ASSIGNMENT

1. Ag Silver Mining, Inc. has $500,000 of earnings before interest and taxes at the
year end. Interest expenses for the year were $10,000. The firm expects to
distribute $100,000 in dividends. Calculate the earnings after taxes for the firm
assuming a 40 percent tax on ordinary income.
2. A firm's price to earnings ratio is 8 and its market to book ratio is 2. If its
earnings per share are $4.00, what is the book value per share?
3. A firm's current ratio is 1.5 and its quick ratio is 1.0. If its current liabilities are
$10,000, what are its inventories?
4. Flash In The Pan Cooking School is considering the issuance of additional longterm debt to finance expansion. At the present time the company has $160
million of 10% debentures outstanding. Its after-tax net income is $48 million,
and the company's income tax rate is 40%. The company is required by the
debenture holders to maintain its coverage ratio at 4.0 or greater. Determine
Flashs present coverage ratio.
5. If a firm has interest expenses of $10,000 per year, sales of $700,000, a tax rate
of 40%, and a net profit margin of 7%, what is the firm's times interest earned
ratio?
6. What is the market price per share of Big Whoop, Inc. if the firm had net income
of $200,000, earnings per share of $2.70, total equity of $800,000, and a market
to book ratio of 1.5?
7. Determine the cost of sales for a firm with the following financial ratios and data:
Current ratio = 3.0; Quick ratio = 2.0; Current liabilities $1,000,000; Inventory
turnover 6 times
8. Given the following information, determine Salem Company's fixed assets.
Sales = $10,000,000
Total asset turnover = 4 times
Current ratio = 2.40
Current liabilities = $500,000
9. Sales = $10,000,000 (all on credit)
Current ratio = 3.0
Current liabilities = $800,000
Average collection period = 36.5 days (Assume 365 days/year)
Quick ratio = 1.50
Current assets = cash + accounts receivable + inventory
10.Your current assets consist of cash, accounts receivable, and inventory. Total
current liabilities equal $200,000. The average collection period is 20 days on
average daily credit sales of $2,500. The current ratio is 1.3 and the quick ratio
is 0.625. What is the balance in the cash account?
11. Vang Corp.'s stock price at the end of last year was $33.50 and its earnings per share for the year were
$2.30. What was its P/E ratio?
12.Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was
$25.00. What was its market/book ratio?

Reliable Auto Parts has 5,000 shares of common stock outstanding. The company also has the

following amounts in revenue and expense accounts.

Calculate
(a) gross profits.
(b) operating profits.
(c) net profits before taxes.
(d) net profits after taxes (assume a 40 percent tax rate).
(e) earnings available to common stockholders.
(g) earnings per share.