Please help and show all work! 4) If Days Payables Outstanding for a firm is 42
ID: 2638978 • Letter: P
Question
Please help and show all work!
4) If Days Payables Outstanding for a firm is 42 days, Sales is $5,875,800, and the Gross Profit Margin is 38%, what is the level of Accounts Payable? 5) If the Debt to Asset Ratio for a firm is .62 and the level of Total Assets is $6,587,300, what is the debt to equity ratio? 6) If the Debt to Equity Ratio for a firm is .43, and the level of equity is $2,943,600, what is the level of Total Assets? 7) If Total Asset Turnover for a firm is 1.73 and Net Profit Margin is .065, what is the Return on Assets? 8) If the firm in (7) has a Debt to Asset Ratio of.38, what is their Return on Equity? 9) If Sales for a firm are $7,426,700 and the Net Profit Margin is .054, what is the earning after tax? 10) If the firm in (9) has total Assets of $5,856,200, what is the Return on Assets?Explanation / Answer
4. Cost of Purchase= $5,875,800 x 138 / 100 = $4,257,826
Days Payable Outstanding: 365 / Payable Turnover
42 = 365 / X,
X = 8.69, Payable Turnover = 8.69
Payable Turnover = Purchase / Trade Payable
8.69 = 4,257,826 / X
X = 489,968, Trade Payable = $489,968
5. If Debt to Asset Ratio = .62,
Than Equity is: 1 - .62 = .38
Equity = 6,587,300 / 100 x 38 = $2,503,174
Debt = 6,587,300 - 2,503,174 = $4,084,126
Debt to Equity Ratio = 4,084,126 / 2,503,174 = 1.63
6. Equity = 2,943,600, Debt = 2,943,600 x .43 = $1,265,748
Total of Equity and Debt= $4,209,348
Total Assets = Equity + Debt
Total Assets = $4,209,348
7. Asset Turnover = 1.73, than Sales = 1.73, Total Asset = 1,
Net Profit = 1.73 x .065 = 0.11
Return on Asset = 0.11 / 1 =11%
8. Total Asset = 1, Equity = 1 - .38 = .62,
ROE = .11 / .62 = 17.74%
9. Sales = 7,426,700, Net Profit = 7,426,700 x .054 = $401,042
EAT = $401,042 - tax
10. Return on Assets = 401,042 / 5,856,200 = 6.85%