Hills Department Stores has $54 million of current assets and $58 million of noncurrent assets. It forecasts an EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5% interest rate, and the company can issue long-term bonds at 7%. The company has set a target debt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company's abbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company's financial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order to evaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluate the company's risk and return. Please see attached spreadsheet and if you could please help me step by step by the information provided into the attached spreadsheet, I would be grateful.
Hills Department Stores has $54 million of current assets and $58 million of noncurrent assets. It
an EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5%
interest rate, and the company can issue long-term bonds at 7%. The company has set a target
debt ratio of 45%.
Required:
A. For a maturity mix of 60% current and 40% long-term debt, prepare the company's
abbreviated
B. For a maturity mix of 60% current and 40% long-term debt, prepare the company's
financial half of its income statement.
C. Based on the financial statements above, calculate the return on equity ratio in order to
evaluate the company's risk and return.
D. Based on the financial statements above, calculate the
the company's risk and return.
Please see attached spreadsheet and if you could please help me step by step by the information provided into the attached spreadsheet, I would be grateful.
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I have a few questions...
For the interest on the long-term debt, the amount you have is not 7% of the balance in the long-term liability account. As you change that, please remember that change may change some of the calculations in Parts B, C, and D.
Thanks so much for your help!
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