Question 1: Sdj Inc. Has Net Working Capital Of 3390 Current

Question 1 Sdj Inc Has Net Working Capital Of 3390 Current Liab

SDJ, Inc., has net working capital of $3,390, current liabilities of $4,610, and inventory of $4,700. a. What is the current ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the quick ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Question 2 : DTO, Inc., has sales of $18 million, total assets of $16.7 million, and total debt of $7.2 million. Assume the profit margin is 5 percent. a. What is the company's net income? (Do not round intermediate calculations. Enter your answer in dollars not in millions, e.g., 1,234,567.) b. What is the company's ROA? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Question 3: The King Corporation has ending inventory of $476,200, and cost of goods sold for the year just ended was $4,028,652. a. What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the days' sales in inventory? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) c. How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Question 4 Queen, Inc., has a total debt ratio of .41. a. What is its debt-equity ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is its equity multiplier? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Question 5 : Makers Corp. had additions to retained earnings for the year just ended of $313,000. The firm paid out $177,000 in cash dividends, and it has ending total equity of $4.82 million. The company currently has 140,000 shares of common stock outstanding. a. What are earnings per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What are dividends per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the book value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. If the stock currently sells for $65 per share, what is the market-to-book ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) e. What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) f. If the company had sales of $4.41 million, what is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Question 6 : If Roten Rooters, Inc., has an equity multiplier of 1.51, total asset turnover of 1.30, and a profit margin of 6.1 percent, a. what is its ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Paper For Above instruction

This comprehensive financial analysis encompasses multiple key financial ratios and metrics that provide valuable insights into the financial health and performance of various companies. Through detailed calculations and interpretations, these metrics aid stakeholders in understanding liquidity, profitability, efficiency, and leverage. The following sections systematically address each question, presenting the calculations, rationale, and implications of each financial indicator.

Question 1: Liquidity Ratios for SDJ Inc.

SDJ, Inc. possesses a net working capital (NWC) of $3,390. Given current liabilities of $4,610, and inventory of $4,700, we proceed to compute the current and quick ratios, which measure liquidity and short-term financial stability.

Current Ratio

The current ratio is calculated as current assets divided by current liabilities. First, we determine current assets using the relation:

• Net working capital = Current assets – Current liabilities

Rearranged, current assets = NWC + current liabilities = $3,390 + $4,610 = $8,000.

Thus, the current ratio = Current assets / Current liabilities = $8,000 / $4,610 ≈ 1.73.

Concluding, SDJ’s current ratio stands at approximately 1.73, indicating that its current assets are 1.73 times its current liabilities, reflecting a moderate liquidity level.

Quick Ratio

The quick ratio, also known as the acid-test ratio, considers only liquid assets excluding inventory:

• Quick assets = Current assets – Inventory = $8,000 – $4,700 = $3,300.

Therefore, the quick ratio = Quick assets / Current liabilities = $3,300 / $4,610 ≈ 0.72.

This suggests that SDJ, Inc. has sufficient liquid assets to cover approximately 72% of its current liabilities without relying on inventory sales.

Question 2: Profitability Metrics for DTO Inc.

DTO, Inc. reports sales of $18 million, total assets of $16.7 million, and total debt of $7.2 million, with a profit margin of 5%. These figures enable calculation of net income, return on assets (ROA), and return on equity (ROE).

Net Income

The profit margin is defined as net income divided by sales:

Net income = Sales × Profit margin = $18,000,000 × 0.05 = $900,000.

Return on Assets (ROA)

ROA measures how efficiently a company uses its assets to generate profit:

ROA = (Net Income / Total Assets) × 100 = ($900,000 / $16,700,000) × 100 ≈ 5.39%.

Return on Equity (ROE)

First, ascertain equity: Total assets – Total debt = $16.7 million – $7.2 million = $9.5 million.

ROE = (Net Income / Equity) × 100 = ($900,000 / $9,500,000) × 100 ≈ 9.47%.

This indicates that DTO, Inc. generates a return of approximately 9.47% on shareholders’ equity.

Question 3: Inventory Management for The King Corporation

The King Corporation's ending inventory is valued at $476,200, and cost of goods sold (COGS) is $4,028,652.

Inventory Turnover

Inventory turnover ratio = COGS / Average inventory. Assuming no beginning inventory data, we consider ending inventory as average:

Inventory turnover = $4,028,652 / $476,200 ≈ 8.47 times.

Days' Sales in Inventory

Days’ sales in inventory = 365 / Inventory turnover = 365 / 8.47 ≈ 43.07 days.

This indicates how many days, on average, inventory remains before being sold.

Average Inventory Holding Period

Since days' sales in inventory already reflect how long inventory stays, the average period a unit sits on the shelf aligns with the previous calculation, approximately 43.07 days.

Question 4: Leverage Ratios for Queen, Inc.

Queen, Inc. has a total debt ratio of 0.41, which relates to total assets and equity.

Debt-Equity Ratio

The debt-equity ratio = Total debt / Total equity.

Total debt ratio = Total debt / Total assets ⇒ Total debt = 0.41 × Total assets.

Total equity = Total assets – Total debt = Total assets – 0.41 × Total assets = 0.59 × Total assets.

Debt-equity ratio = (0.41 × Total assets) / (0.59 × Total assets) = 0.41 / 0.59 ≈ 0.69.

Equity Multiplier

The equity multiplier = Total assets / Total equity = 1 / (1 – Total debt ratio) = 1 / 0.59 ≈ 1.69.

This shows that Queen, Inc.’s assets are financed with 69% equity and 31% debt, on average.

Question 5: Earnings and Market Ratios for Makers Corp.

With additions to retained earnings of $313,000, dividends paid of $177,000, and ending equity of $4.82 million, calculations for EPS, dividends per share, book value per share, market-to-book, P/E, and P/S ratios are performed.

Earnings Per Share (EPS)

Net income = Additions to retained earnings + Dividends paid = $313,000 + $177,000 = $490,000.

EPS = Net income / Number of shares = $490,000 / 140,000 ≈ $3.50 per share.

Dividends Per Share

Dividends per share = Dividends paid / Number of shares = $177,000 / 140,000 ≈ $1.26 per share.

Book Value Per Share

Book value per share = Total equity / Number of shares = $4,820,000 / 140,000 ≈ $34.43.

Market-to-Book Ratio

Market price per share = $65.

Market-to-book ratio = Market price / Book value per share = $65 / $34.43 ≈ 1.89.

Price-Earnings (P/E) Ratio

P/E ratio = Market price per share / Earnings per share = $65 / $3.50 ≈ 18.57.

Price-Sales Ratio

Sales = $4.41 million, i.e., $4,410,000.

Sales per share = $4,410,000 / 140,000 ≈ $31.50.

Price-sales ratio = Market price / Sales per share = $65 / $31.50 ≈ 2.06.

Question 6: Return on Equity for Roten Rooters, Inc.

Given an equity multiplier of 1.51, total asset turnover of 1.30, and profit margin of 6.1%, the ROE is computed using the DuPont Identity:

ROE = Profit margin × Total asset turnover × Equity multiplier = 6.1% × 1.30 × 1.51 ≈ 12.06%.

This indicates that Roten Rooters, Inc. efficiently generates returns for shareholders based on its leverage and operational efficiency.

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