Exam 3: Analyzing Financial Statements

Debt Management Ratios Paige's Purses, Inc. reported a debt to equity ratio of 2.4 times at the end of 2011. If the firm's total assets at year-end are $27 million, how much of their assets is financed with equity?

A firm reported sales of $10 million. It had a debt ratio of 40% and total debt amounted to $3 million. What was the firm's capital intensity ratio?

Liquidity Ratios The top part of Mars, Inc.'s 2008 balance sheet is listed below (in millions of dollars). What are Mars, Inc.'s Current ratio, Quick ratio, and Cash ratio for 2008?

A firm has an ROA of 12% and an ROE of 52%. What is the firm's equity multiplier?

Which of these is NOT considered a coverage ratio?

Describe the difference between the internal growth rate and the sustainable growth rate.

Liquidity Ratios The top part of Rammy's Inc.'s 2008 balance sheet is listed below (in millions of dollars). What are Rammy's Inc.'s Current ratio, Quick ratio, and Cash ratio for 2008?

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?

What is the debt ratio for a firm with an equity multiplier of 3.5?

Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 2 times at the end of 2011. If the firm's total debt at year-end was $10 million, how much equity does Trina's Trikes have?

Which of the following activities will increase a firm's current ratio?

Sustainable Growth Rate You have located the following information on Greenwich Company: debt ratio = 60%, capital intensity ratio = 0.75 times, profit margin = 13.5%, and dividend payout ratio = 80%. What is the sustainable growth rate for Greenwich?

Asset Management and Profitability Ratios You have the following information on Zip's Diner, Inc.: sales to working capital = 8 times, profit margin = 5%, net income available to common stockholders = $20 million, and current liabilities = $4 million. What is the firm's balance of current assets?

This measures the operating return on the firm's assets, irrespective of financial leverage and taxes.

This ratio measures the percentage of total assets financed by debt.

Which is true? Ratio analysis:

These ratios measure the extent to which the firm uses debt (or financial leverage) versus equity to finance its assets.

This ratio measures the number of dollars of operating earnings available to meet the firm's interest dollars and other fixed charges.

Which one of the following is unlikely to have a high capital intensity ratio?

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2011: net income = $500,000, total debt = $12 million, and debt ratio = 40%. What is Tikki's ROE for 2011?