Question

Pettijohn Inc. The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over. Balance Sheet (Millions of $) Assets 2016 Cash and securities $ 1,554.0 Accounts receivable 9,660.0 Inventories 13,440.0 Total current assets $24,654.0 Net plant and equipment 17,346.0 Total assets $42,000.0 Liabilities and Equity Accounts payable $ 7,980.0 Notes payable 5,880.0 Accruals 4,620.0 Total current liabilities $18,480.0 Long-term bonds 10,920.0 Total liabilities $29,400.0 Common stock 3,360.0 Retained earnings 9,240.0 Total common equity $12,600.0 Total liabilities and equity $42,000.0 Income Statement (Millions of $) 2016 Net sales $58,800.0 Operating costs except depr'n $54,978.0 Depreciation $ 1,029.0 Earnings bef int and taxes (EBIT) $ 2,793.0 Less interest 1,050.0 Earnings before taxes (EBT) $ 1,743.0 Taxes $ 610.1 Net income $ 1,133.0 Other data: Shares outstanding (millions) 175.00 Common dividends $ 509.83 Int rate on notes payable & L-T bonds 6.25% Federal plus state income tax rate 35% Year-end stock price $77.69 a. Refer to the data for Pettijohn Inc. What is the firm's current ratio? b. Refer to the data for Pettijohn Inc. What is the firm's quick ratio? c. Refer to the data for Pettijohn Inc. What is the firm's debt ratio (i.e., debt-to-assets ratio)? d. Refer to the data for Pettijohn Inc. What is the firm's profit margin? e. Refer to the data for Pettijohn Inc. What is the firm's equity multiplier?

Answer 1

Answer a. Current Ratio Current Assets$24,654.0 Current Liabilities $18,480.0 Current Ratio-Current Assets Current Liabilities $24,654.0 $18,480.0 Answer b. Quick ratio Quick Assets- Current Assets Inventories - $24,654.0 $13,440.0 -$11,214.0 Current Liabilities $18,480.0 Quick RatioQuick Assets Current Liabilities $11,214.0 $18,480.0 Answer c. Debt Ratio Total Debt- Notes payable + Long-term bondsTotai Liabitities = $5.880+ $10.920 $16,800.0 Total Assets - $42,000.0

Debt Ratio- Total Debt Total Assets $16,800.0 $42,000.0 0.40 or 40% Answer d. Profit Margin Net Income $1,133.0 Net Sales $58,800.0 Net Income Profit Margin - Net Sales $1,133.0 $58,800.0 0.0193 or 1.93%) Answer e. Equity Multiplier Total Assets = $42.000 Total Common Equity- $12,600.0 Total Assets Equity Multiplier - Total Common Equity $42,000 12,600.0 - 3.33

Answer 2

What is the firm's day sale outstanding? Assume a 360 day year for this calculations

Answer 3

What is the total assets turnover Pettijohn Inc

Answer 4

What is the firm's day sale outstanding? Assume a 360 day year for this calculations

Answer: annual sales / 360          acc receivable  9,660 / 163.33 = 59.14

=58,800 / 360

= 163.33