Reference no: EM131905247
1. Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,240,000 that is currently appraised at $1,440,000. The equipment originally cost $720,000 and is currently valued at $467,000. The inventory is valued on the balance sheet at $410,000 but has a market value of only one-half of that amount. The owner expects to collect 98 percent of the $225,200 in accounts receivable. The firm has $10,500 in cash and owes a total of $1,440,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?
a. $1,333,396
b. $672,000
c. $1,108,196
d. $903,196
e. $1,743,396
2. Your firm has net income of $329 on total sales of $1,340. Costs are $740 and depreciation is $130. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow?
a. $459
b. $470
c. $329
d. $799
e. $600
3. A firm has net working capital of $570, net fixed assets of $2,316, sales of $6,800, and current liabilities of $880. How many dollars worth of sales are generated from every $1 in total assets?
a. $2.94
b. $1.81
c. $2.36
d. $1.54
e. $2.13
4. Lee Sun's has sales of $3,850, total assets of $3,550, and a profit margin of 4 percent. The firm has a total debt ratio of 40 percent. What is the return on equity?
a. 4.34 percent
b. 3.85 percent
c. 7.23 percent
d. 13.83 percent
e. 4.00 percent
5. Samuelson's has a debt-equity ratio of 36 percent, sales of $15,000, net income of $2,500, and total debt of $12,700. What is the return on equity?
a. 16.67 percent
b. 19.69 percent
c. 3.60 percent
d. 7.09 percent
e. 5.21 percent
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