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Shtirlitz [24]
3 years ago
14

The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does no

t lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
Balance Sheet (Millions of $)
Assets 2016
Cash and securities $2,145
Accounts receivable 8,970
Inventories 12,480
Total current assets $23,595
Net plant and equipment $15,405
Total assets $39,000
Liabilities and Equity Accounts payable $7,410
Accruals 4,290
Notes payable 5,460
Total current liabilities $17,160
Long-term bonds $7,800
Total liabilities $24,960
Common stock $5,460
Retained earnings 8,580
Total common equity $14,040
Total liabilities and equity $39,000
Income Statement (Millions of $) 2016
Net sales $58,500
Operating costs except depreciation 54,698
Depreciation 1,024
Earnings before interest and taxes (EBIT) $2,779
Less interest 829
Earnings before taxes (EBT) $1,950
Taxes 683
Net income $1,268
Other data: Shares outstanding (millions) 500.00
Common dividends (millions of $) $443.63
Int rate on notes payable & L-T bonds 6.25%Federal plus state income tax rate 35%Year-end stock price $23.77A. What is the firm's current ratio?B. What is the firm's quick ratio?C. What is the firm's days sales outstanding? Assume a 365-day year for this calculation.D. What is the firm's total assets turnover?E. What is the firm's inventory turnover ratio?F. What is the firm's TIE?G. What is the firm's debt/assets ratio?H. What is the firm's ROA?I. What is the firm's ROE?
Business
1 answer:
nlexa [21]3 years ago
7 0

Answer:

A. 1.375

B. 0.648

C. 77.87 days

D. 1.5 times

E. 4.69 times

F. 3.35 times

G. 34 %

H. 4.63 %

I.  23.22%

Explanation:

A. What is the firm's current ratio

current ratio = current assets / current liabilities

                     = $23,595 / $17,160

                     = 1.375

B. What is the firm's quick ratio

 quick ratio   = (current assets - inventory) / current liabilities

                     = ($23,595 - $12,480) / $17,160

                     = 0.648

C. What is the firm's days sales outstanding Assume a 365-day year for this calculation.

days sales outstanding = Inventory / (Sales / 365)

                                       = $12,480 / ($58,500 /365)

                                       = 77.87 days

D. What is the firm's total assets turnover

total assets turnover = Sales / Total Assets

                                  = $58,500 / $39,000

                                  = 1.5 times

E. What is the firm's inventory turnover ratio?

inventory turnover ratio = Sales / Inventory

                                        = $58,500 / $12,480

                                        = 4.69 times

F. What is the firm's TIE?

Total Interest Expense (TIE) = Earnings before interest and taxes (EBIT) / Total Interest Expense

                                              = $2,779 / $829

                                              = 3.35 times

G. What is the firm's debt/assets ratio?

debt/assets ratio = Total Debt / Total Assets × 100

                            = ($5,460 + $ $7,800) / $39,000 × 100

                            = 34 %

H. What is the firm's ROA?

Return on Assets (ROA) = Earnings Before Interest After Tax (EBIAT) / Total Assets × 100

                                        = ($1,268 + ($829 × 65%)) / $39,000 × 100

                                        = 4.63 %

I. What is the firm's ROE?

Return on Equity (ROE) = Net Income / Total Shareholders Funds

                                      = $1,268 / $5,460 × 100

                                      = 23.22%

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