Reference no: EM133072730

1) Calculate the equity multiplier and equity ratio when debt ratio is 42%.

2) A company has an assets of 4000 and equity multiplier of 1.27. Interest rate on existing debts is 11%. Operating profit margin on sales is 18.5%. Total asset turnover is 2.43. Calculate the company's a) Net Profit Margin on Sales b) Return on Assets c) Return on Equity d) Times Interest Earned, when the corporate income tax rate is 20%.

3) Average collection period of a company is 43 days. Management accepted a new credit policy. According to the new plan average collection period will be reduced to 36 days. Last year credit sales amounted to 9000000 KZT. For next year management estimates the sales to increase by 40 percent. Calculate the average receivables for both current and next years.

4) In 2016 assets of a company were 6300. Return on Assets was 12.5% and Return on Equity was 18%. Annual sales of the company were 17600 and average collection period was 52 days. For 2017, company doesn't expect a change in credit sales. But management developed a new credit plan. According to the new plan DSO is expected to decrease to 35 days. And funds generated through the plan will be used to reduce common equity (shares will be purchased at book value). Calculate the expected return on equity if the plan becomes successful.

5) A company's profit margins and industry averages compared below. Company Industry Gross Profit Margin on Sales 42% 40% Operating Profit Margin on Sales 18% 17% Net Profit Margin on Sales 6% 14% What can you say about company's capital structure? Just make a verbal estimation about the liquidity of the company. If return on assets of company and industry are equal, what can you say about the total assets turnover and return on equity?