Financial management

Problem 3-8 Profit Margin and Debt Ratio

Assume you are given the following relationships for the Haslam Corporation:

Sales/total assets	2.1
Return on assets (ROA)	2%
Return on equity (ROE)	7%

1. Calculate Haslam's profit margin. Do not round intermediate calculations. Round your answer to two decimal places. ________ %

2. Calculate Haslam's liabilities-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. ________ %

3. Suppose half of Haslam's liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. ________ %

Problem 3-9 Current and Quick Ratios

The Nelson Company has $1,957,500 in current assets and $675,000 in current liabilities. Its initial inventory level is $337,500, and it will raise funds as additional notes payable and use them to increase inventory.

1. How much can Nelson's short-term debt (notes payable) increase without pushing its current ratio below 2.4? Round your answer to the nearest cent.

$ ________

2. What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds? Round your answer to two decimal places. ________