The Digital Warehouse has an outstanding debt of R580 000 with an interest rate of 9, 15%. The company's sales amount to R4 290 000, the tax rate is 40%, and the net profit margin is 3,5%. What is the company's times interest earned ratio? 1. 1, 13 times 2. 4,70 times 3. 5, 72 times 4. 7,93 times
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- The Raattama Corporation had sales of $3.5 million last year, and it earned a 5% return (after taxes) on sales. Recently, the company has fallen behind in its accounts payable. Although its terms of purchase are net 30 days, its accounts payable represents 60 days’ purchases. The company’s treasurer is seeking to increase bank borrowing in order to become current in meeting its trade obligations (that is, to have 30 days’ payables outstanding). The company’s balance sheet is as follows (in thousands of dollars): How much bank financing is needed to eliminate the past-due accounts payable? Assume that the bank will lend the firm the amount calculated in part a. The terms of the loan offered are 8%, simple interest, and the bank uses a 360-day year for the interest calculation. What is the interest charge for 1 month? (Assume there are 30 days in a month.) Now ignore part b and assume that the bank will lend the firm the amount calculated in part a. The terms of the loan are 7.5%, add-on interest, to be repaid in 12 monthly installments. What is the total loan amount? What are the monthly installments? What is the APR of the loan? What is the effective rate of the loan? Would you, as a bank loan officer, make this loan? Why or why not?Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in long-term debt. What is the debt ratio?The Digital Warehouse has an outstanding debt of R580 000 with an interest rate of 9, 15%. The company's sales amount to R4 290 000, the tax rate is 40%, and the net profit margin is 3,5%. What is the company's times interest earned ratio? 1. 1, 13 times 2. 4 , 70 times 3. 5,72 times 4. 7, 93 times
- Toyto Corp. has net working capital of $1,370, current liabilities of $3,720 and inventory of $1,950. What is the current ratio? What is the quick ratio? Doria Inc. has sales of $29 million, total assets of $17.5 million and total debt of $6.3 million. If the profit margin is 8 percent, what it the net income? What is the ROA? What is the ROE? Orion Inc. has a total debt ratio of 0.63. What is the debt-equity ratio? What is the equity multiplier?. Young Enterprises has $2 million in assets, $400,000 of EBIT, and has a 40% tax rate. The firm also has a debt to assets ratio of 60% and pays 12% interest on its debt. What is Young's ROE? a. 19.20% b. 17.40% c. 17.10% d. 16.80%Orono Corp.'s sales last year were $465,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? Select the correct answer. a. 9.70 b. 8.70 c. 9.20 d. 8.20 e. 10.20
- Choose the correct letter of answer: In the current year, Company A had P15 Million in sales, while total fixed costs were held to P6 Million. The firm's total assets at year-end were P20 Million and the debt/equity ratio was calculated at 0.60. If the firm's EBIT is P3 Million, the interest on all debt is 9%, and the tax rate is 40%, what is the firm's return on equity? a. 11.16%b. 14.4%c. 18.6%d. 24.0%e. 28.5%Last year Jullan Corp. had sales of P302,225 operating costs of P267,500 and year-end assets of P195,000. The debt-to-total-assets ratio was 27%, the interest rate on the debt was 8.2% and the firm's tax rate was 37%. The new CFO wants to see how the Return on Equity (ROE) would have been affected if the firm had used a 45% debt ratio. Assume that sales and total assets would not be affected, and that the interest rate and tax rate would both remain constant. By how much would the ROE change (increase or decrease in percentage) in response to the change in the capital structure?WICO Databank Limited has a debt-equity ratio of 0.45. The required return on the company's unlevered (ungeared) equity is 17 per cent, and the pre-tax cost of the firm's debt is 9 per cent. Sales revenue for the company is expected to remain stable indefinitely at last year's level of GHC23,500,000. Variable costs amount to 60 per cent of sales. The tax rate is 25 per cent, and the company distributes all its earnings as dividends at the end of each year. Required: a) Use the flow to equity method to calculate the value of the company's equity. b) What is the required return on the firm's levered (geared) equity)? c) Use the weighted average cost of capital method to value the company. What is the value of the company's equity? What is the value of the company's debt?
- WICO Databank Limited has a debt-equity ratio of 0.45. The required return on the company's unlevered (ungeared) equity is 17 per cent, and the pre-tax cost of the firm's debt is 9 per cent. Sales revenue for the company is expected to remain stable indefinitely at last year's level of GHC23,500,000. Variable costs amount to 60 per cent of sales. The tax rate is 25 per cent, and the company distributes all its earnings as dividends at the end of each year. Required: a. If the company were financed entirely by equity, how much would it be worth? b. What is the required return on the firm's levered (geared) equity)? c. Use the weighted average cost of capital method to value the company. What is the value of the company's equity? What is the value of the company's debt? d. Use the flow to equity method to calculate the value of the company's equity.The H.R. Pickett Corp. has $500,000 of debt outstanding, and it pays an annual interest rate of 10%. Its annual sales are $2 million, its average tax rate is 30%, and its net profit margin is 5%. What is its TIE ratio?The lawrence company has a ratio of long term debt to long term debt plus equity of .25 and a current ratio of 1.5. current liabilities are 900, sales are 6230 , profit margin is 8.1 percent what is the amount of the firms net fixt assets ?
