Advanced Financial Management Worksheet- Prepared By: Giday G. (Ph.

D in Finance)
Worksheet

1. Ace Industries has current assets equal to $3 million. The company’s current ratio is 1.5, and its quick
ratio is 1.0. What is the firm’s level of current liabilities? What is the firm’s level of inventories? Assume
the firm is not having supplies.
2. Baker Brothers has a ACP of 40 days. The company’s annual sales are $7,300,000. What is the level of its
accounts receivable? Assume there are 365 days in a year. An. 800,000
3. Doublewide Dealers has an ROA of 10 percent, a 2 percent profit margin, and a return on equity equal to
15 percent. What is the company’s total assets turnover? What is the firm’s equity multiplier?
4. Jaster Jets has $10 billion in total assets. The left side of its balance sheet consists of $1 billion in current
liabilities, $3 billion in long-term debt, and $6 billion in common equity. The company has 800 million
shares of common stock outstanding, and its stock price is $32 per share. What is Jaster’s market/book
ratio?
5. Graser Trucking has $12 billion in assets, and its tax rate is 40 percent. The company’s basic earning
power (BEP = EBIT/ Total Asset) ratio is 15 percent, and its return on assets (ROA) is 5 percent. What is
Graser’s times-interest-earned (TIE) ratio?
6. Assume you are given the following relationships for the Brauer Corporation:
Sales/total assets 1.5X
Return on assets (ROA) 3%
Return on equity (ROE) 5%
Calculate Brauer’s profit margin and debt ratio.
7. The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, an inventory turnover of 6 times,
total current assets of $810,000, and cash and marketable securities of $120,000 in 2001. What were
Kretovich’s annual sales and its ACP for that year? Assume there are 365 days in a year.
8. The H.R. Pickett Corporation has $500,000 of debt outstanding, and it pays an interest rate of 10 percent
annually. Pickett’s annual sales are $2 million, its average tax rate is 30 percent, and its net profit margin
on sales is 5 percent. If the company does not maintain a TIE ratio of at least 5 times, its bank will refuse
to renew the loan, and bankruptcy will result. What is Pickett’s TIE ratio?
9. The Corrigan Corporation’s forecasted 2002 financial statements follow, along with some industry
average ratios. Calculate Corrigan’s 2002 forecasted ratios, compare them with the industry average data,
and comment briefly on Corrigan’s projected strengths and weaknesses.

1|Page
 Advanced Financial Management Worksheet- Prepared By: Giday G. (Ph.D in Finance)

10. Complete the balance sheet and sales information in the table that follows for Hoffmeister Industries using
the following financial data:
Debt ratio: 50% Quick ratio: 0.80X
Total assets turnover: 1.5X Days sales outstanding: 36.5 daysa
Inventory turnover ratio: 5X Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 25%
a
Calculation is based on a 365-day year.

2|Page
 Advanced Financial Management Worksheet- Prepared By: Giday G. (Ph.D in Finance)

11. Use the following industry average ratios to construct a Performa balance sheet for SIMBA INC.
Total asset turn over 2 times
Average collection period (assume 365 days) 9 days
Fixed asset turn over 5 times
Inventory turn over (cost-to-cost) 3 times
Current ratio 2 times
Sales (all on credit)$ $4,000,000
Cost of goods sold 75%of sales
Debt ratio 50%
SIMBA INC.
Balance sheet
Cash ---------- current liabilities -----------------
Inventories --------- long-term debt -----------------
Accounts receivable ----------- common and retained earning -----
Net fixed asset ---------- total $ ------------------------------
Total $----------

12. The following data apply to A.L Kaiser company (million of dollars)
Cash and marketable securities $100
Fixed assets 283.5
Sales 1,000
Net income 50
Quick ratio 2.0
Current rario3.0
Days sales outstanding 40 days
Return on equity 1.2%
Find the Kaisers:
A. Accounts receivable
B. Current liabilities
C. Current assets total assets
D. Return on assets
E. Common equity
F. Long term debt

3|Page
 Advanced Financial Management Worksheet- Prepared By: Giday G. (Ph.D in Finance)
13. Complete the following balance sheet using the following information provided below:

Cash --------------------? accounts payable --------------------100,000

Inventory ---------------? long term debt ------------------------?
Current assets-----------? total liabilities---------------------------?
Net fixed assts ----------1,500,000 common equity -------------------------?
Total-----------------------$2,100,000 total----------------------------------------2,100,000

Current ratio 6.0 inventory turnover =8.0

Debt ratio=20% total asset turn over=1.0
Average collection period=30 days gross profit margin=15%

4|Page