# Average collection period, asset turnover, dividends

See attached file for problems.

Refer to Stone Cold. For 2004, what was the return on assets?

(Points: 2)

9.16%

12.40%

15.60%

20.00%

4. Referring to Stone Cold data below. For 2004, what was the debt-to-equity ratio?

Refer to Stone Cold. For 2004, what was the average collection period for the firm in 2004?

Refer to Stone Cold data below. For 2004, what was the total asset turnover for 2004?

7. You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years. You can invest into an retirement account that guarantees you a 5% annual return. How much do you have to put into your account at the end of each year to reach your retirement goal? (Points: 2)

$81,314.29

$18,814.30

$23,346.59

$12,382.37

8. You set up a college fund in which you pay $2,000 each year at the beginning of the year. How much money will you have accumulated in the fund after 18 years, if your fund earns 7% compounded annually? (Points: 2)

$72,757.93

$67,998.07

$20,118.17

$28,339.25

11. Bavarian Sausage is expected to pay a $1.57 dividend next year and investors expect that dividend to grow by 5% each year forever. If the required return on the stock investment is 14%, what should be the price of the stock today. (Points: 2)

$18.32

$17.44

$11.21

$25.37

12. Miller Juice traditionally pays out 35% of its earnings as dividends. Last year Miller's earnings available for common stockholders were $256 million and the book value of its equity was $678 million. What is Miller's growth rate? (Points: 2)

24.54%

35.00%

37.76%

13.22%

21. You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. Referring to Bavarian Sausage. What is the total return of your stock investment? (Points: 2)

5.91%

13.44%

26.69%

19.35%

22. The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a beta of 1.5, what is its expected return? (Points: 2)

17%

12%

19.5%

24.5%

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#### Solution Summary

The solution explains various multiple choice questions relating to average collection period, asset turnover, dividends, annuities, FV and stock beta

Corporate Finance : Liquidity Ratio, Collection Period, Inventory Turnover, Leverage Ratios, Du Pont Identity, Payables and Market Value

ASee attached file for full problem description.

I am needing help answering the circled questions:

1-10 and 13

1, Calculating Liquidity Ratios. SDJ, Inca, has net working capital of $900, current liabilities of $4,320, and inventory of $ 1 ,900. What is the current ratio? What is the quick ratio?

2. Calculating Profitability Ratios. Bennett's Bird Cages has sales of $41 million, total assets of $32 million, and total debt of $11 million. If the profit margin is 12 percent, what is net income? What is ROA? What is ROE?

3. Calculating the Average Collection Period. Pirate Lumber Yard has a current accounts receivable balance of $308, 165. Credit sales for the year just ended were $2, I 3 1 ,5 1 6. What is the receivables turnover? The days' sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?

4. Calculating Inventory Turnover. Keegan Corporation has ending inventory of $921,386, and cost of goods sold for the year just ended was $1,843,127. What is the inventory turnover? The days' sales in inventory? How long on average did a unit of inventory sit on the shelf before it was sold?

5 Calculating Leverage Ratios. Myrtle Golf, Inc., has a total debt ratio of 45. What

is its debt-equity ratio? What is its equity multiplier?

6. Calculating Market Value Ratios. Sandy's Baby-sitting, Inc., had additions to

retained earnings for the year just ended of $300,000. The firm paid out $220,000 in

cash dividends, and it has ending total equity of $5 million. If Sandy's currently has

300,000 shares of common stock outstanding, what are earnings per share?

Dividends per share? What is book value per share? If the stock currently sells for

$25 per share, what is the market-tobook ratio? The priceeearnings ratio?

7. Du Pont Identity. If Roten Rooters, Inc., has an equity multiplier of 1 .60, total asset turnover of 1.05, and a profit margin of 1.1 percent, what is its ROE?

8. Du Pont Identity. Jimmy Cricket Removal has a profit margin of 12 percent, total asset turnover of 1.35, and ROE of 17.20 percent1 What is this firm's debt-equity ratio?

9, Calculating Average Payables Period. For the past year, BDJ, Inc., had a cost of goods sold of $18,364. At the end of the year, the accounts payable balance was $3,105 . How long on average did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply?

10. Equity Multiplier and Return on Equity. Sunny Beach Chair Company has a debt-equity ratio of .80. Return on assets is 8.4 percent, and total equity is $430,000. What is the equity multiplier? Return on equity? Net income?

13. Sustainable Growth. Based on the following information, calculate the sustainable growth rate for Chicago Chocolate Pies:

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