Refer to Exhibit 4.1. What is the firm's total debt to total capital ratio? Do not round your intermediate calculations. O a. 45.45% O b. 39.09% O c. 44.09% O d. 38.18% O e. 39.55%

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Income Statement (Millions of $)
2018
Net sales
$84,000
Operating costs except depreciation
78,120
Depreciation
1,680
Earnings before interest and taxes (EBIT)
$4,200
Less interest
900
Earnings before taxes (EBT)
$3,300
Taxes
1,320
Net income
$1,980
Other data:
Shares outstanding (millions)
500.00
Common dividends (millions of $)
$693.00
Int rate on notes payable & L-T bonds
6%
Federal plus state income tax rate
40%
Year-end stock price
$47.52
Refer to Exhibit 4.1. What is the firm's total debt to total capital ratio? Do not round your intermediate calculations.
O a. 45.45%
O b. 39.09%
O c. 44.09%
O d. 38.18%
O e. 39.55%
Transcribed Image Text:Income Statement (Millions of $) 2018 Net sales $84,000 Operating costs except depreciation 78,120 Depreciation 1,680 Earnings before interest and taxes (EBIT) $4,200 Less interest 900 Earnings before taxes (EBT) $3,300 Taxes 1,320 Net income $1,980 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $693.00 Int rate on notes payable & L-T bonds 6% Federal plus state income tax rate 40% Year-end stock price $47.52 Refer to Exhibit 4.1. What is the firm's total debt to total capital ratio? Do not round your intermediate calculations. O a. 45.45% O b. 39.09% O c. 44.09% O d. 38.18% O e. 39.55%
Exhibit 4.1
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
$3,000
Accounts receivable
15,000
Inventories
18,000
Total current assets
$36,000
Net plant and equipment
$24,000
Total assets
$60,000
Liabilities and Equity
Accounts payable
$18,630
Accruals
8,370
Notes payable
6,000
Total current liabilities
$33,000
Long-term bonds
$9,000
Total liabilities
$42,000
Common stock
$5,040
Retained earnings
12,960
Total common equity
$18,000
Total liabilities and equity
$60,000
Income Statement (Millions of $)
2018
Transcribed Image Text:Exhibit 4.1 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 $3,000 Accounts receivable 15,000 Inventories 18,000 Total current assets $36,000 Net plant and equipment $24,000 Total assets $60,000 Liabilities and Equity Accounts payable $18,630 Accruals 8,370 Notes payable 6,000 Total current liabilities $33,000 Long-term bonds $9,000 Total liabilities $42,000 Common stock $5,040 Retained earnings 12,960 Total common equity $18,000 Total liabilities and equity $60,000 Income Statement (Millions of $) 2018
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