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 15,000 Inventories 16,800 Total current assets $ 36,000 Net plant and equipment 24,000 Total assets $ 60,000 Liabilities and Equity Accounts payable $ 18,048 Accruals 10,152 Notes payable 5,000 Total current liabilities $ 33,200 Long-term bonds 10,000 Total liabilities $ 43,200 Common stock 3,864 Retained earnings 12,936 Total common equity $ 16,800 Total liabilities and equity $ 60,000 Income Statement (Millions of $) 2021 Net sales $ 66,000 Operating costs except depreciation 61,380 Depreciation 1,920 Earnings before interest and taxes (EBIT) $ 2,700 Less interest 900 Earnings before taxes (EBT) $ 1,800 Taxes (25%) 450 Net income $ 1,350 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of $) $472.50 Int. rate on notes payable & L-T bonds 6% Federal plus state income tax rate 25% Year-end stock price $32.40 a. 1.98 b. 4.64 c. 2.14 d. 2.57 e. 3.57 What is the firm's equity multiplier? Do not round your intermediate calculations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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			15,000
Inventories			16,800
Total current assets		$	36,000
Net plant and equipment			24,000
Total assets		$	60,000

Liabilities and Equity
Accounts payable		$	18,048
Accruals			10,152
Notes payable			5,000
Total current liabilities		$	33,200
Long-term bonds			10,000
Total liabilities		$	43,200
Common stock			3,864
Retained earnings			12,936
Total common equity		$	16,800
Total liabilities and equity		$	60,000

Income Statement (Millions of $)	2021
Net sales		$	66,000
Operating costs except depreciation			61,380
Depreciation			1,920
Earnings before interest and taxes (EBIT)		$	2,700
Less interest			900
Earnings before taxes (EBT)		$	1,800
Taxes (25%)			450
Net income		$	1,350

Other data:
Shares outstanding (millions)			500.00
Common dividends (millions of $)		$472.50
Int. rate on notes payable & L-T bonds			6%
Federal plus state income tax rate			25%
Year-end stock price			$32.40