Finance

This homework assignment is to be submitted in an Excel workbook titled "

FIN

_Homework2_

yourname

."

Be sure to show all work and/or use Excel formulas to demonstrate how you arrived at

y

our answer.

(3

-

1) DSO Greene Sisters has a DSO of 20 days. The co

mpany’s average daily sales are $20,000.

What is the level of its accounts receivable? Assume there are 365 days in a year.

(3

-

2) Debt Ratio Vigo Vacations has $200 million in total assets, $5 million in notes payable, and

$25 million in long

-

term debt.

What is the debt ratio?

(3

-

3) Market/Book Ratio Winston Watch’s stock price is $75 per share. Winston has $10 billion in

total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long

-

term debt, and

$6 billion in common equit

y. It has 800 million shares of common stock outstanding. What is

Winston’s market/book ratio?

(3

-

4) Price/Earnings Ratio Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and

a price/cash flow ratio of 8.0. What is its P/E ratio?

(3

-

5) ROE Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its

sales are $100 million, and it has total assets of $50 million. What is its ROE? Intermediate

(3

-

6) DuPont Analysis Gardial & Son has an ROA of

12%, a 5% profit margin, and a return on

equity equal to 20%. What is the company’s total assets turnover? What is the firm’s equity

multiplier?

(3

-

7) Current and Quick Ratios Ace Industries has current assets equal to $3 million. The company’s

current

ratio is 1.5, and its quick ratio is 1.0. What is the firm’s level of current liabilities? What is the

firm’s level of inventories?

4

-

1). Future Value of a Single Payment If you deposit $10,000 in a bank account that pays 10%

interest annually, how much

will be in your account after 5 years?

(4

-

2). Present Value of a Single Payment What is the present value of a security that will pay $5,000

in 20 years if securities of equal risk pay 7% annually?

(4

-

6). Future Value: Ordinary Annuity versus Annuity Du

e What is the future value of a 7%, 5

-

year

ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value

be?

(4

-

13). Present Value of an Annuity Find the present value of the following ordinary annuities (see

the Not

es to Problem 4

-

12). $400 per year for 10 years at 10% $200 per year for 5 years at 5% $400

per year for 5 years at 0% Now rework parts a, b, and c assuming that payments are made at the

beginning of each year; that is, they are annuities due.

(4

-

14). U

neven Cash Flow Stream Find the present values of the following cash flow streams. The

appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual

This homework assignment is to be submitted in an Excel workbook titled "FIN

_Homework2_yourname."

Be sure to show all work and/or use Excel formulas to demonstrate how you arrived at

your answer.

(3-1) DSO Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000.

What is the level of its accounts receivable? Assume there are 365 days in a year.

(3-2) Debt Ratio Vigo Vacations has $200 million in total assets, $5 million in notes payable, and

$25 million in long-term debt. What is the debt ratio?

(3-3) Market/Book Ratio Winston Watch’s stock price is $75 per share. Winston has $10 billion in

total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and

$6 billion in common equity. It has 800 million shares of common stock outstanding. What is

Winston’s market/book ratio?

(3-4) Price/Earnings Ratio Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and

a price/cash flow ratio of 8.0. What is its P/E ratio?

(3-5) ROE Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its

sales are $100 million, and it has total assets of $50 million. What is its ROE? Intermediate

(3-6) DuPont Analysis Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on

equity equal to 20%. What is the company’s total assets turnover? What is the firm’s equity

multiplier?

(3-7) Current and Quick Ratios Ace Industries has current assets equal to $3 million. The company’s

current ratio is 1.5, and its quick ratio is 1.0. What is the firm’s level of current liabilities? What is the

firm’s level of inventories?

4-1). Future Value of a Single Payment If you deposit $10,000 in a bank account that pays 10%

interest annually, how much will be in your account after 5 years?

(4-2). Present Value of a Single Payment What is the present value of a security that will pay $5,000

in 20 years if securities of equal risk pay 7% annually?

(4-6). Future Value: Ordinary Annuity versus Annuity Due What is the future value of a 7%, 5-year

ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value

be?

(4-13). Present Value of an Annuity Find the present value of the following ordinary annuities (see

the Notes to Problem 4-12). $400 per year for 10 years at 10% $200 per year for 5 years at 5% $400

per year for 5 years at 0% Now rework parts a, b, and c assuming that payments are made at the

beginning of each year; that is, they are annuities due.

(4-14). Uneven Cash Flow Stream Find the present values of the following cash flow streams. The

appropriate interest rate is 8%. (Hint: It is fairly easy to work this problem dealing with the individual