VoyForums
[ Show ]
Support VoyForums
[ Shrink ]
VoyForums Announcement: Programming and providing support for this service has been a labor of love since 1997. We are one of the few services online who values our users' privacy, and have never sold your information. We have even fought hard to defend your privacy in legal cases; however, we've done it with almost no financial support -- paying out of pocket to continue providing the service. Due to the issues imposed on us by advertisers, we also stopped hosting most ads on the forums many years ago. We hope you appreciate our efforts.

Show your support by donating any amount. (Note: We are still technically a for-profit company, so your contribution is not tax-deductible.) PayPal Acct: Feedback:

Donate to VoyForums (PayPal):

[ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 1, [2] ]

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Date Posted: 08:04:50 02/14/03 Fri
Author: Dr. D.
Subject: Assignment 5.3 (part 2, a-f)

Several of you have asked questions about Problem 5.3 (part 2). Here it is:

A) Get AR using ACP and Slaes (assume all sales are credit)
==> AR = $100

B & C) Since The numerator in the Quick ratio is Cash + AR (everything but Inventory), (Cash + AR) = 2x Current Liabilities ==> CL=$150

Using the Current Ratio, Current Assets = 3x150 = $450


D)To get ROA, we need Net Income and Total Assets. Net Income is given. Total Assets = Current Assets (from above) + Net Fixed Assets (given) = $450 + $600 = $1,050
Therefore, ROA = 60/1050 = 5.71$

E) Using ROE, ROA, and the Dupont Identity, 12=5.71 x 1/(1-DR) ==> The Debt Ratio = 52.42% ==> Total Debt = 1050 x 52.42% = $550
Since Current Liabilities = $150, Long Term Debt = $400

F) Common Equity = Total Assets - Total Liabilities = $1050 - $550 = $500

[ Next Thread | Previous Thread | Next Message | Previous Message ]
[ Contact Forum Admin ]

Forum timezone: GMT-8
VF Version: 3.00b, ConfDB:
Before posting please read our privacy policy.
VoyForums(tm) is a Free Service from Voyager Info-Systems.
Copyright © 1998-2019 Voyager Info-Systems. All Rights Reserved.