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Computation of leverage, profitability, and liquidity ratios for Flying Penguins Corp, Breckenridge Ski Company, Rangoon Timber Company, and Cisco Systems

4.2 Liquidity ratios: Flying Penguins Corp. has total current assets of $11,845,175, current liabilities of $5,311,020, and a quick ratio of 0.89. What is its level of inventory?

4.6 Leverage ratios: Breckenridge Ski Company has total assets of $422,235,811 and a debt ratio of 29.5 percent. Calculate the company's debt-to-equity ratio and the equity multiplier.

4.8 DuPont equation: The Rangoon Timber Company has the following relationships:

Sales/Total assets = 2.23; ROA = 9.69%; ROE = 16.4%

What are Rangoon's profit margin and debt ratio?

4.18 Profitability ratios: Cisco Systems has total assets of $35.594 billion, total debt of $9.678 billion, and net sales of $22.045 billion. Their net profit margin for the year was 20 percent, while the operating profit margin was 30 percent. What are Cisco's net income, EBIT ROA, ROA, and ROE?

Solution Preview

4.2

Quick ratio = (current assets - inventories) / current liabilities
0.89 = (11,845,175 - inventories) / 5,311,020
4726807.80 = 11,845,175 - inventories
4726807.80 - 11,845,175 = - inventories
-7118367.2 = - inventories.

Thus, inventories = $7,118,367.20

4.6

debt ratio = total debt / total assets
0.295 = total debt / 422,235,811
total debt = $124,559,564.25

D/E = D/A / ...

Solution Summary

This solution provides calculations for liquidity ratios, leverage ratios, DuPont equation and profitability ratios.

$2.19