1) The Global Network has sales of $424580, cost of goods sold of $253865, and i

Question

1) The Global Network has sales of $424580, cost of goods sold of $253865, and inventory of $57994. What is the inventory turnover rate? Round your answer to the nearest hundredth.

2) The common stock of The Burger Hut is selling for $19.11 a share. The company has earnings per share of $1.3 and a book value per share of $6.7. What is the market-to-book ratio?  Round your answer to the nearest hundredth.

3)The Inside Door has total debt of $79922, total equity of $219525, and a return on equity of 13.5 percent. What is the return on assets?  Input your answer as a decimal rounded to 4 places (i.e., 1% = 0.0100).

4)Valentino's maintains a constant debt-to-assets ratio of 0.78, with total assets of $40871. Its plowback ratio is 0.51, and net income is $6665. What is the sustainable growth rate? Input your answer as a decimal rounded to 4 places (i.e., 1% = 0.0100).

5)Friendly's Shoe Store has earnings before interest and taxes of $27172 and net income of $9903. The tax rate is 34 percent. What is the times interest earned ratio? Round your answer to the nearest hundredth.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Inventory Turnover Rate = Cost of Goods Sold/Inventory = 253865/57994 = 4.38 times

Part B:

Market to Book Ratio = Market Price Per Share/Book Price Per Share = 19.11/6.7 = 2.85

Part C:

Return on Equity = Net Income/Total Equity

13.5% = Net Income/219525

Net Income = 219525*13.5% = 29635.88

Return on Assets = Net Income/Total Assets = 29635.88/(219525 + 79922) = .0990

Part D:

Debt to Total Assets Ratio = Debt/Total Assets

.78 = Debt/40871

Debt = 40871*.78 = 31879.38

Equity = Total Assets - Debt = 40871 - 31879.38 = 8991.62

Return on Equity = Net Income/Equity*100 = 6665/8991.62*100 = 74.12%

Sustainable Growth Rate = Return on Equity*(Plow Back Ratio) = 74.12%*(.51) = .3780

Part E:

Net Income = 9903

Earnings Before Taxes (9903/(1-.34)) = 15004.55

Income Before Interest andTaxes = 27172

Interest (Income Before Taxes - Earnings Before Taxes) = 27172 - 15004.55 = 12167.45

Time Interest Earned Ratio = EBIT/Total Interest = 27172/12167.45 = 2.23

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.