FIN 402 MASTER 1 Predictable World / fin402master.com FIN 402 MASTER 1 Predictable World / fin402master. | Page 29

Current assets
$600,000
Fixed assets 400,000
Current liabilities 300,000
Inventory
200,000
If inventory increases by $100,000, what will be the impact on the
current ratio, the quick ratio, and the net-working-capital-to-total-
assets ratio? Show the ratios before and after the changes.
9. Given the following financial data, compute:
10. Assume the following financial data:
Shares outstanding............................................................................
24,000
a. Compute the P/E ratio (stock price to earnings per share).
b. Compute the book value per share (note that book value equals
stockholders’ equity).
c. Compute the ratio of stock price to book value per share.
d. Compute the dividend yield.
e. Compute the payout ratio.
11. Security Analyst A thinks the Collins Corporation is worth 14
times current earnings. Security Analyst B has a different approach.
He assumes that 45 percent of earnings (per share) will be paid out in
dividends and the stock should provide a 4 percent current dividend
yield. Assume total earnings are $12 million and that 5 million shares
are outstanding.
a. Compute the value of the stock based on Security Analyst A’s
approach.