Reference no: EM131288154
A company has the following ratios:
Current ratio - .85
Inventory to Sales Conversion Period – 180 days
Sales to Cash Conversion Period – 40 days
Purchases to Payments Conversion Period - 7 days
The accountant also reports that the gross profit margin is 15% and the next profit margin is 3%.
Now you are being provided with this additional information on the company.
The company also has a bank line of credit that allows the company to borrow any shortfall it might have in cash. Interest on the loan is 10%. Assume the loan remained constant throughout the year.
The company has $1,000,000 of equity and $120,000 in retained earnings at the end of the year.
Sales in the most recent year were $2,500,000.
Ignore income tax for purposes of this problem.
Question: Based on all of the above information, will this company have a good return on equity or a poor return on equity?
Build a balance sheet and income statement financial model to prove your answer.
International aspects of doing business
: Select an article published in January 2012 or later that deals with the international aspects of doing business. See the Grades section of the syllabus for the specifics of the format for this summary. You will also find a sample in the course H..
|
What is earnings per share reported
: Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings pe..
|
Level of outsourcing to international subcontractors
: What are the reasons for the increasing level of outsourcing to international subcontractors?- Explain the shift from seller to buyer initiative in subcontracting.
|
Describe the effects of these diplomatic efforts for the u.s
: Cite at least four (4) reputable sources in addition to the textbook, not including Wikipedia, encyclopedias, or dictionaries.
|
Good return on equity or poor return on equity
: The company also has a bank line of credit that allows the company to borrow any shortfall it might have in cash. Interest on the loan is 10%. Assume the loan remained constant throughout the year. The company has $1,000,000 of equity and $120,000 in..
|
Develop a consensus investment strategy
: Develop a consensus investment strategy. Your initial portfolio must have at least 5 securities and should cover at least 5% of your budget. StockTrak will allow you to complete up to 400 transactions.
|
Develop a checklist for pilots that takes
: Assignment: For this activity, you are to develop a checklist for pilots that takes them through a step-by-step process for avoiding altimeter-setting errors.
|
The us and the japanese subsupplier systems
: Explain the main differences between the US and the Japanese subsupplier systems.- How are project exports/turnkey projects different from general subcontracting in the industrial market?
|
What are cumulative total passive suspended losses
: Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $58,500. At the beginning of year 1, Molly has tax basis and an at-risk amount of $21,500. In year 1, Beau Geste incurs a loss of $187,000 ..
|