Question
Find below the financial data for Costa. Note that the firm has no amortization charges, it pays $100 in lease, and has $0 debt retired
Find below the financial data for Costa. Note that the firm has no amortization charges, it pays $100 in lease, and has $0 debt retired during the next 5 years (notes payable will be rolled over). Assume a 365-day year. COSTA. BALANCE SHEET (millions of dollars) Cash $ 140.0 Accounts payable $ 800.0 Accts. receivable 880.0 Notes payable 600.0 Inventories 1,320.0 Accruals 400.0 Total current assets $2,340.0 Total current liabilities $1,800.0 Long-term bonds 1,000.0 Total debt $2,800.0 Common stock 200.0 Retained earnings 1,000.0 Net plant & equip. 1,660.0 Total common equity $1,200.0 Total assets $4,000.0 Total liabilities & equity $4,000.0 OTHER DATA Sales = $ 6,000.0 Depreciation expense = $ 100.2 Operating income = $ 300.0 Interest expense = $ 96.0 Net income = $ 122.4 a. Calculate the ratios that you think would be useful in this analysis. (10 marks) b. Analyze the firm's: I. Liquidity position (3 marks) II. Debt Management (3 marks) c. Calculate the firm's ROE using Du-pont equation. (5 marks)
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