Question

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

What is the firm's return on invested capital?

What is the firm's dividends per share? Do not round your intermediate calculations.

What is the firm's total debt to total capital ratio? Do not round your intermediate calculations.

Answer 1

BALANCE SHEET
Cash and securities	2145
Acounts receivable	8970
Inventories	12480
Total current assets		23595
Net plant and equipment		15405
Total assets		39000
Accounts payable	7410
Accruals	4290
Notes payable	5460
Total current liabilities		17160
Long term bonds		7800
Total liabilities		24960
Common stock	5460
Retained earnings	8580
Total common equity		14040
Total liabilities and equity		39000
INCOME STATEMENT
Net sales		58500
Operating costs except depreciation		54697
Depreciation		1024
EBT		2779
Interest		829
EBT		1950
Taxes		683
Net income		1268
Return on invested capital = NOPAT/Invested capital
NOPAT = EBIT*(1-t) = 2279*(1-35%) =		$   1,481.35
Invested capital = Total assets-Accounts payable-Accruals = 39000-7410-4290 =		$ 27,300.00
ROIC = 1481.35/27300 =		5.43%
Dividend per share = 443.63/500 =		$            0.89
Debt to Total capital ratio = 24960/39000 =		0.64