Friday 8 June 2012

Marshall Networks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%.

Marshall Networks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%. The firm has a return on equity of 17.5%. Calculate Marshall’s debt ratio.
a.  30%
b.  40%
c.  50%
d.  60%

Use the following information and the percent-of-sales method to Answer questions 10 -12.
Below is the 2004 year-end balance sheet for Banner, Inc. Sales for 2004 were $1,600,000 and are expected to be $2,000,000 during 2005. In addition, we know that Banner plans to pay $90,000 in 2005 dividends and expects projected net income of 4% of sales. (For consistency with the Answer selections provided, round your forecast percentages to two decimals.)
                 Banner, Inc. Balance Sheet
                       December 31, 2004
Assets
Current assets                                   $890,000
Net fixed assets                                     1,000,000
Total                                                    $1,890,000
Liabilities and Owners’ Equity
Accounts payable                                    $160,000
Accrued expenses                                        100,000
Notes payable                                              700,000
Long-term debt                                            300,000
Total liabilities                                       1,260,000
Common stock (plus paid-in capital)          360,000
Retained earnings                                        270,000
Common equity                                            630,000
Total                                                    $1,890,000
 

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