Consider this simplified balance sheet for Geomorph Trading: Current assetS $ 100 Current liabilities $ 60 280 Long-term assets 500 Long-term debt Other liabilities 70 190 Equity $ 600 $ 600 a. Calculate the ratio of debt to equity. (Round your answer to 2 decimal places.) b-1. What are Geomorph's net working capital and total long- term capital? b-2. Calculate the ratio of debt to total long-term capital. (Round your answer to 2 decimal places.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Exercise n°6.
Consider this simplified balance sheet for Geomorph Trading:
Current liabilities
Long-term debt
Other liabilities
Equity
Current assets
$ 100
$ 60
Long-term assets
500
280
70
190
$ 600
$ 600
a. Calculate the ratio of debt to equity. (Round your answer to 2
decimal places.)
b-1. What are Geomorph's net working capital and total long-
term capital?
b-2. Calculate the ratio of debt to total long-term capital. (Round
your answer to 2 decimal places.)
Exercise n°7.
Magic Flutes has total receivables of $3,000, which represent 20 days'
sales. Total assets are $75,000. The firm's operating profit margin is
5%. Assume a 365-day year.
3/4
a. What is the firm's sales-to-assets ratio? (Round your answer to 2
decimal places.)
b. What is the firm's return on assets? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 2 decimal
places.)
Exercise n°8.
a. If a firm's assets of $10,000 represent 200 days' sales, what is its
annual sales? Assume a 365-day year.
b. What is its asset turnover ratio?
Transcribed Image Text:Exercise n°6. Consider this simplified balance sheet for Geomorph Trading: Current liabilities Long-term debt Other liabilities Equity Current assets $ 100 $ 60 Long-term assets 500 280 70 190 $ 600 $ 600 a. Calculate the ratio of debt to equity. (Round your answer to 2 decimal places.) b-1. What are Geomorph's net working capital and total long- term capital? b-2. Calculate the ratio of debt to total long-term capital. (Round your answer to 2 decimal places.) Exercise n°7. Magic Flutes has total receivables of $3,000, which represent 20 days' sales. Total assets are $75,000. The firm's operating profit margin is 5%. Assume a 365-day year. 3/4 a. What is the firm's sales-to-assets ratio? (Round your answer to 2 decimal places.) b. What is the firm's return on assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Exercise n°8. a. If a firm's assets of $10,000 represent 200 days' sales, what is its annual sales? Assume a 365-day year. b. What is its asset turnover ratio?
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