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Assistance with Part D would be very much appreciated. Tops Markets, Inc. has $54 million of current assets and $58 million of noncurrent assets. It
Assistance with Part D would be very much appreciated.
Tops Markets, Inc. has $54 million of current assets and $58 million of noncurrent assets. It forecasts an EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5% interest rate, and the company can issue long-term bonds at 7%. The company has set a target debt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company's abbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company's financial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order to evaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluate the company's risk and return. Your answers to this open-ended assignment should be placed in the space below this line. A Current assets Noncurrent assets Total Assets 54,000,000 58,000,000 112,000,000 Current liabilities Long-term liabilities Total debit Stockholders' equity Total liabilities & equity 30,240,000 20,160,000 50,400,000 61,600,000 112,000,000 10,400,000 1,512,000 1,411,200 BEBIT Interest on current liabilities Interest on noncurrent debt Total interest Earnings before taxes Income taxes Net income 2,923,000 7,477,000 2,616,950 4,860,050 C Net income Stockholders' equity Return on equity 4,860,050 61,600,000 7.88% D Current assets Current liabilities Return on equityStep by Step Solution
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