LO 2 5. Calculating Leverage Ratlos. Fincher, Inc., has a total debt ratio of .1
ID: 2819854 • Letter: L
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LO 2 5. Calculating Leverage Ratlos. Fincher, Inc., has a total debt ratio of .19. What is its debt- equity ratio? What is its equity multiplier? LO 2 6. Calculating Market Value Ratios. Rossdale, Inc., had additions to retained earnings for the year just ended of $534,000. The firm paid out $185,000 in cash dividends, and it has ending total equity of $7.45 million. If the company currently has 365,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? If the stock currently sells for $49 per share, what is the market-to-book ratio? The price-earnings ratio? If total sales were $15.4 million, what is the price-sales ratio? LO 3 7. DuPont Identity. If jPhone, Inc., has an equity multiplier of 1.83, total asset turnover of 1.65, and a profit margin of 5.2 percent, what is its ROE? LO 3 8. DuPont Identity. Jiminy Cricket Removal has a profit margin of 7.6 percent, total asset turnover of 1.73, and ROE of 17.2 percent. What is this firm's debt-equity ratio? LO 2 9. Calculating Average Payables Period. For the past year, Coach, Inc., had a cost of goods sold of $87,386. At the end of the year, the accounts payable balance was $19,472. How long on average did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply? LO 2 10. Equity Multiplier and Return on Equity. Shelton Company has a debt-equity ratio of.75. Return on assets is 6.9 percent, and total equity is $815,000. What is the equity multiplier? Return on equity? Net income? LO 3 11. Internal Growth. If Williams, Inc., has an ROA of 7.2 percent and a payout ratio of 25 percent, what is its internal growth rate?Explanation / Answer
6)
Total Current Year Earnings = Dividend Paid + Addtion to Retained Earnings
= 185000+534000
= 719000
So, Eanings per Share = Total Earnings/Total Shares Outstanding
= 719000/ 365000
= $ 1.97 per share
Dividend Per Share = Total Dividend Paid/ Total Shares Outstanding
= 185000/365000
= $ 0.51 per share
Book Value per Share = Total Equity/ Total Shares Outstanding
= 7450000/365000
$ 20.41 per Share
Market to book ratio = Market Price per share/ Book Value per Share
= 49/20.41
= 2.40
Price to Earnings Ratio = Market Price per Share/ Earnings per Share
= 49/1.97
= 24.87
Price to Sales Ratio = Price Per Share/ Sales Per Share
= 49/(15400000/365000)
= 49 / 42.19
= 1.16
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