Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 3, Problem 1QP
Calculating Liquidity Ratios [LO2] SDJ, Inc., has net working capital of $1,920, current liabilities of $4,380, and inventory of $3,750. What is the current ratio? What is the quick ratio?
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Calculating Profi tability Ratios [LO2] Wakers, Inc., has sales of $29 million,total assets of $17.5 million, and total debt of $6.3 million. If the profi t marginis 8 percent, what is net income? What is ROA? What is ROE?
V. Direction: Solve the following problems using financial ratios. Write the answer on the blank.
1. Current assets is P20,000, current liabilities is P30,000. What is the current ratio?
2. Inventory is P15,000; Accounts Payable is P45,000. Cash and accounts receivable total P8,000.
What is the current ratio?
What is the quick ratio?
3. If current ratio is 1.5, what is the total accounts receivable if cash is P220,000, inventory is P75,000,
and accounts payable is P330,000?
4. Cash is 30% of total current assets. If current ratio is 2.5, what is the new current ratio if total non-
cash current assets grow by 50%?
5. The total asset is P1,500,000. Sales is P4,500,000. What is the asset turnover?
6. Accounts receivable turnover is 8. What is the average collection period assuming annual data
What is the average collection period if quarterly data are used?
are used?
7. Sales for the year amount to P3,000,000, Accounts receivable is P360,000. What is the average
collection period assuming…
Company X is competing with company Y. These are their ratios:
x
y
Current Ratio = .223
Current Ratio = .146
Cash Ratio = .057
Cash Ratio = .031
Quick Ratio = .105
Quick Ratio = .072
Based on liquidity and short term assets, which company is doing better?
Chapter 3 Solutions
Fundamentals of Corporate Finance
Ch. 3.1 - Prob. 3.1ACQCh. 3.1 - Prob. 3.1BCQCh. 3.2 - Prob. 3.2ACQCh. 3.2 - Name two types of standardized statements and...Ch. 3.3 - What are the five groups of ratios? Give two or...Ch. 3.3 - Given the total debt ratio, what other two ratios...Ch. 3.3 - Turnover ratios all have one of two figures as the...Ch. 3.3 - Profitability ratios all have the same figure in...Ch. 3.4 - Return on assets, or ROA, can be expressed as the...Ch. 3.4 - Return on equity, or ROE, can be expressed as the...
Ch. 3.5 - Prob. 3.5ACQCh. 3.5 - Prob. 3.5BCQCh. 3.5 - Prob. 3.5CCQCh. 3.5 - Prob. 3.5DCQCh. 3 - Prob. 3.1CTFCh. 3 - Prob. 3.2CTFCh. 3 - What is the correct formula for computing the...Ch. 3 - Prob. 3.5CTFCh. 3 - Current Ratio [LO2] What effect would the...Ch. 3 - Current Ratio and Quick Ratio [LO2] In recent...Ch. 3 - Prob. 3CRCTCh. 3 - Prob. 4CRCTCh. 3 - Prob. 5CRCTCh. 3 - Prob. 6CRCTCh. 3 - Prob. 7CRCTCh. 3 - Prob. 8CRCTCh. 3 - Prob. 9CRCTCh. 3 - Industry-Specific Ratios [LO2] There are many ways...Ch. 3 - Prob. 11CRCTCh. 3 - Prob. 12CRCTCh. 3 - Calculating Liquidity Ratios [LO2] SDJ, Inc., has...Ch. 3 - Calculating Profitability Ratios [LO2] Shelton,...Ch. 3 - Calculating the Average Collection Period [LO2]...Ch. 3 - Calculating Inventory Turnover [LO2] The Green...Ch. 3 - Calculating Leverage Ratios [LO2] Levine, Inc.,...Ch. 3 - Calculating Market Value Ratios [LO2] Makers Corp....Ch. 3 - DuPont Identity [LO4] If Roten Rooters, Inc., has...Ch. 3 - DuPont Identity [LO4] Zombie Corp. has a profit...Ch. 3 - Prob. 9QPCh. 3 - Prob. 10QPCh. 3 - Prob. 11QPCh. 3 - Equity Multiplier and Return on Equity [LO3] SME...Ch. 3 - Just Dew It Corporation reports the following...Ch. 3 - Prob. 14QPCh. 3 - Prob. 15QPCh. 3 - Prob. 16QPCh. 3 - Calculating Financial Ratios [LO2] Based on the...Ch. 3 - Using the DuPont Identity [LO3] Y3K, Inc., has...Ch. 3 - Days Sales in Receivables [LO2] A company has net...Ch. 3 - Ratios and Fixed Assets [LO2] The Caughlin Company...Ch. 3 - Profit Margin [LO4] In response to complaints...Ch. 3 - Return on Equity [LO2] Firm A and Firm B have...Ch. 3 - Calculating the Cash Coverage Ratio [LO2] Ugh...Ch. 3 - Cost of Goods Sold [LO2] W B Corp. has current...Ch. 3 - Prob. 25QPCh. 3 - Some recent financial statements for Smolira Golf...Ch. 3 - DuPont Identity [LO3] Construct the DuPont...Ch. 3 - Prob. 28QPCh. 3 - Market Value Ratios [LO2] Smolira Golf Corp. has...Ch. 3 - Tobins Q [LO2] What is Tobins Q for Smolira Golf?...Ch. 3 - Using the financial statements provided for SS...Ch. 3 - Mark and Todd agree that a ratio analysis can...Ch. 3 - Compare the performance of SS Air to the industry....
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- For the companies Lockheed-Martin (LMT) & Northrop-Grumman (NOC) • • • [5 pts] Use Macrotrends data to calculate Return on Sales, Return on Assets, Debt Ratio, Inventory Turnover, Lead Time for each company [4 pts] Use Fintel to determine EPS forecasts for 2024-2027 for each company, and use those to calculate an average earnings growth rate for each - https://fintel.io/sfo/us/Imt https://fintel.io/sfo/us/noc [4 pts] Assuming MARR = WACC + 3%, calculate a fair market price for the stock of each company, assuming that earnings grow at the calculated rate for the next 50 years, with the following WACC LMT: NOC: 8.00% 8.25% [2 pts] Find the current stock price for each company [5 pts) Based on the above calculations, which company's stock would you buy, and provide your reasoning (If neither or both, explain reasoning)arrow_forwardLiquidity ratios: Laurel Electronics has a quick ratio of 1.15, current liabilities of $5,311,020, and inventories of $7,121,599. What is the firm’s current ratio?arrow_forwardIf a bank has a leverage ratio of 0.5 and a return on assets of 1%, what is its return on equity? Select one: OA 0.2% O B. 2% OC 5% O D. 20%arrow_forward
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