Fin 515 Week 2 Hw

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2-29. In fiscal year 2011, Starbucks Corporation (SBUX) had revenue of $11.70 billion, gross profit of $6.75 billion, and net income of $1.25 billion. Peet’s Coffee and Tea (PEET) had revenue of $372 million, gross profit of $72.7 million, and net income of $17.8 million. a. Compare the gross margins for Starbucks and Peet’s. b. Compare the net profit margins for Starbucks and Peet’s. c. Which firm was more profitable in 2011? Answer: a) Gross profit margin: Gross profit margin is determined by dividing the gross profit by sales. Gross margin = Gross profit/Sales SBUX: Gross margin = Gross profit/Sales =$6,750,000,000/$11,700,000,000 =57.69% PEET: Gross margin = Gross profit/Sales =$72,700,000/$372,000,000 =19.54% b) Net profit margin: Net profit margin is determined by dividing net income by sales. Net profit margin = Net income/Sales SBUX: Net profit margin = Net income/Sales =$1,250,000,000/$11,700,000,000 =10.68% PEET: Net profit margin = Net income/Sales =$17,800,000/$372,000,000 =4.78% c) In 2011, SBUX was more profitable compared to PEET because the net margin is higher for SBUX when compared to PEET. In fact, SBUX has higher gross and net profit margin than PEET. 30. In mid-2012, Apple had cash and short-term investments of $27.65 billion, accounts receivable of $14.30 billion, current assets of $51.94 billion, and current liabilities of $33.06 billion. a. What was Apple’s current ratio? b. What was Apple’s quick ratio? c. What was Apple’s cash ratio? d. In mid-2012, Dell had a cash ratio of 0.67, a quick ratio of 1.11 and a current ratio of 1.35. What can you say about the asset liquidity of

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