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Managerial Finance - Green Sisters, Winston Washer, Needham

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3.1 Greene Sisters has a DSO of 20 days. The company's average daily sales are $20,000. What is the level of its account receivable? Assume there are 365 days in a year.

3.2 Vigo Vacations has an equity multiplier of 2.5. The company's assets are financed with some combination of long-term debt and common equity. What is the company's debt ratio?

3.3 Winston Washer'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 A company 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 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?

3.6 Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the company's total assets turnover? What is the firm's equity multiplier?

3.7 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?

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Solution Summary

Your tutorial lays out the ratios impacted so you can solve for the missing pieces. This is done in Excel so you can click in the cells and see the computations.

Solution provided by:
Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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