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 $) 2021 Assets Cash and securities $ 4,200 Accounts receivable 17,500 Inventories 20,300 Total current assets $ 42,000 Net plant and equipment 28,000 Total assets $ 70,000 Liabilities and Equity Accounts payable $ 27,531 Accruals 12,369 Notes payable 5,000 Total current liabilities $ 44,900 Long-term bonds 9,000 Total liabilities $ 53,900 Common stock 3,864 Retained earnings 12,236 Total common equity $ 16,100 Total liabilities and equity $ 70,000 Income Statement (Millions of $) 2021 Net sales $ 112,000 Operating costs except depreciation 104,160 Depreciation 2,240 Earnings before interest and taxes (EBIT) $ 5,600 Less interest 840 Earnings before taxes (EBT) $ 4,760 Taxes (25%) 1,190 Net income $ 3,570 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $1,249.50 Int. rate on notes payable & L-T bonds 6% Federal plus state income tax rate 25% Year-end stock price $85.68 What is the firm's equity multiplier? Do not round your intermediate calculations. a. 5.72 b. 2.61 c. 2.79 d. 4.35 e. 3.35 Please show calculations and explain as well.
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 $) 2021 Assets Cash and securities $ 4,200 Accounts receivable 17,500 Inventories 20,300 Total current assets $ 42,000 Net plant and equipment 28,000 Total assets $ 70,000 Liabilities and Equity Accounts payable $ 27,531 Accruals 12,369 Notes payable 5,000 Total current liabilities $ 44,900 Long-term bonds 9,000 Total liabilities $ 53,900 Common stock 3,864 Retained earnings 12,236 Total common equity $ 16,100 Total liabilities and equity $ 70,000 Income Statement (Millions of $) 2021 Net sales $ 112,000 Operating costs except depreciation 104,160 Depreciation 2,240 Earnings before interest and taxes (EBIT) $ 5,600 Less interest 840 Earnings before taxes (EBT) $ 4,760 Taxes (25%) 1,190 Net income $ 3,570 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $1,249.50 Int. rate on notes payable & L-T bonds 6% Federal plus state income tax rate 25% Year-end stock price $85.68 What is the firm's equity multiplier? Do not round your intermediate calculations. a. 5.72 b. 2.61 c. 2.79 d. 4.35 e. 3.35 Please show calculations and explain as well.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The
| Balance Sheet (Millions of $) | 2021 | |||
| Assets | ||||
| Cash and securities | $ | 4,200 | ||
| Accounts receivable | 17,500 | |||
| Inventories | 20,300 | |||
| Total current assets | $ | 42,000 | ||
| Net plant and equipment | 28,000 | |||
| Total assets | $ | 70,000 | ||
| Liabilities and Equity | ||||
| Accounts payable | $ | 27,531 | ||
| Accruals | 12,369 | |||
| Notes payable | 5,000 | |||
| Total current liabilities | $ | 44,900 | ||
| Long-term bonds | 9,000 | |||
| Total liabilities | $ | 53,900 | ||
| Common stock | 3,864 | |||
| 12,236 | ||||
| Total common equity | $ | 16,100 | ||
| Total liabilities and equity | $ | 70,000 | ||
| Income Statement (Millions of $) | 2021 | |||
| Net sales | $ | 112,000 | ||
| Operating costs except |
104,160 | |||
| Depreciation | 2,240 | |||
| Earnings before interest and taxes (EBIT) | $ | 5,600 | ||
| Less interest | 840 | |||
| Earnings before taxes (EBT) | $ | 4,760 | ||
| Taxes (25%) | 1,190 | |||
| Net income | $ | 3,570 | ||
| Other data: | ||||
| Shares outstanding (millions) | 500.00 | |||
| Common dividends (millions of $) | $1,249.50 | |||
| Int. rate on notes payable & L-T bonds | 6% | |||
| Federal plus state income tax rate | 25% | |||
| Year-end stock price | $85.68 |
What is the firm's equity multiplier? Do not round your intermediate calculations.
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Please show calculations and explain as well.
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