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1. Recently, the owner of Martha's Wares encountered severe legal problems and is trying to sell her business. The company built a building at a cost of $1,240,000 that is currently appraised at $1,440,000. The equipment originally cost $720,000 and is currently valued at $467,000. The inventory is valued on the balance sheet at $410,000 but has a market value of only one-half of that amount. The owner expects to collect 98 percent of the $225,200 in accounts receivable. The firm has $10,500 in cash and owes a total of $1,440,000. The legal problems are personal and unrelated to the actual business. What is the market value of this firm?

a. $1,333,396

b. $672,000

c. $1,108,196

d. $903,196

e. $1,743,396

2. Your firm has net income of $329 on total sales of $1,340. Costs are $740 and depreciation is $130. The tax rate is 30 percent. The firm does not have interest expenses. What is the operating cash flow?

a. $459

b. $470

c. $329

d. $799

e. $600

3. A firm has net working capital of $570, net fixed assets of $2,316, sales of $6,800, and current liabilities of $880. How many dollars worth of sales are generated from every $1 in total assets?

a. $2.94

b. $1.81

c. $2.36

d. $1.54

e. $2.13

4. Lee Sun's has sales of $3,850, total assets of $3,550, and a profit margin of 4 percent. The firm has a total debt ratio of 40 percent. What is the return on equity?

a. 4.34 percent

b. 3.85 percent

c. 7.23 percent

d. 13.83 percent

e. 4.00 percent

5. Samuelson's has a debt-equity ratio of 36 percent, sales of $15,000, net income of $2,500, and total debt of $12,700. What is the return on equity?

a. 16.67 percent

b. 19.69 percent

c. 3.60 percent

d. 7.09 percent

e. 5.21 percent

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