a)
To discuss: The impact of sale of additional common stock and uses those proceeds to increase inventory and to increase cash balances on company’s current ratio.
b)
To discuss: The impact of sale of additional common stock and uses those proceeds to increase inventory and to increase cash balances on company’s
c)
To discuss: The impact of sale of additional common stock and uses those proceeds to increase inventory and to increase cash balances on company’s quick ratio.
d)
To discuss: The impact of sale of additional common stock and uses those proceeds to increase inventory and to increase cash balances on company’s debt to total assets.
e)
To discuss: The impact of sale of additional common stock and uses those proceeds to increase inventory and to increase cash balances on company’s total asset turnover.
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EBK CONTEMPORARY FINANCIAL MANAGEMENT
- Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test, ratio Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turnover ratio; total assets turnover ratio Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; EBITDA coverage ratio Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share Trend analysis; comparative ratio analysis; benchmarking DuPont equation; window dressing; seasonal effects on ratiosarrow_forwardWhich of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Salesarrow_forwardThe cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnoverarrow_forward
- Define each of the following terms: Annual report; balance sheet; income statement Common stockholders’ equity, or net worth; retained earnings Statement of stockholders’ equity; statement of cash flows Depreciation; amortization; EBITDA Operating current assets; operating current liabilities; net operating working capital; total net operating capital Accounting profit; net cash flow; NOPAT; free cash flow; return on invested capital Market Value Added; Economic Value Added Progressive tax; taxable income; marginal and average tax rates Capital gain or loss; tax loss carryforward Improper accumulation; S corporationarrow_forwardDefine each of the following terms: a. Liquid asset b. Liquidity ratios: current ratio; quick ratio c. Asset management ratios: inventory turnover ratio d. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratio e. Profitability ratios: profit margin; return on total assets (ROA); return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratio f. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio; enterprise value/EBITDA ratioarrow_forwardProblem no 19, (Ref. 3) The following are the financial statements of Bagmati Bitumin Limited. Assets Cash Accounts receivable Inventory Total current assets Fixed assets Total assets Sales Cost of goods sold Depreciation Bagmati Bitumin Limited Balance Sheet as of December 31, 2016 and 2017 2016 Rs 650 2,382 4,408 Rs 7,440 2017 Liabilities and Equity Rs 710 Accounts payable 2,106 Notes payable 4,982 Other Rs 7,798 Rs 13,992 Rs 18,584 Total debt Total current liabilities Long-term debt Owners' equity (1,250 shares outstanding) Rs 21,432 Rs 26,382 Total liabilities and equity Earnings before interest and taxes Interest paid Taxable income Taxes @ 35% Net Income Dividends Addition to retained earnings Market price for a share of stock 2016 Rs 987 640 90 Rs 1,717 4,318 Rs 6,035 Rs 15,397 Bagmati Bitumin Limited Income Statement for the Year Ended December 31, 2017 2017 Rs 1215 718 230 Rs 2,163 4,190 Rs 6,353 Rs 20,029 Rs 21,432 Rs 26,382 Rs 28,000 11,600 2,140 Rs 14,260 980 Rs 13,280…arrow_forward
- If your goal is to determine how effective a firm in managing its assets, you would examine O Profit margin, Current ratio, Debt ratio O Price-earnings ratio, Times-interest-earned ratio, Operating Margin O Inventory turnover, Receivables turnover, Assets turnover O Quick ratio, Debt ratio, Times-interest-earned ratioarrow_forwardMatch each ratio that follows to its use. Items may be used more than once.arrow_forwardMatch each ratio that follows to its use. Items may be used more than once. Clear All price-earnings (P/E) ratio working capital return on total assets ratio of liabilities to stockholders’ equity quick ratio indicate the ability to pay current liabilities assess the profitability of the assets indicate how much of the company is financed by debt and equity indicate future earnings prospects indicate instant debt-arrow_forward
- Define each of the following terms:a. Liquid assetb. Liquidity ratios: current ratio; quick (acid test) ratioc. Asset management ratios: inventory turnover ratio; days sales outstanding (DSO);fixed assets turnover ratio; total assets turnover ratiod. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratioe. Profitability ratios: operating margin; profit margin; return on total assets (ROA);return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratiof. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio; enterprise value/EBITDA ratio g. DuPont equation; benchmarking; trend analysish. “Window dressing” techniquesarrow_forwardthe liquidity- cash ratios, quick ratios and current ratios.arrow_forwardthe ratio which includes the average credit period received by the a business firm is known as options are : current asset turn over ratio working capital turnver ratio creditors turnover ratio inventory turnover ratioarrow_forward
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