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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