STR 581 help A Guide to career/uophelp.com STR 581 help A Guide to career/uophelp.com | Page 7

Inventory 950,000
Plant and equipment 1,330,000
Sales 10,000,000
A. Assets turnover ratio of 0.3

B. Debt to assets ratio of 3.4

C. Assets turnover ratio of 2.3
D. Debt to assets ratio of 0.4
15 Jose, a financial expert of Cerione Ltd., analyzes the data given
below. What conclusion is he likely to arrive at?
Sales $161,000
Cost of goods sold 110,000
Gross margin $ 51,000
Total selling and administrative expenses 39,500
Net operating income $ 11,500
Interest expenses 2,170
Net income before taxes $ 9,330
Income tax (30%) 2,799
Net income $ 6,531
A. The company does not have adequate resources to pay the interest
due to creditors.

B. The company’s gross margin is 20 percent.

C. The company has sufficient resources to pay the interest due to
creditors.
D. The company’s earnings before interest is the same as its earnings
after taxes.
16 The capital structure for Purnen Corporation is given below.
Calculate the weighted average cost of capital (WACC).
Debt: 10%, 1,500 bonds, 20 years to maturity, selling for 105% of par.
The bonds have a $1,000 par value each and make annual payments.