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 2007 Cash and securities 2500 Accounts receivable 11500 Inventories 16000 Total current assets 30000 Net plant and equipment 20000 Total assets 50000 Liabilities and Equity Accounts payable 9500 Notes payable 7000 Accruals 5500 Total current liabilities 22000 Long-term bonds 15000 Total debt 37000 Common stock 2000 Retained earnings 11000 Total common equity 13000 Total liabilities and equity 50000 Income Statement (Millions of $) 2007 Net sales 87500 Operating costs except depreciation 81813 Depreciation 1531 Earnings bef interest and taxes (EBIT) 4156 Less interest 1375 Earnings before taxes (EBT) 2781 Taxes 973 Net income 1808 Other data: Shares outstanding (millions) 500 Common dividends 632.73 Int rate on notes payable & L-T bonds 0.0625 Federal plus state income tax rate 0.35 Year-end stock price 43.39
18. What is the firm's current ratio? a. 0.99 b. 1.10 c. 1.23 d. 1.36 e. 1.50
19. What is the firm's quick ratio? a. 0.51 b. 0.64 c. 0.76 d. 0.92 e. 1.10
20. What is the firm's days sales outstanding? Assume a 365-day year for this calculation. a. 39.07 b. 41.13 c. 43.29 d. 45.57 e. 47.97
21. What is the firm's total assets turnover? a. 1.12 b. 1.40 c. 1.75 d. 2.10 e. 2.52
22. What is the firm's inventory turnover ratio? a. 5.47 b. 5.74 c. 6.03 d. 6.33 e. 6.65
23. What is the firm's TIE? a. 2.20 b. 2.45 c. 2.72 d. 3.02 e. 3.33
24. What is the firm's debt ratio? a. 48.55% b. 53.95% c. 59.94% d. 66.60% e. 74.00%
25. What is the firm's ROA? a. 3.62% b. 3.98% c. 4.37% d. 4.81% e. 5.29%
26. What is the firm's ROE? a. 13.21% b. 13.91% c. 14.60% d. 15.33% e. 16.10%
27. What is the firm's BEP? a. 7.50% b. 7.90% c. 8.31% d. 8.73% e. 9.16%
28. What is the firm's profit margin? a. 1.51% b. 1.67% c. 1.86% d. 2.07% e. 2.27%
29. What is the firm's operating margin? a. 3.12% b. 3.46% c. 3.85% d. 4.28% e. 4.75%
30. What is the firm's dividends per share? a. $1.14 b. $1.27 c. $1.39 d. $1.53 e. $1.68
31. What is the firm's EPS? a. $3.26 b. $3.43 c. $3.62 d. $3.80 e. $3.99
32. What is the firm's P/E ratio? a. 12.0 b. 12.6 c. 13.2 d. 13.9 e. 14.6
P/E ratio = Price per share/Earnings per share = 12.0
We actually fixed the P/E ratio at 12 in order to get a stock price. Either the price or the P/E ratio must be fixed or the model becomes very complicated and a stock pricing equation is required.
33. What is the firm's book value per share? a. $22.29 b. $23.47 c. $24.70 d. $26.00 e. $27.30
34. What is the firm's market-to-book ratio? a. 0.87 b. 1.02 c. 1.21 d. 1.42 e. 1.67
35. What is the firm's equity multiplier? a. 3.85 b. 4.04 c. 4.24 d. 4.45 e. 4.68
18)
Current ratio = Current assets/Current liabilities = 1.36
19)
Quick ratio = (CA − Inventory)/CL = 0.64
20)
DSO = Accounts receivable/(Sales/365) = 47.97
21)
Total assets turnover ratio = TATO = Sales/Total assets = 1.75
22)
Inventory turnover ratio = Sales/Inventory = 5.47
23)
TIE = EBIT/Interest charges = 3.02
24)
Debt ratio = Total debt/Total assets = 74.0%
25)
ROA = Net income/Total assets = 3.62%
26)
ROE = Net income/Common equity = 13.91%
27)
BEP = EBIT/Total assets = 8.31%
28)
Profit margin = Net income/Sales = 2.07%
29)
Operating margin = EBIT/Sales = 4.75%
30)
DPS = Common dividends paid/Shares outstanding = $1.27
31)
EPS = Net income/Common shares outstanding = $3.62
32)
P/E ratio = Price per share/Earnings per share = 12.0
We actually fixed the P/E ratio at 12 in order to get a stock price. Either the price or the P/E ratio must be fixed or the model becomes very complicated and a stock pricing equation is required.
33)
BVPS = Common equity/Shares outstanding = $26.00
34)
Market/book ratio (M/B) = Price per share/BVPS = 1.67
35)
Equity multiplier = Total assets/Common equity = 3.85