l. Nimoy Nautalytics has a return on sales of 9%, a total assets turnover ratio

Question

l. Nimoy Nautalytics has a return on sales of 9%, a total assets turnover ratio of 1.5, debt of S4 million and assets of S14 million. What is the firm's return on equity? a. 16.3% b. 18.9% C. 31.2% d. 33.290 e. 36.0% 3. Last year, Shatner Shoes had negative cash flow from operations; however, cash on its balance sheet increased. Which of the following could explain this? a. The company repurchased some of its common stock b. The company had large depreciation and amortization expenses c. The company issued a large amount of long-term debt. d. The company dramatically increased its capital expenditures. e. All of the statements above are correct. 5. Simon C per year, sales of $400,000, a tax rate of 40 percent, and a profit margin of 30 percent. What is the firm's times interest earned ratio? s has total interest charges o f S50,000 b. 6x c. 8x d. 9x e. none of the above 7. A fire has destroyed many of the financial records at Fortes Associates. You are assigned to piece together information to prepare a financial report. You have found that the firm's return on equity is 24 percent and its debt ratio is .55. What is its return on assets? a 4.90% b. 8.40% 10.80% d. 12.80% e 15.60%

Explanation / Answer

As per chegg guidelines when there are more than one question then we have to answer first question Calculation of return on equity: Turnover= assets*assets turnover ratio                    = 14*1.5=21 Turnover is $21 million Equity= Total assets- debt             = 14-4= 10 Equity= $10 million Net income= Turnover* return on sales               =21*0.09=1.89 Net income= $1.89 million Return on equity= Net Income/ equity*100                                   = 1.89/10*100=18.9% So correct answer is b) 18.9%

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