Exam 3: Analyzing Financial Statements

You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the debt-to-equity ratio for the two firms.

Debt Management Ratios Tierre's Ts, Inc. reported a debt to equity ratio of 3 times at the end of 2011. If the firm's total assets at year-end are $15 million, how much of their assets is financed with equity?

Market Value Ratios Fancy Paws' year-end price on its common stock is $20. The firm has total assets of $40 million, the debt ratio is 40%, there is no preferred stock, and there are 2 million shares of common stock outstanding. Calculate the market-to-book ratio for Fancy Paws.

DuPont Analysis Last year Café Creations, Inc. had an ROA of 25%, a profit margin of 12%, and sales of $4 million. What is Café Creations' total assets?

A firm reported working capital of $5.5 million and fixed assets of $20 million. Its fixed asset turnover was 1.2 times. What was the firm's sales to working capital ratio?

Debt Management Ratios Will's Wheels, Inc. reported a debt-to-equity ratio of .65 times at the end of 2011. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have?

Market Value Ratios Lab R Doors' year-end price on its common stock is $40. The firm has total assets of $75 million, the debt ratio is 60%, there is no preferred stock, and there are 4 million shares of common stock outstanding. Calculate the market-to-book ratio for Lab R Doors.

A firm that is efficient in inventory management will have ____________.

Asset Management and Debt Management Ratios Use the following information to calculate current assets: Sales = $100 million, capital intensity ratio = .5 times, debt ratio = 30%, and fixed asset turnover ratio = 5 times.

The term "capital structure" refers to

The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the ____________.

Which of the following statements is correct?

Which of these statements is true?

Market Value Ratios You are considering an investment in Taylor's Hot Rods, Corp. During the last year the firm's income statement listed addition to retained earnings = $2.5 million and common stock dividends = $1.2 million. Taylor's year-end balance sheet shows common stockholders' equity = $10 million with 2 million shares of common stock outstanding. The common stock's market price per share = $45.00. What is Taylor's Hot Rods' book value per share and earnings per share? Calculate the market-to-book ratio and PE ratio.

Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 10% and a dividend payout ratio of 50%. What is the internal growth rate?

Internal Growth Rate Last year Poncho Villa Corporation had an ROA of 16% and a dividend payout ratio of 25%. What is the internal growth rate?

Firm A and Firm B have the same total assets, ROA and profit margin. However, Firm B has a higher debt ratio and interest expense than Firm A. Which of the following statements is correct?

Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of .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?

A firm has a profit margin of 12%; total asset turnover of .55 and an equity multiplier of 2.2. What is the firm's ROA and ROE?

This ratio measures the dollars of current assets available to pay each dollar of current liabilities.