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- The Highly Liquid Bottled Water Company has current assets of $485,500, of which $127,500 is inventory, $3,950
is prepaid expenses, and the rest is cash and receivables. Current liabilities are $172,300. Calculate the company’s
current and quick ratios. - The Highly Illiquid Ice Company has current assets of $755,929. Of this, $433,043 is in cash and receivables, the
remainder is in inventory. Current liabilities total $748,889. Calculate the company’s current and quick ratios. - Suppose that your business makes a large amount of sales on credit to two large customers. Company A has a
quick ratio of 4.35, while Company B has a quick ratio of 0.72. Which customer are you more likely to have trouble
collecting from? - If a company’s current ratio is much larger than its quick ratio, and the company has no prepaid expenses on its books,
what can you say about its inventory? - Calculate the liabilities-to-equity ratio for the Tastee Lard Donut Shoppe.
- a. HighDebtCorp Inc. has net assets of $25,000,000. The company’s liabilities total $23,000,000. Calculate the
company’s equity and the company’s liabilities-to-equity ratio.
b. LowDebtCorp Inc. also has net assets of $25,000,000. The company’s liabilities total $5,000,000. Calculate the
company’s liabilities-to-equity ratio.
C. Valuation Ratios- Suppose that ExampleCo Inc. earned $575,923 last year and has shareholders’ equity of $3,545,926. The company
has 425,000 shares outstanding. Calculate the company’s EPS and book value per share. - Suppose that the Tastee Lard Donut Shoppe is a corporation with 750 shares outstanding. Calculate its 2007 earnings
per share and book value per share. - Texas Hypothetical Supply Corp. lost $1,953,026 last year. The company’s equity is $12,753,000. The company has
810,000 shares outstanding. Calculate the EPS and book value per share. - If a company earns $415,000 and is sold for $7,535,025, what is the price-to-earnings ratio?
- Suppose that the current market price of each share of ExampleCo Inc. (from Exercise 19) is $17.55. Calculate this
company’s PE and price-to-book ratios. - A company’s earnings per share is $3.79 and the stock price is $82.50. What is the PE ratio?
Exercises 12.3 517