The following data apply to A.L Kaiser & Company(millions of dollars) Cash and equivalents $ 100.00 Fixed
Question:
The following data apply to A.L Kaiser & Company(millions of dollars)
Cash and equivalents $ 100.00
Fixed assets 283.50
Sales 1,000.00
Net Income 50.00
Current liabilities 105.50
Current ratio 3.00X
DSO* 40.55 day
ROE 12.00%
This calculation is based on a365 day year
Kalser has no preferred stock-only common equity, current liabilities, and long term debt.
a. Find Kaiser’s (1) accounts receivable, (2) Current Assets, (3) total assets, (4) ROA, (5) common equity, (6) quick ratio, and (7) long-term debt.
b. In Part a, you should have found that Kaiser’saccounts receivable (A/R) = $111.1 million. If Kaiser could reduce its DSO from 40.55 day to 30.4 day while holding other things constan hom much cash would it generate ? If this cash were used to buy back common stock (at book value), thus reducing common equity, how would this affect (1) the ROE, (2) the ROA, and (3) the total debt/total assets ratio?
Expert Answer:
We will compute the ff requirements with simple explanation in each requirement 1 Accounts Receivabl... View the full answer
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
