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 $) 2021 Assets   Cash and securities   $ 4,200   Accounts receivable     17,500   Inventories     20,300   Total current assets   $ 42,000   Net plant and equipment     28,000   Total assets   $ 70,000     Liabilities and Equity   Accounts payable   $ 27,531   Accruals     12,369   Notes payable     5,000   Total current liabilities   $ 44,900   Long-term bonds     9,000   Total liabilities   $ 53,900   Common stock     3,864   Retained earnings     12,236   Total common equity   $ 16,100   Total liabilities and equity   $ 70,000     Income Statement (Millions of $) 2021 Net sales   $ 112,000   Operating costs except depreciation     104,160   Depreciation     2,240   Earnings before interest and taxes (EBIT)   $ 5,600   Less interest     840   Earnings before taxes (EBT)   $ 4,760   Taxes (25%)     1,190   Net income   $ 3,570     Other data:   Shares outstanding (millions)     500.00   Common dividends (millions of $)   $1,249.50   Int. rate on notes payable & L-T bonds     6%   Federal plus state income tax rate     25%   Year-end stock price     $67.83     What is the firm's P/E ratio? Do not round your intermediate calculations.   a. 9.50     b. 7.12     c. 9.52     d. 11.20     e. 7.14

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 $) 2021
Assets  
Cash and securities   $ 4,200  
Accounts receivable     17,500  
Inventories     20,300  
Total current assets   $ 42,000  
Net plant and equipment     28,000  
Total assets   $ 70,000  
 
Liabilities and Equity  
Accounts payable   $ 27,531  
Accruals     12,369  
Notes payable     5,000  
Total current liabilities   $ 44,900  
Long-term bonds     9,000  
Total liabilities   $ 53,900  
Common stock     3,864  
Retained earnings     12,236  
Total common equity   $ 16,100  
Total liabilities and equity   $ 70,000  
 
Income Statement (Millions of $) 2021
Net sales   $ 112,000  
Operating costs except depreciation     104,160  
Depreciation     2,240  
Earnings before interest and taxes (EBIT)   $ 5,600  
Less interest     840  
Earnings before taxes (EBT)   $ 4,760  
Taxes (25%)     1,190  
Net income   $ 3,570  
 
Other data:  
Shares outstanding (millions)     500.00  
Common dividends (millions of $)   $1,249.50  
Int. rate on notes payable & L-T bonds     6%  
Federal plus state income tax rate     25%  
Year-end stock price     $67.83  

 

What is the firm's P/E ratio? Do not round your intermediate calculations.

  a. 9.50  
  b. 7.12  
  c. 9.52  
  d. 11.20  
  e. 7.14  
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