Firm’s Current Ratio Assignment | Homework For You

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        2018
Cash and securities        $5,000
Accounts receivable        12,500
Inventories        12,500
Total current assets        $30,000
Net plant and equipment        $20,000
Total assets        $50,000
Liabilities and Equity
Accounts payable        $11,040
Accruals        4,960
Notes payable        7,000
Total current liabilities        $23,000

Long-term bonds        $12,000
Total liabilities        $35,000
Common stock        $4,200
Retained earnings        10,800
Total common equity        $15,000
Total liabilities and equity        $50,000

Income Statement (Millions of $)       2018
Net sales        $70,000
Operating costs except depreciation   65,100
Depreciation        1,400
Earnings before interest and taxes (EBIT)   $3,500
Less interest        1,140
Earnings before taxes (EBT)        $2,360
Taxes        944
Net income        $1,416

Other data:
Shares outstanding (millions)        500.00
Common dividends (millions of $)        $495.60
Int rate on notes payable & L-T bonds   6%
Federal plus state income tax rate   40%
Year-end stock price        $33.98
​

Refer to Exhibit 4.1.

Part 1:What is the firm’s current ratio? Do not round your intermediate calculations.

a. 1.55

b. 1.20

c. 1.04

d. 1.30

e. 1.00

Part 2: What’s the present value of $12,000 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually?

a. $9,606.12

b. $9,702.18

c. $7,204.59

d. $9,029.75

e. $11,815.53. Get Finance homework help today