# Stokes, Inc. has net working capital - Expert Answers

Stokes, Inc. has net working capital of $7,900, current liabilities of $5,220, and inventory of $2,000. What is the quick ratio?

1.21

1.13

1.89

2.1

You are considering a project with an initial cash outlay of $160,000 and expected free cash flows of $40,000 at the end of each year for 6 years. The required rate of return for this project is 10%. What is the project’s payback period?

4.5 years

4 years

6 years

5 years

Bill’s Billiards has total assets of $8 million and a total asset turnover of 2.9 times. If the return on assets is 11%, what is Bill's profit margin?

4.10%

11%

2.50%

3.79

Fijisawa, Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9%. Calculate the net present value and the internal rate of return.

NPV=$66,098, IRR=10.5

NPV=$72,097, IRR=9.5

NPV=$69,368, IRR=10

NPV=$68,663, IRR=10.2

Terry’s Trash removal has a total debt ratio of 0.45. What is the firm’s debt-to-equity ratio?

1.27

0.41

0.82

1.82

For the most recent year, Cal’s Cats had sales of $380,000, cost of goods sold of $93,000, depreciation expense of $47,000, and additions to retained earnings of $61,420. The firm had $52,000 in interest expense, and 34% tax rate. What were the times interest earned ratio?

4.61

2.8

2.2

5.8

Stokes, Inc. has net working capital of $7,900, current liabilities of $5,220, and inventory of $2,000. What is the current ratio?

2.1

1.51

0.77

1.89

The correct answer is 2.51 (please see the attached excel sheet)

Brenda Smith, Inc. had a gross profit margin (gross profits ÷ sales) of 25% and sales of $9.75 million last year. Seventy-five percent of the firm’s sales are on credit and the remainder are cash sales. Smith’s current assets equal $1,550,000, its current liabilities equal $300,000, and it has $150,000 in cash plus marketable securities. If Smith’s accounts receivable are $562,500, what is its average collection period?

28 days

32 days

25 days

14 days

Bob’s Garages has sales of $41 million, total assets of $32 million, and total debt of $11 million. If the profit margin is 12% what is the return on equity (ROE)?

51%

14%

23.40%

12%

The R. M. Senchack Corporation earned an operating profit margin of 6% based on sales of $11 million and total assets of $6 million last year. What was Senchack’s total asset turnover ratio?

5.4

1.8

1

0.54

1.21

1.13

1.89

2.1

You are considering a project with an initial cash outlay of $160,000 and expected free cash flows of $40,000 at the end of each year for 6 years. The required rate of return for this project is 10%. What is the project’s payback period?

4.5 years

4 years

6 years

5 years

Bill’s Billiards has total assets of $8 million and a total asset turnover of 2.9 times. If the return on assets is 11%, what is Bill's profit margin?

4.10%

11%

2.50%

3.79

Fijisawa, Inc. is considering a major expansion of its product line and has estimated the following free cash flows associated with such an expansion. The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of $450,000 per year for 6 years. The appropriate required rate of return is 9%. Calculate the net present value and the internal rate of return.

NPV=$66,098, IRR=10.5

NPV=$72,097, IRR=9.5

NPV=$69,368, IRR=10

NPV=$68,663, IRR=10.2

Terry’s Trash removal has a total debt ratio of 0.45. What is the firm’s debt-to-equity ratio?

1.27

0.41

0.82

1.82

For the most recent year, Cal’s Cats had sales of $380,000, cost of goods sold of $93,000, depreciation expense of $47,000, and additions to retained earnings of $61,420. The firm had $52,000 in interest expense, and 34% tax rate. What were the times interest earned ratio?

4.61

2.8

2.2

5.8

Stokes, Inc. has net working capital of $7,900, current liabilities of $5,220, and inventory of $2,000. What is the current ratio?

2.1

1.51

0.77

1.89

The correct answer is 2.51 (please see the attached excel sheet)

Brenda Smith, Inc. had a gross profit margin (gross profits ÷ sales) of 25% and sales of $9.75 million last year. Seventy-five percent of the firm’s sales are on credit and the remainder are cash sales. Smith’s current assets equal $1,550,000, its current liabilities equal $300,000, and it has $150,000 in cash plus marketable securities. If Smith’s accounts receivable are $562,500, what is its average collection period?

28 days

32 days

25 days

14 days

Bob’s Garages has sales of $41 million, total assets of $32 million, and total debt of $11 million. If the profit margin is 12% what is the return on equity (ROE)?

51%

14%

23.40%

12%

The R. M. Senchack Corporation earned an operating profit margin of 6% based on sales of $11 million and total assets of $6 million last year. What was Senchack’s total asset turnover ratio?

5.4

1.8

1

0.54

You'll get a 11.3KB .XLSX file.