Chapter 3 – Assessment Questions
(Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
Student name: Ngo Gia Minh
Class: Advanced Finance 60B
ID: 11183333
1. SDJ, Inc., has net working capital of $3,320, current liabilities of $4,550, and inventory of
$4,600. What is the current ratio?
We have the formula: net working capital = current assets – current liabilities
$3,320
= current assets - $4,550
current assets = $3,320 + $4,550
current assets = $7,870
Moreover, current ratio = current assets/current liabilities
= $7,870/$4,550
= 1,73 times
2. SDJ, Inc., has net working capital of $3,320, current liabilities of $4,550, and inventory of
$4,600. What is the quick ratio?
We have the formula: quick ratio = (current assets – inventory)/current liabilities
= ($7,870 - $4,600)/$4,550
= $3,270/$4,550
= 0.72 times
3. The King Corporation has ending inventory of $483,824, and cost of goods sold for the year
just ended was $4,233,460. What is the inventory turnover?
4. The King Corporation has ending inventory of $483,824, and cost of goods sold for the year
just ended was $4,233,460. What are the days' sales in inventory?
Question 3:
We have the formula: inventory turnover = cost of goods sold/inventory
= $4,233,460/$483,824
= 8.75 times
Question 4:
We have the formula: days’ sales in inventory = 365 days/inventory turnover
= 365/8.75
= 41.71 days
5. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. What are earnings
per share?
We need to know that: net income = returned earnings + dividends
= $260,000 + $195,000
= $455,000
So, we have the formula: earnings per share = net income/shares outstanding
= $455,000/130,000 shares
= $3.5
6. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. What are dividends
per share?
We have the formula: dividends per share = dividends/share outstanding
= $195,000/130,000 shares
= $1.5
7. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. What is the book
value per share?
We have the formula: book value per share = total equity/shares outstanding
= $5,000,000/130,000 shares
= $38.46
8. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. If the stock currently
sells for $73 per share, what is the market-to-book ratio?
We have the formula: market-to-book ratio = price per share/book value per share (answer from
question 7)
= $73/$38.46
= 1.89
9. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. What is the priceearnings ratio?
We have the formula: price earnings ratio = price per share (from question 8)/earning per share
(answer from question 5)
= $73/$3.5
= 20.86 times
10. Makers Corp. had additions to retained earnings for the year just ended of $260,000. The
firm paid out $195,000 in cash dividends, and it has ending total equity of $5.00 million. The
company currently has 130,000 shares of common stock outstanding. If the company had
sales of $4.16 million, what is the price-sales ratio?
We need to know sales per share = sales/shares outstanding
= $4,160,000/130,000 shares
= $32
We have the formula: price-sales ratio = price per share (from question 8)/sales per share
= $73/$32
= 2.28 times