91Ó°ÊÓ

Du Pont Identity If Roten, Inc., has an equity multiplier of 1.35, total asset turnover of 2.15, and a profit margin of 5.8 percent, what is its ROE?

Equity Multiplier and Return on Equity Thomsen Company has a debt-equity ratio of .90. Return on assets is 10.1 percent, and total equity is \(\$ 645,000\). What is the equity multiplier? Return on equity? Net income?

EFN The most recent financial statements for Martin, Inc., are shown here: Assets and costs are proportional to sales. Debt and equity are not. A dividend of \(\$ 1,841.40\) was paid, and Martin wishes to maintain a constant payout ratio. Next year's sales are projected to be \(\$ 30,960\). What external financing is needed?

Sustainable Growth Assuming the following ratios are constant, what is the sustainable growth rate? Total asset turnover \(=1.90\) Profit margin \(=8.1 \%\) Equity multiplier \(=1.25\) Payout ratio \(=\mathbf{3 0} \%\)

External Funds Needed Cheryl Colby, CFO of Charming Florist Ltd., has created the firm's pro forma balance sheet for the next fiscal year. Sales are projected to grow by 10 percent to \(\$ 390\) million. Current assets, fixed assets, and short-term debt are 20 percent, 120 percent, and 15 percent of sales, respectively. Charming Florist pays out 30 percent of its net income in dividends. The company currently has \(\$ 130\) million of long-term debt and \(\$ 48\) million in common stock par value. The profit margin is 12 percent. 1\. Construct the current balance sheet for the firm using the projected sales figure. 2\. Based on Ms. Colby's sales growth forecast, how much does Charming Florist need in external funds for the upcoming fiscal year? 3\. Construct the firm's pro forma balance sheet for the next fiscal year and confirm the external funds needed that you calculated in part (b).

Sustainable Growth Rate The Steiben Company has an ROE of \(\mathbf{1 0 . 5}\) percent and a payout ratio of 40 percent. 1\. What is the company's sustainable growth rate? 2\. Can the company's actual growth rate be different from its sustainable growth rate? Why or why not? 3\. How can the company increase its sustainable growth rate?

Return on Equity Firm \(A\) and Firm B have debt-total asset ratios of \(\mathbf{4 0}\) percent and \(\mathbf{3 0}\) percent and returns on total assets of 12 percent and 15 percent, respectively. Which firm has a greater return on equity?

Ratios and Fixed Assets The Le Bleu Company has a ratio of long-term debt to total assets of .40 and a current ratio of 1.30. Current liabilities are \(\$ 900\), sales are \(\$ 5,320\), profit margin is 9.4 percent, and ROE is 18.2 percent. What is the amount of the firm's net fixed assets?

Calculating the Cash Coverage Ratio Titan Inc.'s net income for the most recent year was \(\$ 9,450\). The tax rate was 34 percent. The firm paid \(\$ 2,360\) in total interest expense and deducted \(\$ 3,480\) in depreciation expense. What was Titan's cash coverage ratio for the year?

Cost of Goods Sold Guthrie Corp. has current liabilities of \(\$ \mathbf{\$ 2 7 0 , 0 0 0}\), a quick ratio of 1.1, inventory turnover of 4.2 , and a current ratio of 2.3. What is the cost of goods sold for the company?