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):
a. Current Ratio
b. Quick Ratio
c. DSO
d. TATO
e. Inventory Turnover
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

Answer 1

a) Current Ratio: Current Assets / Current Lianbilities

: 22595/21516 = 1.0501

b) Quick Ratio: (Cash & marketable securities + Account Recievable) / Current Liabilities

: (2245 + 9870)/21516 = 0.5631

c) DSO( Days of sales outstanding: = (Accounts receivable/Credit Sales) x 365

= (9870/85500) x 365 = 42.14 days

d) TATO (Total Assets Turnover ratio = Sales / Total Assets

= 85500/88000 = 0.9716 times

e) Inventory Turnover : Cost of Goods Sold(or Sales) / Total Inventory

= 85500/10480 = 8.16 times

f) TIE (Times Interest Earned) = EBIT(operating Income) / Interest charges Payable

= 11496/2226 = 5.16 times