Assume you are given the following relationships for the Haslam Corporation:

Sales/total assets 1.2

Return on assets (ROA) 4%

Return on equity (ROE) 7%

Calculate Haslam’s profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.

The Morrit Corporation has $600,000 of debt outstanding, and it pays an interest rate of 8% annually. Morrit’s annual sales are$3 million, its average tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew the loan and bankruptcy will result. What is Morrit’s TIE ratio?

Arrow Distributing Corp. (see Table 9) likes to track inventory by using weeks of supply as well as by inventory turnover.

What is Arrow's inventory turnover?

Presto Corp. had total variable costs of $180,000, total fixed costs of$110,000, and total revenues of $300,000. Compute the required sales in dollars to break even.

Financial statement analysis can help us determine why a firm's cash flows are increasing or decreasing.

a) True

b) False

Winston Watch’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?

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?

The Nelson Company has $1,312,500 in current assets and$525,000 in current liabilities. Its initial inventory level is $375,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can Nelson’s short-term debt (notes payable) increase without pushing its current ratio below 2.0? What will be the firm’s quick ratio after Nelson has raised the maximum amount of short-term funds?

A company has the following current assets: Cash, $10,000; Accounts Receivable,$70,000; and Inventory, $20,000. The company also has current liabilities of$40,000. Calculate the company’s current ratio and quick ratio.

Arrow Distributing Corp. (see Table 9) likes to track inventory by using weeks of supply as well as by inventory turnover.

What is its weeks of supply?

Assume the following relationships for the Caulder Corp.:

$$\begin{array}{ll} \text { Sales/Total assets } & 1.3 \times \\ \text { Return on assets (ROA) } & 4.0 \text{ percent } \\ \text { Return on equity (ROE) } & 8.0 \text{ percent } \end{array}$$

Calculate Caulder’s profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital.

Assume that you are given the following relationships for Zumwalt Corporation:

$$\begin{array}{lrlr} \text{Sales/total assets} &{1.5 \times} \\ \text{Return on assets (ROA)} & {3.0 \%} \\ \text{Return on equity (ROE)} & {5.0 \%} \\ \end{array}$$

Calculate Zumwalt's net profit margin and debt ratio.

Henderson’s Hardware has an ROA of 11%, a 6% profit margin, and an ROE of 23%. What is its total assets turnover? What is its equity multiplier?

Big has current assets of $500,000 and current liabilities of$400,000. Small reports current assets of $80,000 and current liabilities of$20,000. Which company is more liquid? Why?