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Problem 1
Particulars M N Sales $1,080 $1,215 Net Income 54 122 Investment 180 405
a. Which company has the higher profit margin?
b. Which company has the higher investment turnover? c. Based solely on the data given, in which firm would you prefer to invest? efer to invest? Problem 2
The treasurer of Gould's Stores, Inc was interested in what effect, if any, new credit terms have ha The usual 30-day payment period was shortened to 20 days in an attempt to reduce the investmen The following information for the current year and the preceding year(prior to the payment period
What effect has the new credit policy apparently had?
w credit terms have had on collections of customer accounts. reduce the investment in accounts receivable. to the payment period change) is available: Problem No 3
Tara Whitney was interested in controlling her company's inventory because
she knew that excess inventories were expensive in that they tied up funds. On the other hand, insufficient inventory levels could result in lost sales. Whitney obtained the following inventory information from her trade associations, which reported average figures for companies similar to hers:
Days' Inventory 38 days
Inventory Turnover 11 times
Whitney had the following information from last year, which she considered to be ty
How does Tara Whitney's company's inventory compare with that of other similar co ry because up funds.
ade associations,
onsidered to be typical year for her company.
of other similar companies?
PROBLEM NO 5
Dupont framework for four industries are presented below:
Assets to Equity Ratio Asset turnover
Retail Jewelry stores 1.427 1.777 Retail grocery stores 1.91 5.844 Electric service companies 2.639 0.601 Legal services firms 1.684 3.468
Compute: Return on Assets Retun on Equity Return on Sales Return on Assets Return on Equity 0.053 2.535779 0.134396287 0.016 11.16204 0.17859264 0.063 1.586039 0.099920457 0.087 5.840112 0.508089744 PROBLEM NO 5
Dupont framework for four industries are presented below:
Assets to Equity Ratio Asset turnover Return on Sales
Compute: Retail Jewellry Retail Grocery Electric Service
Return on Assets 9% 9% 4% Retun on Equity 13% 18% 51% Legal Services 30% 51% PROBLEM 6
The following information for Francis Company for 2006 has been established:
Price-earnings ratio 42 Stockholders equity $100,000 Debt Ratio 75% Net income $32,000 Asset turnover 0.8 Current liabilities $115,000 Longterm assets $310,000
Compute: Return on Equity Total Assets Sales Return on Sales Current ratio Total Market value of Shares Book to Market Ratio
What factors might explain the fact that the book-to-market ratio is so low for Francis company? The Philip Company
2006 2005 2004
Current Assets 34,000 30,000 37,000 Total Assets 130,000 110,000 90,000 Current Liabilities 25,000 20,000 20,000 Total Liabilities 45,000 40,000 45,000 Stock Holders Equity 85,000 70,000 45,000 Sales 550,000 430,000 300,000 Net Income 35,000 22,000 20,000
Compute Return on Equity 41% 31% 44% Return on Sales 6% 5% 7% Asset Turnover 27% 20% 22% Asset to Equity 153% 157% 200% Problem 4
Ralite Company had net income for the year of $20 million. It had 2 million shares of The year end market price of $82 a share. Dividends during the year were $5.74
1. P-E ratio 2. Dividend yield 3. Dividend payout million shares of common stock outstanding. r were $5.74
