Eastern Slope Bison, Inc.(ESB) posted the following financial information when its stock was trading at $40 and 20,000 shares were outstanding:

Balance Sheet

Cash

$70,000

Accounts Payable

$120,000

Accounts Receivable

110,000

Notes Payable in 1 year

200,000

Prepaid expenses

30,000

Long-term debt

140,000

Inventories

120,000

Net Plant and Equipment

630,000

Common Stock

Retained earnings

350,000

150,000

$960,000

$960,000

Income Statement

Sales

$525,000

Gain on sale of assets

15,000

Cost of goods sold

230,000

Depreciation expense

65,000

Interest expense

35,000

Net profit before taxes

210,000

Tax expense

70,000

$140,000

Ratios:EBIT= Sales revenue - operating costs

Debt ratio= Total debt / total assets

Market/book ratio= Market value per share / book value per share

Book value= Common equity / average shares outstanding

Return on assets= Net income / total assets

Quick ratio= Current assets - inventory / current liabilities

What is ESB's EBIT?

a.

525000 - 230000 + 35,000 = 310,000

b.

525000 - 230000 - 65000 = 230,000

c.

525000 + 15000 - 230000 - 65000 = 245,000

d.

525000 - 230000 + 35,000 = 330,000

What is ESB's debt ratio?

a.

(120000 + 140000) / 960000 = 27.1%

b.

(200000 + 120000) / 960000 = 33.3%

c.

(200000 + 140000) / 960000 = 35.4%

d.

(120000 + 200000 + 140000) / 960000 = 47.9%

What is ESB's return on assets?

a.

(525000 - 230000 - 65000) / 630000 = 69.3%

b.

(525000 - 230000 - 65000) / 960000 = 45.5%

c.

140000 / 630000 = 22.2%

d.

140000 / 960000 = 14.6%

What is ESB's market to book ratio (times)?

a.

40 / ( (350000 + 150000) / 20000 ) = 1.6 x

b.

40 / (350000 / 20000) = 2.3 x

c.

40 / (150000 / 25000) = 6.7 x

d.

40 x : the stock trading at $40 per share

What is ESB's quick ratio?

a.

(70000 + 110000 + 30000 - 120000) / 120000 = 0.75

b.

(70000 + 110000 - 120000) / (120000 + 200000) = 0.19

c.

(70000 + 110000 + 30000 + 120000) - (120000 / 120000) = 329,000

d.

(70000 + 110000 + 30000 + 120000 - 120000) / (120000 + 200000) = 0.65