Cross Town Express has sales of $137,000, net income of $14,000, total assets of $98,000, and total equity of $45,000

Cross Town Express has sales of $137,000, net income of $14,000, total assets of $98,000, and total equity of $45,000. The firm paid $7,560 in dividends and maintains a constant dividend payout ratio. Currently, the firm is operating at full capacity. All costs and assets vary directly with sales. The firm does not want to obtain any additional external equity. At the sustainable rate of growth, how much new total debt must the firm acquire?    A.  $0 B.  $6,311 C.  $6,989 D.  $7,207 E.  $8,852 Dividend payout ratio = $7,560/$14,000 = 0.54 Retention ratio = 1 - 0.54 = 0.46 Sustainable growth = [($14,000/$45,000) × 0.46]/{1 - [($14,000/$45,000) × 0.46]} = 0.167012 Projected total assets = $98,000 × 1.167012 = $114,367.22 Current debt = $98,000 - $45,000 = $53,000 Projected equity = $45,000 + ($14,000 × 1.167012 × 0.46) = $52,515.56 New debt required = $114,367.22 - $53,000 - $52,515.56 = $8,852

57.	The Two Sisters has a 9 percent return on assets and a 75 percent retention ratio. What is the internal growth rate?    A.  6.50 percent B.  6.75 percent C.  6.97 percent D.  7.24 percent E.  7.38 percent Internal growth rate = (0.09 × 0.75)/[1 - (0.09 × 0.75)] = 7.24 percent

58.

The Dog House has net income of $3,450 and total equity of $8,600. The debt-equity ratio is 0.60 and the payout ratio is 30 percent. What is the internal growth rate?    A.  14.47 percent B.  17.78 percent C.  21.29 percent D.  29.40 percent E.  33.33 percent Total assets = $8,600 × (1 + 0.60) = $13,760 Return on assets = $3,450/$13,760 = .250727 Internal growth = [.250727 × (1 - 0.30]/[1 - (.250727 × (1 - 0.30)] = 21.29 percent

Davis and Davis have expected sales of $490, $465, $450, and $570 for the months of January through April, respectively

Davis and Davis have expected sales of $490, $465, $450, and $570 for the months of January through April, respectively. The accounts receivable period is 28 days. What is the accounts receivable balance at the end of March? Assume a year has 360 days.    A.  $420 B.  $426 C.  $440 D.  $450 E.  $482 March ending receivables = (28/30) $450 = $420

77.

The Athletic Sports Store has a beginning receivables balance on January 1 of $410. Sales for January through April are $440, $480, $690, and $720, respectively. The accounts receivable period is 60 days. How much did the firm collect in the month of April? Assume a year has 360 days.    A.  $410 B.  $440 C.  $480 D.  $690 E.  $720 April collections = February sales = $480

78.

Breakwater Aquatics has a 45 day accounts receivable period. The estimated quarterly sales for this year, starting with the first quarter, are $6,800, $7,100, $8,200, and $6,400, respectively. What is the accounts receivable balance at the beginning of the third quarter? Assume a year has 360 days.    A.  $3,400 B.  $3,550 C.  $6,950 D.  $7,100 E.  $7,650 A/R Begin Q3 = A/R End Q2 = (45/90) $7,100 = $3,550

79.

The Dog House expects sales of $560, $650, $630, and $610 for the months of May through August, respectively. The firm collects 20 percent of sales in the month of sale, 70 percent in the month following the month of sale, and 8 percent in the second month following the month of sale. The remaining 2 percent of sales is never collected. How much money does the firm expect to collect in the month of August?    A.  $615 B.  $628 C.  $633 D.  $639 E.  $643 August collections = 0.20($610) + 0.70($630) + 0.08($650) = $615