Dr.

Doaa El-Diftar Financial Management Lecture 4

Class Problems
1) Mulligan, Inc. has net income of $50,000 and total assets of $400,000. The
dividend payout ratio is 0.6. What is the internal growth rate?

2) Beaver Industries has a total asset turnover rate of 1.8, an equity multiplier of
1.2, a profit margin of 7%, a retention ratio of 0.6, and total assets of
$300,000, what is the sustainable growth rate?

3) If jPhone, Inc., has as equity multiplier of 1.65, total asset turnover of 1.8, and
a profit margin of 6 percent, what is its ROE?

4) The Cavo Company has ROA of 9 percent, a profit margin of 6 percent, and
ROE of 17 percent. What is the company’s total asset turnover? What is the
equity multiplier?

5) Larson, Inc. has total assets of $248,000 and an equity multiplier of 2.5. What
is the debt-equity ratio?

6) It takes Ted's Trucks 85 days, on average, to sell its inventory. Costs of goods
sold for the year are $1,250,000. What is the average value of the firm's
inventory?

7) Morgan's Industrial Park has total assets of $541,700, long-term debt of

$201,400, total equity of $306,800, fixed assets of $469,200, and sales of
$600,500. The profit margin is 7 percent. What is the current ratio?

8) Thayer, Inc. has earnings before interest and taxes of $10,350 and net income
of $2,528.50. The tax rate is 35 percent. What is the times interest earned
ratio?

9) Benet, Inc. has total sales of $128,000 and a profit margin of 12.89 percent.
Currently, the firm has 15,000 shares outstanding. What are the earnings per
share?

10) Decorative Paintings has total debt of $69,000, total equity of $345,000, and a
return on equity of 10 percent. What is the return on assets?