Quiz Question #4
A firm has $30,000 of inventory. If this represents 30 days of sales, what is the annual cost of goods
sold?
Quiz Question #5
Keller Cosmetics maintains a profit margin of 4 percent and a sales-to-assets ratio of 3.
a. What is its return on assets?
b. If its debt-to-equity ratio is1.0, its interest payments and taxes are each $10,000, and EBIT is
$40,000, what is the return on equity?
Quiz Question #6
A firm has a long-term debt-equity ratio of 0.4. Shareholders equity is $1 million. Current assets are
$200,000 and the current-ratio is 2.0. Long-term assets total $1.5 million. What is the ratio of debt to
total long-term capital?
Quiz Question #7
Magic Flutes has total receivables of $3,000, which represent 20 days’ sales. Average total assets are
$75,000. The firm’s profit margin is 5 percent. Find the firm’s sales-to-assets ratio and return-on-assets
Quiz Question #8
Consider this simplified balance sheet for Geomorph Trading
Current Assets
$100 $ 60
Current Liabilities
280
Long Term Debt
Long Term Assets
500
70
Other Liabilities
190
Equity
$600 $600
a. Calculate the ratio of debt to equity
b. What are Geomorph’s net working capital and total long-term capital? Calculate the
ratio of debt to total long-term capital.