Some of the financial ratios from the annual report

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1. Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 5% and IR 5%. A stock with a beta of 1 on IP and 0.7 on IR currently is expected to provide a rate of return of 10%. If industrial production actually grows by 6%, while the inflation rate turns out to be 6%, what is your best guess for the rate of return on the stock? (Round your answer to 1 decimal place.)

2. Caseys Corp, known for pizza, had net income in 2011 of $160,000. Here are some of the financial ratios from the annual report.

Profit Margin 12%

Return on Assets 20%

Debt to Assets Ratio 55%

Using these ratios, calculate the following for Caseys Corp:

a) Sales

b) Total assets

c) Total asset turnover

d) Total debt

e) Stockholders' equity

f) Return on equity

Reference no: EM13814070

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