In: Finance
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 |
2016 |
|||
Cash and securities |
$2,145 |
|||
Accounts receivable |
8,970 |
|||
Inventories |
12,480 |
|||
Total current assets |
$23,595 |
|||
Net plant and equipment |
$15,405 |
|||
Total assets |
$39,000 |
|||
Liabilities and Equity | ||||
Accounts payable |
$7,410 |
|||
Accruals |
4,290 |
|||
Notes payable |
5,460 |
|||
Total current liabilities |
$17,160 |
|||
Long-term bonds |
$7,800 |
|||
Total liabilities |
$24,960 |
|||
Common stock |
$5,460 |
|||
Retained earnings |
8,580 |
|||
Total common equity |
$14,040 |
|||
Total liabilities and equity |
$39,000 |
|||
Income Statement (Millions of $) | 2016 | |||
Net sales |
$58,500 |
|||
Operating costs except depreciation |
54,698 |
|||
Depreciation |
1,024 |
|||
Earnings before interest and taxes (EBIT) |
$2,779 |
|||
Less interest |
829 |
|||
Earnings before taxes (EBT) |
$1,950 |
|||
Taxes |
683 |
|||
Net income |
$1,268 |
|||
Other data: | ||||
Shares outstanding (millions) |
500.00 |
|||
Common dividends (millions of $) |
$443.63 |
|||
Int rate on notes payable & L-T bonds |
6.25% |
|||
Federal plus state income tax rate |
35% |
|||
Year-end stock price |
$30.42 |
Refer to Exhibit 4.1. What is the firm's market-to-book ratio? Do not round your intermediate calculations.
Question 4 options:
1.01 |
|
1.35 |
|
1.09 |
|
1.18 |
|
1.08 |
Save
Market-to-Book Ratio = Market Capitalisation / Net book Value
Here Market Capitalisation = 500 ( million shares)*30.42 (per share price)
= $15,210
Net Book value = Toatl Assets-Total liabilities
= $39,000 - $24,960
Market- to -book ratio = $15,210 / $14,040
So the Answer is = 1.08 times. Thank You.....