(Related to Checkpoint 4.2) (Capital structure analysis) The liabilities and owners' equity for Campbell Industries is found here: g . a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.5 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? a. What percentage of the firm's assets does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is 29.3 % (Round to one decimal place.) b. If Campbell were to purchase a new warehouse for $1.5 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? The new debt ratio will be | |%. (Round tc one decimal place.) Data table Accounts payable $507,000 Notes payable $244 000 Current liabilities $751,000 Long-term debt $1,251,000 Common equity $4 822,000 Total liabilities and equity 56,824 000 (Click on the icon 0 in order to copy its contents info a spreadsheet.) (Capital structure analysis) The Karson Transport Company currently has net operating income of $498 000 and pays interest expense of $204 000 The company plans to borrow $1 18 million on which the firm will pay 10 percent interest. The borrowed money will be used to finance an investment that is expected to increase the firm's net operating income by $410,000 a year. a. What is Karson's times interest earned ratio before the loan is taken out and the investment is made? b. What effect will the loan and the investment have on the firm's times interest eamed ratio? a. What is Karson's times interest earned ratio before the loan is taken out and the investment is made? The times interest earned ratio is 2.44 times. (Round to two decimal places.) b. What effect will the loan and the investment have on the firm's times interest earned ratio? The new times interest eamed ratio is 2.82' times (Round to two decimal places.) (Related to Checkpoint 4.3) {Analyzing Profitability) In 2016, the Allen Corporation had sales of $70 million, total assets of $41 million, and total liabilities of $21 million. The interest rate on the company's debt is 6.1 percent, and its tax rate is 35 percent. The cperating profit margin is 12 percent. a. Compute the firm's 2016 net operating income and net income b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.) a. Compute the firm's 2016 net operating income and net income The firm's 2016 net operating income is $ 8.40' millien. (Round to two decimal places.) The firm's 2016 net income is $ $4 63 million (Round to two decimal places.) b. Calculate the firm's operating return on assets and return on equity. The operating return on assets is 20, 49'y, (Round to two decimal places ) The return on equity is 23 15'% (Round to two decimal places.) (Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $421,000, with & cost of goods sold of $112,000. The firm's cperating expenses were $128,000, and - its increase in retained earnings was $84 470 There are currently 21,000 shares of common stock outstanding, the firm pays a $1.58 dividend per share, and the firm has no interest-bearing debt a. Assuming the firm's earnings are taxed at 35 percent, construct the firm's income statement b. Compute the firm's operating profit margin. a. Assuming the firm's earnings are taxed at 35%, construct the firm's income statement Complete the income statement below: (Round to the nearest dollar.) Income Statement Revenues $ Cost of Goods Sold Gross Profit $ Operating Expenses Net Operating Income $ Interest Expense Eamings before Taxes $ Income Taxes Net Income $ {Using commeon-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,900,000. In addition, the firm pays taxes at 35 percent and will owe $301,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 80 percent of sales and operating expenses will total 35 percent. What is your estimate of the firm's net income (after taxes) for the coming year? Complete the pro-forma income statement below: (Round to the nearest dollar ) Pro-Forma Income Statement Sales $ Cost of goods sold Gross profit $ Operating expenses Net operating income $ Interest expense Earnings before taxes 5 Taxes Net income $