Graded Homework

1.)Here is some income statement and balance sheet information:

Net Profit	$24.68 million
Sales	$227.1 million
Assets	$158.99 million
Equity	$76.77 million

Calculate the asset turnover ratio. Round your answer to
two decimal places. E.g., if you calculate 1.764, you would enter 1.76 in
the answer box.

2.)You know that Return on
Equity is 29.9%, that Return on Sales is 8.8% and Asset Turnover is 1.47.
Calculate the Leverage implied by these data.

Round your answer to two
decimal places. E.g., if you calculate 1.764, you would enter 1.76 in the
answer box.

3.)Which set of actions all work to increase
leverage?

	Borrow money, buy back stock, issue dividends
	Borrow money, sell stock, cancel dividend payouts

	Issue stock, issue dividends, retire debt
	Buy back stock, cancel dividends, retire debt

Borrow money, sell stock, issue dividend payouts

4.)Here is some income statement and balance sheet information:

Net Profit	$15.31 million
Sales	$243.01 million
Assets	$157.72 million
Equity	$70.81 million

Assume that from this baseline information you were to pay off
$19.6 million in bond debt. Ignoring interest rate and service charge
implications, how much would the Leverage ratio increase or
decrease? Record an increase as positive, a decrease as negative,
omitting the percentage symbol and rounding to 2 points of
precision. E.g., if the Leverage changes from 2.25 to 2.00, you would
record -.25 in the answer box.

5.)Here is some income statement and balance sheet information:

Net Profit	$18.26 million
Sales	$269.79 million
Assets	$148.56 million
Equity	$63.11 million

Calculate the leverage ratio. Round your answer to two
decimal places. E.g., if you calculate 1.764, you would enter 1.76 in the
answer box.

6.)You are doing financial planning for the next fiscal
year. You have the following forecast information and a
target Return on Equity of 26.9%.

Net Profit	$ ? million
Sales	$213.31 million
Assets	$193.87 million
Equity	$131.16 million

How much profit ($ million) will you need to achieve the
target Return on Equity of 26.9%?

Record your answer rounding to 2 points of precision. E.g., if
you calculate that you will need $2.578 million to achieve the desired ROE,
then you would record 2.58 in the answer box.

7.)Check all statements that are correct.

	Issuing stock tends to decrease leverage and increase ROE
	If assets and equity are reduced by the same dollar amount, leverage will stay the same

	If assets and equity are reduced by the same dollar amount, leverage will increase
	Ignoring interest and service charge effects, decreasing debt tends to decrease leverage.

	Ignoring interest and service charge effects, decreasing debt tends to increase leverage.
	Issuing stock tends to decrease leverage and increase ROE

8.)Here is some income statement and balance sheet information:

Net Profit	$20.63 million
Sales	$221.0 million
Assets	$127.02 million
Equity	$139.17 million

Assume that from this baseline information you were to issue
$14.57 million in stock. How much would the ROE percentage increase or
decrease? Record an increase as positive, a decrease as negative,
omitting the percentage symbol and rounding to 1 point of precision.
E.g., if the ROE changes from 24.2% to 20.1%, you would record -4.1 in the
answer box.