DSO = Receivables / Ave. sales per day Receivables= DSO * Ave. sales per day = 20 * 20,000 Receivables= $400,000 (3-2) Debt Ratio: Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Debt ratio = 1 – (1 / Equity multiplier) Debt ratio = 1 – (1/2.5) = 1 - .40 = .60 Debt ratio = 60% (3-3) Market/Book Ratio: Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
Ans: DSO (Days Sales Outstanding) = Accounts Receivables/Average Sales per day Accounts Receivables = 20 * 20000 = $400,000 (3-2) Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debtratio? Ans: Equity Multiplier = 2.5 Therefore Equity Ratio = 1/EM Equity Ratio = 1/2.5 = 0.40 Debt Ratio + Equity Ratio = 1 Therefore Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60 = 60% (3-3) Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total assets.
Accounting and legal fees $150,000 Advertising $125,000 Freight-out $65,000 Interest $80,000 Loss on sale of long-term investments $35,000 Officers’ salaries $200,000 Rent for office space $160,000 Sales salaries and commissions $110,000 One half of the rented premises are occupied by the sales department. How much of the expenses listed above should be included in Perry’s general and administrative expenses for 201X? (TCO C) An income statement shows “income before income taxes and extraordinary items” in the amount of $3,000,000. The income taxes payable for the year are $1,500,000, including $260,000 that is applicable to an extraordinary gain. Thus, what is the “income before extraordinary items”?
Present Value | Rate per period | 2.246 | 0.552 | | Cash Inflow | 8000 | 10000 | | Present Value | 17968 | 5520 | 23488 | 2. Cash flow calculations and net present value On January 2, 20X1, Bruce Greene invested $10,000 in the stock market and purchased 500 shares of Heartland Development, Inc. Heartland paid cash dividends of $2.60 per share in 20X1 and 20X2; the dividend was raised to $3.10 per share in 20X3. On December 31, 20X3, Greene sold his holdings and generated proceeds of $13,000. Greene uses the net-present- value method and desires a 16% return on investments. a.
Chapter 01 The Equity Method of Accounting for Investments Multiple Choice Questions 1. Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2008 and paid dividends of $60,000 on October 1, 2008. How much income should Gaw recognize on this investment in 2008? A.
c. Internal common equity where the current market price of the common stock is $43.50. The expected dividend this coming year should be $3.25, increasing thereafter at a 7% annual growth rate. The corporation’s tax rate is 34%. d. A preferred stock paying a 10% dividend on a $125 par value. If a new issue is offered, flotation costs will be 12% of the current price of $150.
Dividends _____. represent an expense and are an operating activity represent an obligation and are an operating activity represent a distribution of earnings and are a financing activity represent an asset and are an investing activity 3. Below is a partial list of account balances for LBJ Company: Cash $15,000 Prepaid insurance 5,000 Accounts receivable 2,500 Accounts payable 3,000 Notes payable 6,000 Common stock 10,000 Dividends 500 Revenues 15,000 Expenses 13,000 What did LBJ Company show as total debits? $34,000 $36,000 $70,000 $31,000 4. Under the accrual basis of accounting, revenues are recorded and reported _____.
| 0.75 | | | | | General Feedback: | Expected return | 40.0% | Standard deviation | 30.0% | Coefficient of variation = std dev / expected return = | 0.75 | | | | Score: | 0/10 | | 2. Chapter 8 - Risk and Rates of Return Question MC #119 Bill Dukes has $100,000 invested in a 2-stock portfolio.
Calculate the following financial ratios. TIP: If you don't remember how to calculate financial ratios, review the Calculating Financial Ratio pages from Section 9, Lesson 2 of this course. a. A company makes a net profit before tax of $12,000 and has $20,000 in total equity. Calculate the company's return on equity as a percentage.
This was the initial amount invested by two of Neverfail founding employees. 4,796,000 shares of common stock were issued at $0.01 par value. After Angel Investment: According to the case, George Lawrence and another Seattle Angel acquired 800,000 shares of convertible preferred stock at $1 per share. This gives a total of $800,000. With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000.