratio to decrease by 2% due to increased efficiency. Williamson Trucking has current sales of $10,000 and a cost of goods sold of $4,300. Return on Equity = (NI/Sales) X (Sales/Total Assets) X (Total Assets/Equity) Return on Equity = (Net Profit Margin X Asset Turnover)/(1-Debt Ratio) What are the pros and cons of financial leverage to an organization? What are the advantages or disadvantages of financial leverage to shareholders of an organization? What are the advantages or disadvantages of financial leverage to creditors of an organization?ħ.
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