(3-1) Days sales outstanding Green Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year? Days of Sales Outstanding DSO= Receivables Average sales per day 20 days = Receivables Average sales per day Receivables= 20 days *$20,000 Receivables= $400,000 (3-2) Debt Ratio Vigo vacations has an equity multiplier of 2.5 .The company’s assets are financed with some
Words: 1542 - Pages: 7
Chapter 2 Pages 85-86 (2-1) An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond’s after-tax yield? We have 9% pretax yield X 36% combined taxes = .09x.36=.0324 (3%) .09-.0324=.0576 (6%) The after tax yield= %6 (2-2) Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk currently yield 6%. At what tax rate would an investor be indifferent between these two
Words: 2214 - Pages: 9
