# Finance Chapter 3

PROBLEM:01 The formula which breaks down the return on equity into three component parts is referred to as DuPont formula. PROBLEM:02 The Purple Martin has annual sales of \$687,400, total debt of \$210,000, total equity of \$365,000, and a profit margin of 4. 80 percent. What is the return on assets? ROA = net income / total assets ROA = (687400 * 4. 80) / (210000 + 365000) ROA = 5. 74 PROBLEM:03 The Meat Market has \$747,000 in sales. The profit margin is 4. 1 percent and the firm has 7,500 shares of stock outstanding. The market price per share is \$22. What is the price-earnings ratio?
P/E = market value per share / earnings per share P/E = 22 / (747000 * 4. 1 / 7500) P/E = . 0539 PROBLEM:04 Beach Wear has current liabilities of \$350,000, a quick ratio of 1. 65, inventory turnover of 3. 2, and a current ratio of 2. 9. What is the cost of goods sold? CA = current ratio * current liablities CA = 2. 9 * 350000 CA = 1015000 QR = (CA – Inventory) / CL 1. 65 = (1015000 – Inventory) / 350000 Inventory = 437500 Cost of goods sold = IT * T Cost of goods sold = 3. 2 * 4375000 Cost of goods sold = 1400000 PROBLEM:05 Study the comparative balance sheets for Kyprianides Inc. nd Pecchia Company in the year 2011. Notice that both companies have the same amount of assets. However, there are some differences in the way the two companies finance those assets. Fill in the spaces on the balance sheets and then answer the following questions. Kyprianides Inc. Pecchia Co. Current Assets Cash and equivalents200300 Accounts Receivable1,1002,400 Inventory 4,6002,000 Total Current Assets 4,9004,700 Property, Plant and Equipment10,00011,200 Total Assets 15,90015,900 Current Liabilities Accounts Payable 3,0003,200 Current portion of LT debt200400
Total Current Liabilities 3,2003,600 Notes payable 2,0007,000 Total Liabilities 5,20010,600 Common Stock6,0002,000 Additional Paid-in Capital 1,0001,000 Retained Earnings 3,7002,300 Total Stockholders’ Equity10,7005,900 Total Liab & SE15,90015,900 Using the financial data from the balance sheets above, fill in the following chart for both Kyprianides Inc. and Pecchia Co. RatioKyprianides Inc. Pecchia Co. Current Ratio4,900 / 3,200= 1. 534,700 / 3,600= 1. 31 Quick Ratio(4,900 – 4,600) / 3,200= . 094(4,700 – 2,000) / 3,600= . 750 Debt Ratio5,200 / 15,900= . 32710,600 / 15,900= . 667

Don't use plagiarized sources. Get Your Custom Essay on
Finance Chapter 3
Just from \$13/Page

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our Guarantees

### Money-back Guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism Guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision Policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.