FIN – Doris Wise is a young career woman

Doris Wise is a young career woman. She lives in Phoenix, Arizona, where she owns andoperates a highly successful modeling agency. Doris manages her modest but rapidly growinginvestment portfolio, made up mostly of high-grade common stocks. Because shes young andsingle and has no pressing family requirements, Doris has invested primarily in stocks that offerthe potential for attractive capital gains. Her broker recently recommended an auto companystock and sent her some literature and analytical reports to study. One report, prepared by thebrokerage house she deals with, provided an up-to-date look at the economy, an extensive studyof the auto industry, and an equally extensive review of several auto companies (including theone her broker recommended). She feels strongly about the merits of security analysis andbelieves it is important to spend time studying a stock before making an investment decision.Questionsa. Doris tries to stay informed about the economy on a regular basis. At the present time, mosteconomists agree that the economy, now well into the third year of a recovery, is healthy, withindustrial activity remaining strong. What other information about the economy do you thinkDoris would find helpful in evaluating an auto stock? Prepare a listand be specific. Which 3items of economic information (from your list) do you feel are most important? Explain.b. In relation to a study of the auto industry, briefly note the importance of each of the following.1. Auto imports2. The United Auto Workers union3. Interest rates4. The price of a gallon of gasc. A variety of financial ratios and measures are provided about one of the auto companies and itsstock. These are incomplete, however, so some additional information will have to be computed.Specifically, we know the following:Net profit margin 15%Total assets $25 billionEarnings per share $3.00Total asset turnover 1.5Net working capital $3.4Payout ratio 40%Current liabilities $5 billionPrice-to-earnings ratio 12.5Given this information, calculate the following:1. Sales2. Net profits after taxes3. Current ratio4. Market price of the stock5. Dividend yield