Session:6 Measures of Financial Health
Problems
Principles of Finance | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance
1. Sarah’s Toy Shop has total sales of $100,000, net credit sales of $70,000, beginning accounts receivable of
$20,000, and ending accounts receivable of $30,000. What is Sarah’s accounts receivable turnover?
Assume industry average is 2.9 times. How would you interpret Sarah’s turnover?
2. Fantastic Foods has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of
cash, $10,000 of short term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is Fantastic Foods’ current ratio?
3. The Big Club has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of
cash, $10,000 of short-term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is The Big Club’s quick ratio?
4. Giant Sales has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of cash,
$10,000 of short-term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is Giant Sales’ cash ratio?
5. Bonita’s Bread Company has total debt of $250,000 and total assets of $150,000. What is Bonita’s debt-toassets ratio, and what can we infer about Bonita’s company using the ratio?
6. Jai Company has total liabilities of $200,000 and total stockholder equity of $300,000. What is the debt-toequity ratio for Jai Company, and what can we infer about the firm using this ratio?
7. Jamilah’s Manufacturing Company has earnings before interest and taxes of $29,000 and interest expense
of $4,000 for the most current period. What is Jamilah’s times interest earned ratio?
8. Sarai’s Sandy Beach Gear has net sales of $100,000, cost of goods sold of $60,000, and net income of
$25,000. What is Sarai’s profit margin?
9. Bob’s Tires Inc. has sales of $100,000, net income of $50,000, beginning asset balance of $200,000, ending
asset balance of $220,000, beginning stockholder equity of $160,000, and ending stockholder equity of
$200,000. What is Bob’s return on total assets?
10. Bob’s Tires Inc. has sales of $100,000, net income of $50,000, beginning asset balance of $200,000, ending
asset balance of $220,000, beginning stockholder equity of $160,000, and ending stockholder equity of
$200,000. What is Bob’s return on equity?
$20,000, and ending accounts receivable of $30,000. What is Sarah’s accounts receivable turnover?
Assume industry average is 2.9 times. How would you interpret Sarah’s turnover?
2. Fantastic Foods has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of
cash, $10,000 of short term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is Fantastic Foods’ current ratio?
3. The Big Club has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of
cash, $10,000 of short-term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is The Big Club’s quick ratio?
4. Giant Sales has total assets of $150,000, current assets of $80,000 (current assets includes $30,000 of cash,
$10,000 of short-term investments, $20,000 of accounts receivable, and $20,000 of inventory), total
liabilities of $120,000, and current liabilities of $70,000. What is Giant Sales’ cash ratio?
5. Bonita’s Bread Company has total debt of $250,000 and total assets of $150,000. What is Bonita’s debt-toassets ratio, and what can we infer about Bonita’s company using the ratio?
6. Jai Company has total liabilities of $200,000 and total stockholder equity of $300,000. What is the debt-toequity ratio for Jai Company, and what can we infer about the firm using this ratio?
7. Jamilah’s Manufacturing Company has earnings before interest and taxes of $29,000 and interest expense
of $4,000 for the most current period. What is Jamilah’s times interest earned ratio?
8. Sarai’s Sandy Beach Gear has net sales of $100,000, cost of goods sold of $60,000, and net income of
$25,000. What is Sarai’s profit margin?
9. Bob’s Tires Inc. has sales of $100,000, net income of $50,000, beginning asset balance of $200,000, ending
asset balance of $220,000, beginning stockholder equity of $160,000, and ending stockholder equity of
$200,000. What is Bob’s return on total assets?
10. Bob’s Tires Inc. has sales of $100,000, net income of $50,000, beginning asset balance of $200,000, ending
asset balance of $220,000, beginning stockholder equity of $160,000, and ending stockholder equity of
$200,000. What is Bob’s return on equity?