4-7. (Analyzing capital structure) CJD Limited makes car parts for major car brands in Germany. They have a net operating income of 1.5 million. They have issued bonds worth 2 million paying 10 percent every year. They plan to borrow an additional capi- tal of 3.000.000 from their bankers at 8 percent and invest in a new factory. The new factory is expected to generate an additional net operating income of E1.3 million. a. What js CID Limited's interest cover ratio (times interest earned ratio) before the new loan? b. What effect will the new loan and investment have on its interest cover ratio (times interest earned ratio)? 4-9. Sliabilities.) (Analyzing efficiency) Bettamould Plc makes plastic tubes and parts used in plumb- ing in buildings. They had sales of 120 million and a gross margin of 30 percent last year. a. How much inventory can they hold to maintain an inventory turnover ratio of 5.0 times? b. A new purchasing manager has suggested that they can reduce the amount of inventory by 25 percent by using a new software to automate their order process- ing. If they invest in the new software and reduce the inventory by 25 percent, how will it affect their inventory turnover ratio? 4-10. (Analyzing efficiency) John Plc has an annual sale of 160 million a year. Fifty per- cent of their sales are on credit. The management has decided to maintain an average collection period of 45 days. a. What is the maximum level of accounts receivable that Jolin Plc can carry and meet their collection period target? b. If John Ple has an average collection period of 60 days, how much does it need to reduce its level of debtors or accounts receivables in order to achieve its new goal of 45 days? 413. (Using DuPont analysis) Stewart Plc has a capital structure including debt and eq- uity. They have a debt/equity ratio of 60 percent. Calculate their equity multiplier. If the firm decreases its debt financing, would this increase or decrease its equity multiplier