Question 25

The information below is the Financial Statements for XYZ Company operating on a calendar year. The financial statements listed below is for the first half of the year ending July 31, 2015. The common stock is trading at $50 per share.

Balance Sheet, July 31, 2015 (in millions of dollars)
			Financial liabilities	1,320
Operating assets	23, 457		Operating liabilities	6,709
Financial assets	1,221		Common equity (on 2,336 million outstanding shares)	16,649
	24,678			24,678

Statement of Earnings, Six Months Ended, July 31, 2015 (in millions of dollars)
Net sales		26,776
Cost of Merchandise Sold		18,795
Gross Profit		7,981
Operating Expenses:
Selling and Store Operating		4,963
Pre-Opening		59
General and Administrative		436
Total Operating Expenses		5,458
Operating Income		2,523
Interest Income (Expense):
Interest and Investment Income		22
Interest Expense		(11)
Interest, Net		11
Earnings Before Income Taxes		2,534
Income Taxes		978
Net Earnings		1,556

Additional Information is related to the combined Federal and State Income Tax Rate equals 39%.

Other Comprehensive Income (not included in the earnings above) is negligible basically it is immaterial.

You are to use a six-month return for operations of 4% in the calculations below.

Requirement:

Calculate Operating Liability Leverage (your answer is to be with three decimals, therefore if you compute it to be .988 then type .988 do not type 0.988 if you do, the answer will be counted incorrect.