Chapter 003 Working with Financial Statements 6. A firm has total assets of $4$6
ID: 2814884 • Letter: C
Question
Chapter 003 Working with Financial Statements 6. A firm has total assets of $4$6,000 and total equity of $217.000. What is the debr-equity ratio? a. 48 b. .68 c. 1.10 d. 1.48 e. 2.10 . The Comer Store has sales of $72,510, total assets of $60,400, a debt-equity ratio of 1.2, and a profit margin of 3 percent. What is the equity multiplier? a. .20 b. .83 c. 1.83 d. 2.20 e. 3.60 8. Singletrak, Inc. has sales of $348,900, cost of goods sold of S294,300, and inventory of $41,200. What is the inventory turnover rate? a. 1.33 b. 4.28 c. 6.67 d. 7.14 e. 8.47 9. It takes Ted's Trucks 85 days, on average, to sell its inventory. Costs of goods sold for the year are $1.250,000. What is the average value of the firm's inventory? a. $14,706 b. $87,904 c. $155,706 d. $261,096 e. $291,096 10. A firm has $28,700 in receivables and $165,600 in total assets. The total asset turnover rate is 1.85 and the profit margin is 7 percent. What are the days' sales in receivables? a. 10.69 days b. 34.19 days c. 52.38 days d. 90.37 days e. 117.03 days 3-2Explanation / Answer
Answer 6.
Total Debt = Total Assets - Total Equity
Total Debt = $456,000 - $217,000
Total Debt = $239,000
Debt-Equity Ratio = Total Debt / Total Equity
Debt-Equity Ratio = $239,000 / $217,000
Debt-Equity Ratio = 1.10
Answer 2.
Equity Multiplier = 1 + Debt-Equity Ratio
Equity Multiplier = 1 + 1.20
Equity Multiplier = 2.20
Answer 3.
Inventory Turnover Ratio = Cost of Goods Sold / Inventory
Inventory Turnover Ratio = $294,300/ $41,200
Inventory Turnover Ratio = 7.14
Answer 4.
Days Sales in Inventory = 365 * Average Inventory / Cost of Goods Sold
85 = 365 * Average Inventory / $1,250,000
Average Inventory = $291,096
Answer 5.
Total Asset Turnover = Sales / Total Assets
1.85 = Sales / $165,600
Sales = $306,360
Days Sales in Receivable = 365 * Receivable / Sales
Days Sales in Receivable = 365 * $28,700 / $306,360
Days Sales in Receivable = 34.19 days
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