1.) Personal After-Tax Corporate bonds issued by Johnson Corporation currently y
ID: 2652804 • Letter: 1
Question
1.) Personal After-Tax
Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two bonds?
2) Balance Sheet Analysis
Complete the balance sheet and sales information in the table that follows for J. White Industries using the following financial data:
Total assets turnover: 1.5
Gross profit margin on sales: (Sales - Cost of goods sold) / Sales = 25%
Total liabilities-to-assets ratio: 40%
Quick ratio: 0.80
Days sales outstanding (based on 365-day year): 36.5 days
Inventory turnover ratio: 3.75
Partial Income Statement
Information
Sales __________
Cost of goods sold __________
Balance Sheet
Cash __________ Accounts payable ___________
Accounts receivable __________ Long-term debt 50,000
Inventories __________ Common Stock ___________
Fixed Assets __________ Retained earnings ___________
Total Assets $400,000 Total liabilities and equity __________
Explanation / Answer
Sales 600000
COGS 450000
Balance Sheet
Cash 150000
AR 60165 Accounts Payable 110000
Inventories 160000 Long Term Debt 50000
Fixed Assets 29835 Common Stock 90000
Retained Earnings 150000
Total 400000 Total 400000
Asset Turnover = Sales/ Total Assets 1.5=Sales/400000 Sales = 600000 Gross Profit Margin= Sales- COGS/Sales .25= 600000-COGS/ 600000 COGS= 450000 Liabilities to assets= 40% Accounts Payable= 160000-50000= 110000 Liabilities/400000=40% Liabilities= 160000 Quick ratio= Current Assets-Inventories/ Liabilities Days sales outstanding= Accounts receivable/ sales*365 36.5= AR/ 600000*365 AR = 60165 Inventory Turnover= Sales/ Inventory 3.75= 600000/ inventory Inventory= 160000Related Questions
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