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Consider the financial data of ABC Ltd: Income Statement ($ millions) Sales: $8,500 Cost of Goods Sold: $5,000 Gross Profit: $3,500 Operating Expenses: $2,500 Operating
Consider the financial data of ABC Ltd:
Income Statement ($ millions)
- Sales: $8,500
- Cost of Goods Sold: $5,000
- Gross Profit: $3,500
- Operating Expenses: $2,500
- Operating Income: $1,000
- Interest Expenses: $180
- Tax Expense: $150
- Net Income: $670
Balance Sheet ($ millions)
- Current Assets:
- Cash: $160
- Accounts Receivable: $800
- Inventory: $900
- Total Current Assets: $1,860
- Non-current Assets:
- Property, Plant & Equipment: $3,700
- Other Long-term Assets: $1,940
- Total Non-current Assets: $5,640
- Total Assets: $7,500
- Current Liabilities:
- Accounts Payable: $750
- Short-term Debt: $500
- Total Current Liabilities: $1,250
- Long-term Liabilities:
- Long-term Debt: $2,500
- Total Liabilities: $3,750
- Equity:
- Common Stock: $500
- Retained Earnings: $3,250
- Total Equity: $3,750
- Total Liabilities & Equity: $7,500
Requirements:
a) Propose ways for ABC Ltd to finance a $180 million project without using its cash reserves. b) Calculate the quick ratio. c) Determine the return on equity (ROE). d) Assess the times interest earned (TIE) ratio.
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