Q1:Firm A reports a Profit Margin of 5% and a Total Asset Turnover Ratio of 1.5. Their totalasset level is $6,000,000. Assume there are 600,000 shares outstanding and the P/E ratio is13 times. Also, assume the Return on Equity is 14%. Based on this, calculate the price ofshare/Book value per share ratio,Q2:XLtd., has a current ratlo of 3.5:1 and quick ratio of 2:1. If excess of current assets overquick assets represented by inventories is $ 24000, Calculate current assets and currentllablitles.

total asset = 6,000,000 share o/s =600,000 P/E ratio = 13 times return on equity is 14 % total asset…

Answered: Q2:XLtd., has a current ratio of 3.5:1…

Q2:XLtd., has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick assets represented by inventories is $ 24000, Calculate current assets and current liablitles.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 15PROB

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Question

Q1:
Firm A reports a Profit Margin of 5% and a Total Asset Turnover Ratio of 1.5. Their total
asset level is $6,000,000. Assume there are 600,000 shares outstanding and the P/E ratio is
13 times. Also, assume the Return on Equity is 14%. Based on this, calculate the price of
share/Book value per share ratio,
Q2:XLtd., has a current ratlo of 3.5:1 and quick ratio of 2:1. If excess of current assets over
quick assets represented by inventories is $ 24000, Calculate current assets and current
llablitles.

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