Finance Home work.
” PROBLEMS in Chapter 3: 3-2, 3-3, 3-7, 3-9, 3-11, 3-15, 3-18, 3-25
3-2 Liquidity Ratios The top part of Ramakrishnan Inc.’s 2012 and 2011 balance sheets is
listed below (in millions of dollars).
2012 2011 2012 2011
Current assets: Current liabilities:
Cash and marketable securities $ 34 $ 25 Accrued wages and taxes $ 32 $ 31
Accounts receivable 143 128 Accounts payable 87 76
Inventory 206 187 Notes payable 76 68
Total $383 $340 Total $195 $175
Calculate Ramakrishnan Inc.’s current ratio, quick ratio, and cash ratio for 2012 and
- (LG3-1
3-3 Asset Management Ratios Tater and Pepper Corp. reported sales for 2012 of $23 million.
Tater and Pepper listed $5.6 million of inventory on its balance sheet. Using a 365-day
year, how many days did Tater and Pepper’s inventory stay on the premises? How many
times per year did Tater and Pepper’s inventory turnover? (LG3-2)
3-7 Profitability Ratios Maggie’s Skunk Removal Corp.’s 2012 income statement listed net
sales of $12.5 million, EBIT of $5.6 million, net income available to common stockholders
of $3.2 million, and common stock dividends of $1.2 million. The 2012 year-end balance
sheet listed total assets of $52.5 million and common stockholders’ equity of $21 million
with 2 million shares outstanding. Calculate the profit margin, basic earnings power,
ROA, ROE, and dividend payout. (LG3-4)..
3-9 Market Value Ratios You are considering an investment in Roxie’s Bed & Breakfast Corp.
During the last year, the firm’s income statement listed an addition to retained earnings of
$4.8 million and common stock dividends of $2.2 million. Roxie’s year-end balance sheet
shows common stockholders’ equity of $35 million with 10 million shares of common
stock outstanding. The common stock’s market price per share was $9.00. What is Roxie’s
Bed & Breakfast’s book value per share and earnings per share? Calculate the market-to-
book ratio and PE ratio. (LG3-5)
3-11 DuPont Analysis If Silas 4-Wheeler Inc. has an ROE of 18 percent, equity multiplier of 2,
and a profit margin of 18.75 percent, what is the total asset turnover and the capital inten-
sity? (LG3-6)
3-15 Liquidity Ratios Brenda’s Bar and Grill has current liabilities of $15 million. Cash makes
up 10 percent of the current assets and accounts receivable makes up another 40 percent
of current assets. Brenda’s current ratio is 2.1 times. Calculate the value of inventory listed
on the firm’s balance sheet. (LG3-1)
3-18 Asset Management and Debt Management Ratios Use the following information to
complete the balance sheet below: Sales are $8.8 million, capital intensity ratio is 2.10
times, debt ratio is 55 percent, and fixed asset turnover is 1.2 times. (LG3-2, LG3-3)
Assets Liabilities and Equity
Current assets $______ Total liabilities $______
Fixed assets ______ Total equity ______
Total assets $______ Total liabilities and equity $______
3-25 DuPont Analysis Last year, Stumble-on-Inn Inc. reported an ROE of 18 percent. The
firm’s debt ratio was 55 percent, sales were $15 million, and the capital intensity was 1.25
times. Calculate the net income for Stumble-on-Inn last year. (LG3-6)
