Fin515

Brandon Marinich

Managerial Finance

11/18/13

3-1:

Day Sales Outstanding= Receivables / Average Sales per day

AR = 20 X $20000 = $400,000

3-2:

The equity multiplier is 2.5. This means that for every dollar of equity the company has $2.5 of assets

Equity Multiplier = 2.5

Therefore Equity Ratio = 1/EM 

Equity Ratio = 1/2.5 = 0.40 

the formula is: 

Debt Ratio + Equity Ratio = 1 

Therefore Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60 or 60%

3-3:

Market value per share = $75 

common equity = 6,000,000 

number of shares outstanding = 800 millions shares

Market-to-book ratio = market value per share/(common equity/number of shares outstanding)

Market-to-book ratio = $75/(6,000,000/800,000,000)

Market-to-book ratio = $75/(6,000,000/800,000,000)

market-to-book ratio = $75/7.5

market-to-book ratio = 10

Winston Washer’s market-to-book ratio is 10.

3-4:

Price /cash flow ratio = Price per share /cash flow per share

Price per share = $8 x $3 = $24

P.E = Price per share / EPS

P.E = $24 / 1.5 = 16

3-5:

ROE= profit margin x asset turnover x equity multiplier 

=3% asset turnover = sales/asset = 50/100= 2 equity multiplier=2 

ROE= 3% x2x2= 12% 

3-6:

ROE= ROA x Equity Multiplier

15=10 (Equity Multiplier)

15/10= 1.5 = Equity Multiplier

Therefore, 1.50 is the Equity Multiplier.

ROA= (Profit Margin) (Total asset turnover) 

10=2(Total Asset Turnover)

10/2=5= Total Asset Turnover

S/TA = 5; TA/E = 1.5

3-7:

CR=current assets / current liabilities

1.5 = 3,000,000 / CL

CL = 2,000,000$

Quick ratio = (current assets – inventories) / current liabilities

1= (3,000,000 – inv.) / 2,000,000

Inv. = $1,000,000

4-1:

$10000*(1.1)^5 = $16105.10

4-2:

What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?

$1292.10

4-6:

FVoa = PMT [((1 + i)n - 1) / i]

= $1725

4-13:

* A. $400 per year for 10 years at 10%

FVoa = PMT [(((1 + i)^n) - 1) / i]

Where:

FVoa...