Quiz 07Q - Ch3part3-2 - Quiz, homework, finance 311, edition 13th year 2021 PDF

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Quiz, homework, finance 311, edition 13th year 2021...

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In-Class Quiz 7 (Ch 3 – part3) Refer to Textbook, answer P3-17 (p178), P3-25 (p184), and P3-26 (p185).

P3-17: A) 1) Net profit margin: A) Gold Drink: 16,869/ 125,577=0.134% B) Tropical fresh: 18,975/188,385=0.10% C) Sun Supplies: 2,529/19,308=0.130% 2) Return on equity: A) Gold Drink: 16,869/69,174=0.243% B) Tropical fresh: 18,975/33,726=0.562% C) Sun Supplies: 2,529/6,390=0.395% 3) Return on asset: A) Gold Drink: 16,869/261,798=0.064% B) Tropical fresh: 18,975/222,375=0.085% C) Sun Supplies: 2,529/29,361=0.0861% Net profit margin Gold Drink is best, Return On Equity tropical fresh is best and Return on asset Sun Supplies is best. Thus will be difficult to pick one o profitable only and answer for each part. B) Gold Drink: 0.064-0.243= 0.179 Tropical Fresh: 0.085-0.562=0.447 Sun Supplies: 0.0861-0.395=0.3089 Gold Drink uses the least proportion of debt in its capital structure.

P3-25:

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1) Liquidity: Current ratio: 2,000,000/ 1,200,000=6.5 Quick ratio: 2,000,000-950,000)/ 1,200,000=0.875

2) Activity: Inventory turnover: 10,000,000/12000000=0.833 Average Age of Inventory: 365 ÷ 0.833=438.175 average collection period: 800000/ (10,000,000/365) = 29.2

3) Debt: Debt ratio: 4,200,000/ 12,000,000= 0.35 Times interest earned ratio:1,300,000/200,000=6.5 Fixed-Payment coverage Ratio: 2,000,000/1200,000= 1.67

4) Profitability: Return on equity ratio: 819,000/7800,000=7.82% Return on Asset ratio: 819,000/1,200,000=0.68% Net profit margin: 819,000/10,000,000=0.0819% Operating profit margin ratio=1,3000,000/10,000,000=13% Gross profit margin ratio: 2,500,000/ 10,000,000= 25% Earning per share: 819,000/200,000=4.095%

5) Market: Price Earnings (P/E) Ratio: 39.50/ 4.10=9.63% Market/ Book ratio: 39.50/ (7,800,000/(4.10 x 819,000))=17.004%

P3-26:

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A)

1) Profit Margin Steve steaks: 0.081 Barry Sizzle:0.108 The Barry Sizzle has a higher profit margin. 2) Asset Turnover Steve steaks: 0.41 Barry Sizzle: 0.52 The Barry Sizzle has a higher Asset Turnover. B) 3) ROA Steve steaks: 0.03 Barry Sizzle: 0.06 The Steve Steaks has a lower ROA. 4) ROE Steve steaks: 0.11 Barry Sizzle: 0.57 The Steve Steaks has a lower ROE.

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