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1)Nezid Corp. paid $216 in dividends and $638 in interest over the past year. The company...

1)Nezid Corp. paid $216 in dividends and $638 in interest over the past year. The company increased retained earnings by $534 and had accounts payable of $714. Sales for the year were $16,615 and depreciation was $760. The tax rate was 35 percent. What was the company's EBIT?

2)Nanina Corp. has current liabilities of $413,000, a quick ratio of 1.70, inventory turnover of 3.60, and a current ratio of 3.80. What is the cost of goods sold for the company?

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Answer #1

1)

Profit after tax = Retained earnings + dividend = 534 + 216 = 750

Profit before tax = Profit After Tax + Tax

PBT = 750 / ( 1 - 0.35) = 1153.85

EBIT = PBT + Interest = 1153.85 + 638 = 1791.85

2)

Quick ratio = Current asssets other than inventory / current liabilties

1.7 =  Current asssets other than inventory / 413000

Current asssets other than inventory = 702100

Current ratio = Current assets / current liabilties

3.8 = Current assets / 413000  

Current assets = 413000 * 3.8 = 1569400

Inventory = Current assets - Current asssets other than inventory = 1569400 - 702100 = 867300

Invetory Turnover = Cost of goods sold / inventory

3.6 = Cost of goods sold / 867300

Cost of goods sold = 867300 * 3.6 = 3122280

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