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(Solution Download) Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.4

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Assume you are given the following relationships for the Haslam

 

Corporation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales/total assets1.4
Return on assets (ROA)4%
Return on equity (ROE)7%

 

Calculate Haslam's profit margin. Do not round intermediate

 

calculations. Round your answer to two decimal places.

 

%

 

Calculate Haslam's liabilities-to-assets ratio. Do not round

 

intermediate calculations. Round your answer to two decimal

 

places.

 

%

 

Suppose half of Haslam's liabilities are in the form of debt.

 

Calculate the debt-to-assets ratio. Do not round intermediate

 

calculations. Round your answer to two decimal places.

 

%

 

2. Current and Quick Ratios

 

The Nelson Company has $1,140,000 in current assets and $475,000

 

in current liabilities. Its initial inventory level is $285,000,

 

and it will raise funds as additional notes payable and use them to

 

increase inventory.

 

How much can Nelson's short-term debt (notes payable) increase

 

without pushing its current ratio below 2.1? Round your answer to

 

the nearest cent.

 

$  

 

What will be the firm's quick ratio after Nelson has raised the

 

maximum amount of short-term funds? Round your answer to two

 

decimal places.

 







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