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Homework answers / question archive / University of North Georgia, Dahlonega FINC 3440 Exam 3 1)If a company’s equity multiplier equals 1

University of North Georgia, Dahlonega FINC 3440 Exam 3 1)If a company’s equity multiplier equals 1

Finance

University of North Georgia, Dahlonega

FINC 3440

Exam 3

1)If a company’s equity multiplier equals 1.32, what is its debt ratio? A)  0.28

B)            0.17

C)            0.36

D)           0.42

E)            0.24

 

 

 

  1. What does the market/book ratio measure?
    1. Liquidity
    2. Asset utilization
    3. Capital structure
    4. Profitability
    5. Market value

 

  1. A company’s assets consist of $123,456 of cash, $237,543 of accounts receivable, $348,876 of inventory, and $1,456,987 of plant and equipment. Its liabilities consist of $187,694 of accounts payable,

$56,895 of accruals, and $622,156 of long-term debt.

The company’s annual sales are $3,678,775, its earnings before interest and taxes are $551,816, its earnings before taxes are $489,601, and its net income is $293,760. What are the company’s days of sales outstanding?

A)            23.6

 

B)            21.5

C)            17.6

D)            32.8

E)            29.1

 

 

  1. A company’s assets consist of $123,456 of cash, $237,543 of accounts receivable, $348,876 of inventory, and $1,456,987 of plant and equipment. Its liabilities consist of $187,694 of accounts payable,

$56,895 of accruals, and $622,156 of long-term debt.

The company’s annual sales are $3,678,775, its earnings before interest and taxes are $551,816, its earnings before taxes are $489,601, and its net income is $293,760. What is the company’s current ratio?

A)           4.1

B)            1.5

C)            2.4

D)           3.3

E)            2.9

 

 

 

 

 

 

 

  1. A company’s assets consist of $15,775 of cash, $45,865 of accounts receivable, $87,234 of inventory, and $89,556 of plant and equipment. Its liabilities consist of $23,667 of accounts payable, $12,667 of accruals, and $66,191 of long-term debt.

The company’s annual sales are $357,445, it paid $8,605 of interest, its earnings before taxes are

$37,863, and its net income is $24,611. What is the company’s times interest earned?

A)           4.9

B)            5.4

C)            3.8

 

D)           2.8

E)            3.4

 

 

 

 

 

  1. A company’s assets consist of $15,775 of cash, $45,865 of accounts receivable, $87,234 of inventory, and $89,556 of plant and equipment. Its liabilities consist of $23,667 of accounts payable, $12,667 of accruals, and $66,191 of long-term debt.

The company’s annual sales are $357,445, it paid $8,605 of interest, its earnings before taxes are

$37,863, and its net income is $24,611. What is the company’s return on assets?

A)           12.3%

B)            14.5%

C)            11.3%

D)           10.3%

E)            13.4%

 

 

 

 

 

 

 

 

 

  1. A company’s assets consist of $15,775 of cash, $45,865 of accounts receivable, $87,234 of inventory, and $89,556 of plant and equipment. Its liabilities consist of $23,667 of accounts payable, $12,667 of accruals, and $66,191 of long-term debt.

The company’s annual sales are $357,445, it paid $8,605 of interest, its earnings before taxes are

$37,863, and its net income is $24,611. What is the company’s debt ratio?

A)           43.0%

B)            24.5%

C)            51.8%

D)           38.1%

 

E)            63.4%

 

 

 

 

 

 

 

  1. A company’s assets consist of $150,000 of cash, $350,000 of accounts receivable, $500,000 of inventory, and $1,700,000 of plant and equipment. Its liabilities consist of $250,000 of accounts payable,

$100,000 of accruals, and $1,000,000 of long-term debt.

The company’s annual sales are $4,000,000, it paid $150,000 of interest, its earnings before taxes are $350,000, and its net income is $200,000. In its industry, the average profit margin is 5.00%, the average total asset turnover is 1.67, and the average equity multiplier is 2.00. Using DuPont analysis, determine if the company’s return on equity is above or below the industry average and what factor causes the difference?

    1. Above, profit margin
    2. Below, profit margin
    3. Below, total asset turnover
    4. Above, total asset turnover
    5. Below, equity multiplier

 

 

 

 

 

  1. A company has $2.5 million of debt outstanding on which it pays interest of 8% per year. The company’s annual revenues are $10 million, its tax rate is 35%, and its profit margin is 4.2%. What is the company’s times interest earned?

A)           4.2

B)            4.4

C)            4.6

D)           4.8

E)            5.0

 

 

 

 

  1. A company has a return on assets of 4% per year, its net income is $278,667, its annual interest expense is $276,443, and its tax rate is 38%. What is the company’s basic earnings power ratio?

A)           20.7%

B)            27.1%

C)            25.2%

D)           22.4%

E)            19.1%

 

 

 

 

 

 

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