QUESTION 8 The balance sheet and income statement shown below are for Koski Inc.
ID: 2820683 • Letter: Q
Question
QUESTION 8
The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not 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 marketable securities
$2,245
Accounts receivable
9,870
Inventories
10,480
Total current assets
$22,595
Net plant and equipment
$65,405
Total assets
$88,000
Liabilities and Equity
Accounts payable
$10,410
Accruals
8,290
Notes payable
2,816
Total current liabilities
$21,516
Long-term bonds
$32,800
Total liabilities
$54,316
Common stock
$5,104
Retained earnings
28,580
Total common equity
$33,684
Total liabilities and equity
$88,000
Income Statement (Millions of $)
2016
Net sales
$85,500
Operating costs except depreciation
64,980
Depreciation
9,024
Earnings before interest and taxes (EBIT)
$11,496
Less interest
2226
Earnings before taxes (EBT)
$9,270
Taxes
3244.50
Net income
$6,025.50
Other data:
Shares outstanding (millions)
500.00
Common dividends (millions of $)
$843.63
Int rate on notes payable & L-T bonds
6.25%
Federal plus state income tax rate
35%
Year-end stock price
$205.42
Please calculate the following ratios of the firm (Do not round your intermediate calculations):
f. TIE
g. ROA
h. ROE
i. Debt-to-Assets
j. Debt-to-Capital
k. Profit Margin
l. BEP
m. ROIC
n. Operating Margin
o. DPS
p. EPS
q. P/E
r. Market-to-Book
s. EM
Explanation / Answer
As per rules I will answer the first 4 sub parts of the question
f. TIE = EBIT/ Interest
= 11496/ 2226
= 5.16
g. ROA = Net Income/ Total assets
= 6,025.50/ 88,000
= 6.85%
h. ROE = Net Income/ Total equity
= 6,025.50/ 33,684
= 17.89%
i. Debt-to-Assets = Total liabilities/ Total assets
= 54,316/ 33,684
=1.61
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