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For the most recent year, Seether, Inc., had sales of $451,000, cost of goods sold of...

For the most recent year, Seether, Inc., had sales of $451,000, cost of goods sold of $218,000, depreciation expense of $57,700, and additions to retained earnings of $49,900. The firm currently has 36,000 shares of common stock outstanding, and the previous year’s dividends per share were $1.30. The income tax rate is 35 percent.

What was the EBIT? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

EBIT            $

How much in total dividends did the company pay? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Total dividends            $

What was the company's net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Net income            $

What was the company's earnings before tax (EBT)? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

EBT            $

What was the company's interest payment? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Interest            $

What was the company's times interest earned ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Times interest earned             times

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Answer #1

Sales = $451000, Cost of Goods Sold (COGS) = $ 21800, Depreciation Expense = $ 57700, Addition to Retained Earnings = $ 49900, Shares Outstanding = 36000, Previous Years Dividend = $ 1.3, Tax Rate = 35 %

Sales =$ 451000

LESS: COGS = $ 218000

EBITDA = $ 233000

LESS: Depreciatio = $ 57700

EBIT = $ 175300

(a) EBIT = $ 175300

(b) Dividend Per Share = $ 1.3 and Shares Outstanding = 36000

Total Dividends = 1.3 x 36000 = $ 46800

(c) Net Income = Total Dividends + Addition Retained Earnings = 46800 + 49900 = $ 96700

(d) Let the firm's EBT be $ K

Tax Rate = 35 %

Therefore, EBT x (1-0.35) = Net Income

K x (0.65) = $ 96700

K = $ 148769.23

(e) EBIT = $ 175300 and EBT = $ 148769.23

Interest Expense = EBIT - EBT = 175300 - 148769.23 = $ 26530.77

(f) Times Interest Earned Ratio = EBIT / Interest Expense = 175300 / 26530.77 = 6.61 approximately.

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