12/31/2014 2014 Current Assets XX Sales 7500 Fixed Assets XX COGS 5500 Total Ass

ID: 2647319 • Letter: 1

Question

12/31/2014 2014

Current Assets XX Sales 7500

Fixed Assets XX COGS 5500

Total Assets 5000 Dep 500

EBIT 1500

Current Liabilities 500 Interest XX

Long Term Debt XX EBT XX

CommonEquity 2000 Taxes XX

Total 5000 Net Income XX

Dividends were 500, Capital Expenditures were 700, Ending Stock Price was $20 per share and there were 400 shares outstanding. Taxes are 40% of EBT.

2014 2014

Current Ratio 4 Profit Margin 10%

Debt Ratio .60 ROA XX

Times Int. Ern 6 BEP XX

FATO 2.5 P/E XX

TATO XX M/B XX

7. What is the firm

Answer;

7. Total Asset Turnover Ratio = Net sales / Average Total Assets

= 7500 / 5000 = 1.5

8. Interest Expense:

Given that Times Interest Earned = 6

EBIT / Interest = 6

Hence, 1500 / Interest = 6

So, Interest Expense = 1500 / 6 = 250

9. Market to Book Ratio:

Ending Stock Price was $20 per share and there were 400 shares outstanding, hence market value = 400 * $20 = $8000

Book value of equity = $2000

Market to book ratio = $8000 / $2000 = 4

10.

Given that Current Ratio = 4

It means current assets / Current liabilities =4

Current assets / 500 = 4

Hence Current assets = 500*4 = $2000

Given that Total Assets = $5000

Hence Fixed assets = Total Assets

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