Financial Management

FIN 515 HOME WORK TWO CHANDANA R WELHENA

PAGE 112

3-1

DSO = ACCOUNTS RECEIVABLE /( SALES /365)

20 = x / 20000

AR = 400000 //

3-2

Debit ratio = total liability / total assets

Total assets / total equity = equity multifier

Equity multitier = 2.5

Equity ration = 1/ 2.5 =40

Debit ratio + equity ratio = 1

Debt ratio = (1- equity ratio )

1- .40 = 60 or 60%

3-3

MARKET BOOK RATIO

Stock PRICE PER SHARE =$ 75

TOTAL ASSETS 10 BILLION (10,000,000,000)

CURRENT LIABILITY 1 BILLION (1,000,000,000)

LONG TERM DEBIT 3,000,000,000)

COMMEN EQUITY 6 billion (6000,000,000)

Number of share outstanding 8000,000,000

MARKET PRICE PER SHARE / BOOK VALUE PER SHARE = MARKET BOOK RATIO

=$ 75 /( 6000,000,000/800,000,000)

=75/ 7.5

=MARKET BOOK RATIO = 10

3-4

PRICE EARNING RATIO

= price per share / earning per share

=price cash ratio = price per share / earning per share

8=x/3

=24

Answer

=24 / 1.50

= 16//

3-5

ROE

ROE = NET INCOME AVALABLE TO COMMON STOCK /COMMON EQUITY

ASSETS TURN OVER = SALES / TOTAL ASSETS

=100 MILLION/50 MILLION

=2

ROE =2*2*3=12%

3-6

DU POINT ANALYSIS

TOTAL ASSETS TURN OVER = SALES / TOTAL ASSETS

ASSETS TURN OVER =ROE / PROFIT MAEGIN

EQUITY MULTIPIER =15% /(5*2) =1.5

3-7

CURRENT AND QUICK RATIO

= CURRENT RATIO = CURRENT ASSETS/ CURRENT LIABILITY

1.5 =3000000/ CURRENT LIABILITY

CURRENT LIABILITY = 2000000

FIRM LEVEL OF CURRENT LIABILITY $ 2000000

QUICK RATIO = CURRENT ASSETS – INVENTORIES / CURRENT LIABILITY

1 = 3000000 – X / 2000000

$1000000

LEVEL OF INVENTORY $1000000

4-1

=FV = P(1+R) ^n

=FV=10000(1.1)^5

=$16105.01

4-2

PV = FV

( 1+R)^n

=$1292.10

4-6

FUTURE VALUE ORDINARY VERSUS ANNUITY DUE

PMT =300

I =7%

N=5

Fvan= PMT(1+I )^5 - (1)

( I ) ( I)

=300 (1.07)^5 - 1

.07 .07

=FV5=1725.22

FVDUE =FVAN(1+I)

=1725.22 (1.07)

=$ 1845.9854

4-13

A)400 P ER...