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
a)	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%
b)	Dividend per share = 443.63/500 =		$               0.89
c)	Debt to Total capital ratio = 24960/39000 =		0.64