Chap. 3 s High Road Transport has a current stock price of $5.60 For the past ye

Question

Chap. 3 s High Road Transport has a current stock price of $5.60 For the past year, the company had net $267 400, total equity of s992,300, sales of $1,511,000, and 750.000 share to-book ratio? A. 3.54 B. 3.81 C. 3.99 D. 4.47 E. 4.23 The Inside Door has total debt of $208,600, total equity of $343.560, and a rehum on equity of 13 27 What is the return on assets? d og A. 9.14 percent B. 8.26 percent C. 11.45 percent D. 9.61 percent ss Co E. 9.48 percent Chap. 16 7. Palm Beach Yachts has a line of credit with a local bank that permits it to borrow uo t $1.8 mionat time. The interest rate is 78 percent per month. The bank charges compound interesa percent of the amount borrowed be deposited into a non-interest-bearing account What is the efl interest rate on this loan? 160 x A 10.68 percent B. 10.43 percent C. 9.74 percent D. 10.29 percent E. 9.91 percent Chap. 17 8. Outdoors Woods has annual credit sales of $14.38 million. The average collection period is 12 days What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year A. $446,000 B. $524,000 C. $408,888 D. $472,767 E. $393,134

Explanation / Answer

1. Book to market ratio = market capitalisation/ total book value

= (750000*5.6)/992300 =4.23 therefore answer is part e 4.23

2. Return on assets = net income/total assetis

= 44590/(208600+343560) = 8.26% i.e., b

First let us calculate net income

Return on equity = net income/book value of equity*100

13.27/100 = net income /343560

Net income = (13.27*343560)/100 =45590

3. Average collection period = average receivables/ average sales*365

12/365 = average receivables/14.38

(12*14.36)/265 = average receivables =$ 472767

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