Any answers that are negative, then add the negative sign to the answertes is input in Canvas os 5) You are a financial analyst reviewing a local coffee company, Espresso Patronum. Financial Statements are in Appendice For questions 16-18, assume Espresso Patronum ears EBT in 2019 that is $5 mil more than they earned in 2018 16 What would be Espresso Patronum's Tax Liability (in millions, to two decimal places)? 17 What would be Espresso Patronum's Effective Tax Rate (in %, to two decimal places)? 18 What would be Espresso Patronum's Marginal Tax Rate (in %, to two decimal places)? 19 20 21 22 Please use the Financial Statements to compute the following ratios Calculate Net Working Capital for 2017 (in millions, no decimals). 170-25 = 145 mil Calculate EPS for 2018 (in dollars, to two decimal places). 13 : 6 = 2.17 Calculate Debt-to-Equity Ratio for 2017 (to two decimal places 140:80 = 2.00 Calculate Debt-to-Equity Ratio for 2018 (to two decimal places) 212 = 88 = 2.41 From 2017 to 2018, has Espresso Patronum's capital structure become MORE or LESS risky? More Risky Patronum shares are trading on the stock exchange at $23.87 per share. What is the 2018 P/E Ratio (to two decimal places)? 23.87 $2.17 = il For questions 25-26, use 2018 financial data, but assume that Espresso Patronum issues $10 mil of new LT Debt. They use the proceeds they raise to buy back $10 mil of Common Equity. Assume Net Income remains the same. What would be the new ROE (% to two decimal places)? 23 24 25 26 What would be the new Debt-to-Equity Ratio (to two decimal places)? 2.2653 212 +10 88+10 222 98 Total Debt Total equity APPENDIX: TAX TABLE & FINANCIAL STATEMENTS Taxable income Pay This Amount on Base Income Plus This Percentage on Anything Over the Base $0-50,000 $0 15% $50,001-75,000 $75,001-$100,000 $7,500 25% $13,750 34% $22,250 39% $100,001-335,000 $335,001-10,000,000 $10,000,001-15,000,000 $15,000,001-18,333,333 34% $113,900 $3,400,000 35% 38% $5,150,000 $6,416,667 Over $18,333,333 35% Espresso Patronum Coffee Company Income Statement milions) Income Statement 2018 Sales $ 100 Less: Cost of Goods Sold $ 27) Gross Profit $ 73 Less: Other Operating Expenses $ (15) EBITDA (Earnings Before Interest, Taxes, Depreciation & Ama) $ 58 Less: Depreciation & Amortization $ (15) EBIT (Earnings Before Interest & Taxes) $ 43 Less Interest $ 125) EBT(Earnings Before Taxes & Taxable income) $ 18 Less: Taxes $ (5) Net Income $ 13 Less: Common Stock Dividends $ (5) Addition to Retained Earnings $ . Current Assets Assets Cash Accounts Receivable Inventory Total Espresso Patronum Coffee Company Balance Sheet (millions) 2018 2017 Liabilities & Equity 2018 2017 $ 55 $ 50 Current Liabilities Accrued Wages & Taxes S 12 $ 10 $ 10 $ 20 Accounts Payable $ 10 $ 5 $ 120 $ 100 Notes Payable $ 5$ 10 $ 185 $ 170 Total S 27 $ 25 Fixed Assets $ $ 185 $ 2125 135 160 Plant & Equipment Less: Depreciation Net Plant & Equip Other Fixed Assets $ $ $ $ 125$ 65 Long-Term Debt (35) $ (20) Total Debt 90 $ 45 25 $ 25 Stockholder's Equity Common Stock Retained Earnings Total Equity 300 $ 240 Total Liabilities & Equity .6 million common shares are outstanding $ $ 5 $ 25$ 63 $ 885 300 $ 25 55 80 240 Total Assets $ 3
