FIN $5300$

Assignment$-1($Unit$-1)$

Solve all of the following problems:

The Smith company has $$2,392,500$ in current assets and $$1,076,625$ in current liabilities. Its initial inventory level is $$526,350$ and it will raise funds as additional notes payable $($short$-$term$)$ and use them to increase inventory. How much can its short$-$term debt $($notes payable$)$ increase so that the company can maintain a current ratio of $2\mathrm{.}0?$

Assume the following information for Brandon Corporation:

Sale$\frac{s}{T}$otal assets $=1\mathrm{.}3$

Return $on$ assets $($ ROA $)=4\%$

Return $on$ equity $($ ROE $)=7\%$

Calculate the firm's profit margin and debt$-$to$-$capital ratio assuming that the firm uses only debt and common equity, so total assets equal total invested capital.

$3.$ Cooper Industries' net income is $$24,000.$ Its interest expense is $$5,000$ and its tax rate is $25\%.$ Its notes payables equal $$27,000,$ long$-$term debt equals $$75,000,$ and common equity equals $$250,000.$ The firm finances with only debt and common equity. Calculate the firm's ROE and ROIC.

$4.$ Tanaz Inc. has $$17$ million in sales. The company's ROE is $17\%$ and its total assets turnover is $3\mathrm{.}2.$ Common equity on the company's balance sheet is $50\%$ of its total assets. Find the company's net income.

$5.$ Thomson Trucking Co$.$ has $$12$ billion in assets and its tax rate is $25\%.$ The firm's basic earning power ratio is $10\%$ and its ROA is $5\mathrm{.}25\%.$ What is the firm's times interest earned