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Below are the financial statements of ZAB Corp: Income Statement ($ millions) Revenue: $9,000 Cost of Goods Sold: $5,400 Gross Profit: $3,600 Operating Expenses: $2,600
Below are the financial statements of ZAB Corp:
Income Statement ($ millions)
- Revenue: $9,000
- Cost of Goods Sold: $5,400
- Gross Profit: $3,600
- Operating Expenses: $2,600
- Operating Profit: $1,000
- Interest Expenses: $200
- Tax Expense: $150
- Net Income: $650
Balance Sheet ($ millions)
- Current Assets:
- Cash: $200
- Accounts Receivable: $700
- Inventory: $800
- Total Current Assets: $1,700
- Non-current Assets:
- Property, Plant & Equipment: $3,500
- Other Long-term Assets: $1,800
- Total Non-current Assets: $5,300
- Total Assets: $7,000
- Current Liabilities:
- Trade Creditors: $700
- Short-term Loans: $400
- Total Current Liabilities: $1,100
- Long-term Liabilities:
- Long-term Debt: $2,200
- Total Liabilities: $3,300
- Equity:
- Common Shares: $800
- Retained Earnings: $2,900
- Total Equity: $3,700
- Total Liabilities & Equity: $7,000
Requirements:
a) Suggest financing strategies for ZAB Corp to secure $150 million for an acquisition without using existing cash. b) Calculate the current ratio. c) Compute the return on assets (ROA). d) Determine the equity multiplier.
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