Muscarella Inc. has the following balance sheet and income state

Muscarella Inc. has the following balance sheet and income state


Asked by 6 years ago
393k points
  1. Muscarella Inc. has the following balance sheet and income statement data:

Cash $ 14,000 Accounts payable $ 42,000

Receivables 70,000 Other current liabilities 28,000

Inventories 210,000 Total CL $ 70,000

Total CA $294,000 Long-term debt 70,000

Net fixed assets 126,000 Common equity 280,000

Total assets $420,000 Total liab. and equity $420,000

Sales $280,000

Net income $ 21,000

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?

a. 4.28%

b. 4.50%

c. 4.73%

d. 4.96%

e. 5.21%

Muscarella Inc
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2 Answers

Answered by 6 years ago
405.9k points

Oh Snap! This Answer is Locked

 Muscarella Inc. has the following balance sheet and income state

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Excerpt from file: 4. Muscarella Inc. has the following balance sheet and income statement data: Cash 14,000 Accounts payable 42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 210,000 Total CL 70,000 Total CA 294,000 Long-term debt 70,000 Net fixed assets 126,000 Common equity 280,000 Total

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J
Answered by 2 years ago
0 points

Oh Snap! This Answer is Locked

 Muscarella Inc. has the following balance sheet and income state

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Excerpt from file: Week2DQ3 Howdothevariousclassificationsofinvestmentsaffectfinancialstatements?Whatisthe rationalebehindthedifferentaccountingmethodsforthevariousinvestmentclassifications? Whichismoreimportantwhendeterminingtheaccountingmethodforsecurities,influence, orownership?Explainwhy.

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Views: 875
Asked: 6 years ago

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