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33. Debt Management Ratios You are considering a stock investment in one of two firms
(LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt,
Inc. finances its $100 million in assets with $90 million in debt and $10 million in equity.
LotsofEquity, Inc. finances its $100 million in assets with $10 million in debt and $90 million in
equity. What are the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms?
34. Market Value Ratios Bree's Tennis Supply's market-to-book ratio is currently 9.4 times
and PE ratio is 20 times. If Bree's Tennis Supply's common stock is currently selling at $20.50 per
share, what is the book value per share and earnings per share?
35. Market Value Ratios Tina's Track Supply's market-to-book ratio is currently 4.5 times
and PE ratio is 10.5 times. If Tina's Track Supply's common stock is currently selling at $100 per
share, what is the book value per share and earnings per share?
36. DuPont Analysis If Epic, Inc. has an ROE = 25 percent, equity multiplier = 4, a profit
margin of 12 percent, what is the total asset turnover ratio?
37. DuPont Analysis If Apex, Inc. has an ROE = 10 percent, equity multiplier = 3, and profit
margin of 5 percent, what is the total asset turnover ratio?
38. DuPont Analysis Last year Café Creations, Inc. had an ROA of 25 percent, a profit margin
of 12 percent, and sales of $4 million. What is Café Creations' total assets?
39. DuPont Analysis Last year Mocha Java, Inc. had an ROA of 10 percent, a profit margin of
5 percent, and sales of $25 million. What is Mocha Java's total assets?
40. Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 10
percent and a dividend payout ratio of 50 percent. What is the internal growth rate?
3-27
41. Internal Growth Rate Last year Rain Repel Corporation had an ROA of 5 percent and a
dividend payout ratio of 90 percent. What is the internal growth rate?
42. Internal Growth Rate Last year Poncho Villa Corporation had an ROA of 16 percent and
a dividend payout ratio of 25 percent. What is the internal growth rate?
43. Sustainable Growth Rate Last year Umbrellas Unlimited Corporation had an ROE of 16.5
percent and a dividend payout ratio of 40 percent. What is the sustainable growth rate?
44. Sustainable Growth Rate Last year Rain Repel Corporation had an ROE of 10 percent
and a dividend payout ratio of 80 percent. What is the sustainable growth rate?
45. Liquidity Ratios Burt's TVs has current liabilities of $25 million. Cash makes up 40
percent of the current assets and accounts receivable makes up another 20 percent of current
assets. Burt's current ratio = 0.85 times. What is the value of inventory listed on the firm's
balance sheet?
46. Liquidity Ratios Ernie's Mufflers has current liabilities of $45 million. Cash makes up 5
percent of the current assets and accounts receivable makes up another 50 percent of current
assets. Ernie's current ratio = 1.5 times. What is the value of inventory listed on the firm's
balance sheet?
47. Liquidity Ratios You have the following information on Marco's Polo Shop: total liabilities
and equity = $205 million, current liabilities = $45 million, inventory = $60 million, and quick ratio
= 2.4 times. Using this information, what is the balance for fixed assets on Marco Polo's balance
sheet?
48. Liquidity Ratios You have the following information on Olivia's Bridle Shop: total
liabilities and equity = $65 million, current liabilities = $10 million, inventory = $15 million, and
quick ratio = 3 times. Using this information, what is the balance for fixed assets on Olivia's
balance sheet?
49. Liquidity and Asset Management Ratios Oasis Products, Inc. has current liabilities =
$10 million, current ratio = 1.5 times, inventory turnover ratio = 12 times, average collection
period = 20 days, and sales = $100 million. What is the value of their cash and marketable
securities?
50. Liquidity and Asset Management Ratios Green Products, Inc. has current liabilities =
$40 million, current ratio = 2.4 times, inventory turnover ratio = 8 times, average collection period
= 40 days, and sales = $320 million. What is the value of their cash and marketable securities?
51. Asset Management and Profitability Ratios You have the following information on
Universe It Ts, Inc.: sales to working capital = 10 times, profit margin = 25 percent, net income
available to common stockholders = $3 million, and current liabilities = $1 million. What is the
firm's balance of current assets?
52. Asset Management and Profitability Ratios You have the following information on Zip's
Diner, Inc.: sales to working capital = 8 times, profit margin = 5 percent, net income available to
common stockholders = $20 million, and current liabilities = $4 million. What is the firm's
balance of current assets?
53. Asset Management and Debt Management Ratios Use the following information to
calculate current assets: sales = $12 million, capital intensity ratio = 4 times, debt ratio = 45
percent, and fixed asset turnover ratio = 2.5 times.
54. Asset Management and Debt Management Ratios Use the following information to
calculate current assets: sales = $100 million, capital intensity ratio = 0.5 times, debt ratio = 30
percent, and fixed asset turnover ratio = 5 times.
55. Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of 0.5
times at the end of 2011. If the firm's total assets at year-end are $50 million, how much of their
assets is financed with equity?
56. Debt Management Ratios Nicole's Neon Signs, Inc. reported a debt to equity ratio of 1.9
times at the end of 2013. If the firm's total assets at year-end are $100 million, how much of their
assets is financed with equity?
