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If a firm sold some inventory for cash and left the funds in its bank account, its current ratio would probably not change much, but its quick ratio would decline.

Wu Systems has the following balance sheet. Assume that all current assets are used in operations.  How much net operating working capital does the firm have?  Cash $ 100   Accounts payable $ 200 Accounts receivable 650   Accruals 155 Inventory 550   Notes payable 545 Current assets $ 1,300           Total current liabilities $ 900 Net fixed assets $ 1,000   Long-term bonds 600                Total liabilities   $ 1,500       Common stock 300       Retained earnings                 500               Common equity             $ 800  Total assets $ 2,300   Total liab. & equity $ 2,300

In general, it’s better to have a low inventory turnover ratio than a high one, as a low ratio indicates that the firm has an adequate stock of inventory relative to sales and thus will not lose sales as a result of running out of stock.

Meyer Inc’s total invested capital is $670,000, and its total debt outstanding is $185,000. The new CFO wants to establish a total debt to total capital ratio of 55%. The size of the firm will not change. How much debt must the company add or subtract to achieve the target debt to capital ratio?

The annual rate of return on any given stock can be found as the stock’s dividend for the year plus the change in the stock’s price during the year, divided by its beginning-of-year price. If you obtain such data on a large portfolio of stocks, like those in the S&P 500, find the rate of return on each stock, and then average those returns, this would give you an idea of stock market returns for the year in question.

In general, if investors believe that a company is relatively risky and/or has relatively poor growth prospects, then the company will have relatively high P/E, M/B, and EV/EBITDA ratios.

Bauer Software’s current balance sheet shows total common equity of $5,125,000. The company has 300,000 shares of stock outstanding, and they sell at a price of $27.50 per share. By how much do the firm’s market and book values per share differ? (Round your intermediate and final answers to two decimal places.)

Over the years, O’Brien Corporation’s stockholders have provided $20,000,000 of capital, when they purchased new issues of stock and allowed management to retain some of the firm’s earnings. The firm now has 1,000,000 shares of common stock outstanding, and it sells at a price of $41.00 per share. How much value has O’Brien’s management added to stockholder wealth over the years, i.e., what is O’Brien’s MVA?

Ajax Corp’s sales last year were $510,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm’s times-interest-earned (TIE) ratio?

Maureen Smith is a single individual. She claims a standard deduction of $12,000. Her salary for the year was $134,750. What is her taxable income?