84) Upriver Tours has balance sheet values of: Inventory $70,500; accounts receivable $50,700;
accounts payable $58,900; cash $32,300, notes payable $20,000, long-term debt $134,700, and
net fixed assets $504,500. What is the current ratio?
A) 1.95
B) .95
C) 2.11
D) 1.98
E) .98
85) Brewster Mills has total revenues of $684,350, costs of goods sold of $472,500, net income
of $11,520, and average inventory of $91,600. What is the days’ sales in inventory?
A) 69.84 days
B) 70.76 days
C) 71.51 days
D) 5.16 days
E) 4.08 days
86) Jones Mfg. has current assets of $26,900, net working capital of $8,200, long-term debt of
$21,500, and total equity of $57,800. What is the equity multiplier?
A) 1.70
B) 1.59
C) 1.66
D) 1.80
E) 1.99
87) Highland Lumber has net sales of $642,100, depreciation of $138,400, interest expense of
$15,600, cost of goods sold of $409,800, and taxes of $16,400. What is the cash coverage ratio?
A) 11.06
B) 6.02
C) 13.79
D) 14.89
E) 8.78
88) Southern Foods has net income of $39,900, net sales of $318,600, total assets of $663,000,
common stock of $106,800 with a par value of $1 per share, and retained earnings of $224,400.
The stock has a market value of $5.45 per share. What is the price-earnings ratio?
A) 17.12
B) 19.94
C) 12.82
D) 14.59
E) 16.64
89) Catherine’s Consulting paid dividends of $3,300 and total equity of $39,450. The debt-equity
ratio is 1 and the plowback ratio is 40 percent. What is the return on assets?
A) 6.24 percent
B) 6.09 percent
C) 7.23 percent
D) 6.97 percent
E) 5.72 percent
90) Mountain Top Markets has total assets of $48,700, net working capital of $1,100, and
retained earnings of $21,200. The firm has 12,500 shares of stock outstanding with a par value of
$1 per share and a market value of $7.10 per share. The stock was originally issued to the firm’s
founders at par value. What is the market-to-book ratio?
A) 3.19
B) 2.22
C) 2.78
D) 3.03
E) 2.63
91) Georgetown Supply has sales of $318,200, net income of $41,400, current assets of
$118,400, net fixed assets of $238,300, net working capital of $18,900, and long-term debt of
$175,000. What is the equity multiplier?
A) 1.71
B) 4.34
C) 1.44
D) 3.82
E) 2.92
92) Black Stone Mills has an enterprise value ratio of 9.8, a profit margin of 6.5 percent, sales of
$946,200, costs of $631,400, depreciation of $17,900, interest expense of $4,500, and a total tax
rate of 23 percent. What is the value of the enterprise?
A) $3,102,900
B) $3,085,040
C) $2,748,300
D) $3,206,780
E) $2,918,640
93) Riverton Stores is all-equity financed and has net sales of $217,800, taxable income of
$32,600, a return on assets of 11.5 percent, a tax rate of 21 percent, and total debt of $63,700.
What are the values for the three components of the DuPont identity?
A) 11.82 percent; .9725; 1.3975
B) 11.82 percent; 1.0282; 1.3975
C) 11.82 percent; .9725; .7156
D) 10.24 percent; 1.0282; .7156
E) 10.24 percent; 1.0282; 1.3975
94) Kelso’s has a return on equity of 16.2 percent, a debt-equity ratio of 44 percent, a capital
intensity ratio of 1.08, a current ratio of 1.25, and current assets of $138,000. What is the profit
margin?
A) 12.15 percent
B) 9.72 percent
C) 7.48 percent
D) 15.19 percent
E) 13.69 percent
95) Western Wear has total sales of $642,100, EBIT of $93,900, net income of $50,800, current
assets of $153,500, total assets of $658,000, current liabilities of $78,900, and total liabilities of
$213,600. What are the values of the three components of the DuPont identity?
A) 7.91 percent; 1.02; 1.48
B) 8.57 percent; 1.02; .68
C) 7.91 percent; .98; 1.48
D) 11.43 percent; .98; .68
E) 11.43 percent; 1.02; 1.48
96) Frederico’s has a net income of $29,600, a total asset turnover of 1.4, total assets of
$318,600, and a debt-equity ratio of .35. What is the return on equity?
A) 16.72 percent
B) 8.40 percent
C) 12.54 percent
D) 14.67 percent
E) 17.56 percent
97) JB Markets has sales of $848,600, net income of $94,000, dividends paid of $28,200, total
assets of $913,600, and current liabilities of $78,900. Assume that all costs, assets, and current
liabilities change spontaneously with sales. The tax rate and dividend payout ratios remain
constant. If the firm’s managers project a firm growth rate of 15 percent for next year, what will
be the amount of external financing needed to support this level of growth? Assume the firm is
currently operating at full capacity.
A) $49,535
B) $68,211
C) −$10,406
D) $13,909
E) $32,408
98) The Lumber Mill has total assets of $591,600, current liabilities of $49,700, dividends paid
of $12,000, net sales of $68,400, and net income of $55,400. Assume that all costs, assets, and
current liabilities change spontaneously with sales. The tax rate and dividend payout ratios
remain constant. If the firm’s managers project a firm growth rate of 6 percent for next year, what
will be the amount of external financing needed to support this level of growth? Assume the firm
is currently operating at full capacity.
A) $3,200
B) −$13,490
C) −$17,520
D) $15,640
E) $16,380
99) Green Lumber has total sales of $387,200 on total assets of $429,600, current liabilities of
$45,000, and $24,000 of dividends paid on net income of $57,700. Assume that all costs, assets,
and current liabilities change spontaneously with sales. The tax rate and dividend payout ratios
remain constant. If the firm’s managers project a firm growth rate of 12 percent for next year,
what will be the amount of external financing needed to support this level of growth? Assume
the firm is currently operating at full capacity.
A) $11,706
B) $14,350
C) $9,911
D) $5,667
E) $8,408
100) Deep Falls Timber has net sales of $642,100, net income of $50,800, dividends paid of
$12,700, total assets of $658,000, and total equity of $444,400. What is the internal growth rate?
A) 5.83 percent
B) 6.24 percent
C) 6.15 percent
D) 5.18 percent
E) 7.70 percent
101) Narrow Falls Lumber has total assets of $913,600, total debt of $424,500, net sales of
$848,600, and net income of $94,000. The tax rate is 21 percent and the dividend payout ratio is
30 percent. What is the firm’s sustainable growth rate?
A) 13.97 percent
B) 14.46 percent
C) 15.54 percent
D) 12.63 percent
E) 14.91 percent
102) The Blue Giant has a profit margin of 6.2 percent and a dividend payout ratio of 40 percent.
The capital intensity is 1.08 and the debt-equity ratio is .54. What is the sustainable rate of
growth?
A) 6.30 percent
B) 5.53 percent
C) 5.60 percent
D) 6.41 percent
E) 5.89 percent
103) You are comparing the common-size financial statements for two firms in the same industry
that have very similar operations. You note that their sales revenues are similar in dollar value
but yet the common-size EBIT for one firm is 30 percent compared to only 26 percent for the
other firm. What are some possible explanations for this difference given the strong similarities
of the two firms?
104) Which is a more meaningful measure of profitability for a firm, return on assets or return on
equity? Why?
105) A retail store has days’ sales in inventory of 68 days and an average collection period of 32
days. The firm pays its suppliers in an average of 42 days, on average. Taken together, what do
these average values imply about the firm’s operations and its cash flows?
106) Suppose a firm calculates its external financial need for a growth rate of ten percent and
finds that the need is a negative value. What are the firm’s options in this case?
107) New Tek has a sustainable growth rate of 11.2 percent. However, the firm’s managers are
determined that the firm should grow by at least 20 percent next year. What must the firm do if
the managers are to reach their desired level of growth for the firm?
108) State the assumptions that underlie the internal growth rate and interpret what that rate
means.