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    22. What is the expected return on the following portfolio?

    STOCK SHARES PRICE EXPECTED RETURN
    ART 1,500 $40 22%
    BAC 2,000 31 19
    DUD 500 85 29

    Use the following data for questions 23 & 24.

    Cost of Goods Sold $22mm

    Inventory $4mm

    Credit Sales $26mm

    Accounts Receivable $3mm

    Purchases on Credit $26mm

    Accounts Payable $6mm

    23, Calculate the Operating Cycle in days for the company.

    24. Calculate the Cash Cycle in days for the company.

    25.Your firm has Day Sales Outstanding of Receivables equal to 31 days. Sales are $11mm. What is value of Accounts Receivable?

    The following information is given.

    Total Asset Turnover = 1.5

    Return on Assets = 3%

    Return on Equity = 15%

    26. Calculate the Net Profit Margin.

    27.Calculate the Total Debt Ratio.

    28. Last year your ROE was 11%. Net Income was $11mm and sales were $100mm. The Total Debt Ratio was 40%. What was the value of Shareholder's Equity.?

    29.If the company, in question #28, had generated another $1mm of net income and $8mm of sales, what would have been ROE?

    31.Your firm would like to achieve a 20% Sustainable Growth Rate. Your return on equity is 30%. How would you achieve this goal?

    32.What is the Sustainable Growth Rate for the following company?

    Net Income $41mm
    Equity $123mm
    Dividend $41mm

    33. Calculate the change in Gross Fixed Assets for 2004, given the data below.

    2003 Net Fixed Assets $4,000

    2004 Depreciation $800

    2004 Net Fixed Assets $4,500

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    Solution Preview

    22. What is the expected return on the following portfolio?

    STOCK SHARES PRICE EXPECTED RETURN
    ART 1,500 $40 22%
    BAC 2,000 31 19
    DUD 500 85 29

    Please refer to EXCEL for calculation:
    STOCK SHARES PRICE Stock Value EXPECTED RETURN Return
    ART 1,500 $40 $60,000 22% $13,200
    BAC 2,000 31 $62,000 19% $11,780
    DUD 500 85 $42,500 29% $12,325
    Total value $164,500 $37,305
    Return on the portfolio = Total return / total value = 37305 / 164500 = 22.7%

    Use the following data for questions 23 & 24.
    Cost of Goods Sold $22mm
    Inventory $4mm
    Credit Sales $26mm
    Accounts Receivable $3mm
    Purchases on Credit $26mm
    Accounts Payable $6mm

    23, Calculate the Operating Cycle in days for the company.

    Operating cycle is the average time between the acquisition of materials or services and the final cash realization from that acquisition.
    Operating cycle = inventory period + accounts receivable period

    where
    Inventory Period = 365 / Inventory Turnover
    = 365 / (COGS / Average ...

    Solution Summary

    Guidance on how to solve and computations for you. The return on a portfolio is determined.

    $2.49

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