CH 3 FINANCE PROBLEM

3-1

DSO = 20 days; ADS = $20,000; AR = ?

3-2

TA = $200 million, notes payable =$5 million, and LT debt = $25 million.
Debt ratio = Debt-to-assets ratio = = = 15%.

3-3

TA = $10,000,000,000; CL = $1,000,000,000; LT debt = $3,000,000,000; CE =
$6,000,000,000; Shares outstanding = 800,000,000; P0 = $75; M/B = ?
Book value per share = = $7.50.
M/B = = 10.

3-4

EPS = $1.50; CFPS = $3.00; P/CF = 8.0× ; P/E = ?
P/CF
= 8.0
P/$3.00 = 8.0
P = $24.00.
P/E = $24.00/$1.50 = 16.0× .

3-5

PM = 3%; EM = 2.0; Sales = $100,000,000; Assets = $50,000,000; ROE = ?
ROE = PM × TATO × EM
= NI/S × S/TA × A/E
= 3% × $100,000,00/$50,000,000 × 2
= 12%.