Question Details

FIN 515
WEEK 2
Problems (p.112) 
 (3-1) Days Sales Outstanding
Greene Sisters has a DSO of 20 days. The company- average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.
(3-2) Debt Ratio
Vigo Vacations has an equity multiplier of 2.5. The company- assets are financed with some combination of long-term debt and common equity. What is the company- debtratio?
(3-3) Market/Book Ratio
Winston Washers- stock price is $75 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 800 million shares of common stock outstanding. What is Winston- market/book ratio?
 (3-4) Price/Earnings Ratio
A company has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?
(3-5) ROE
Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are $100 million and it has total assets of $50 million. What is its ROE?
(3-6) Du Pont Analysis
Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the company- total assets turnover? What is the firm- equity multiplier?
(3-7) Current and Quick Ratios
Ace Industries has current assets equal to $3 million. The company- current ratio is 1.5, and its quick ratio is 1.0. What is the firm- level of current liabilities? What is the firm- level of inventories?
Problems (pp. 165-167) 

(4-1) Future Value of a Single Payment
If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
(4-2) Present Value of a Single Payment
What is the present value of a security that will pay $5,000 in 20 years if securities of equal risk pay 7% annually?
(4-6) Future Value: ordinary Annuity versus Annuity Due
What is the future value of a 7%, 5-year ordinary annuity that pays $300 each year? If this were an annuity due, what would its future value be?
 (4-13) Present Value of an Annuity
Find the present value of the following ordinary annuities (see the Notes to Problem 4-12).
a.	$400 per year for 10 years at 10% 
b.	$200 per year for 5 years at 5% 
c.	$400 per year for 5 years at 0% 
Now rework parts a, b, and c assuming that payments are made at the beginning of each 
d.	year; that is, they are annuities due. 
(4-14) Uneven Cash Flow Stream
Find the present values of the following cash flow streams. The appropriate interest rate is 
a)	8%. (Hint: It is fairly easy to work this problem dealing with the individual cash flows. However, if you have a financial calculator, read the section of the manual that describes how to enter cash flows such as the ones in this problem. This will take a little time, but the investment will pay huge dividends throughout the course. Note that, when working with the calculator- cash flow register, you must enter CF = 0. Note also that it is quite easy to work the problem with Excel, using procedures described in the Chapter 4 Tool Kit.)
b)	What is the value of each cash flow stream at 0% interest rate?