NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting&F
ID: 2793512 • Letter: N
Question
NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting&Finance;) Corporate Finance (FINC 201) QUIZ01 Sept. 20,2017 Prof. Raja Nag Name: Maximum time: 15 minutes You are given the following information: MICROFRAME COMPUTER COMPANY Balance Sheet (as of 12-31-2016) ASSETS LIABILITIES&STOCKHOLDERS; EQUITY $40,000 Accounts Receivable 70,000 80,000 Accounts Payable Accrued Expenses Long-term debt $50,000 40,000 130,000 Inventory Common stock Retained Earnings Plant& Equipment 210,000 100,000 Total Assets: Total Liabilities& Equity: $400.000 MICROFRAME COMPUTER COMPANY Income Statement For the year ended December 31, 2016 s 720,000 Sales (all on credit) Cost of Goods Sold Gross Proft Sales and Administrative Expense Depreciation Operating Profit Interest Expense Earnings before Taxes Taxes (@ 30%) Net Income 220,000 - 20,000 160,000 144,000 43,200Explanation / Answer
Answer)
Debt / Equity = Total Debt / Total Equity = (130000) / (80000+100000) = 0.7222
Answer)
Inventory turnover ratio = Cost of good sold / Total inventory = 500000/ 80000 = 6.25
Answer) DSO = Accounts receiable / (Annual sales/365) = 70000 / (720000/365) = 35.49
Answer) Return on equity = Net Income / Total equity = 100800/180000 = 0.56 or 56%
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