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Review the following financial statements for BCD Corporation: Income Statement ($ millions) Sales: $5,500 Cost of Sales: $3,000 Gross Profit: $2,500 Operating Expenses: $1,800 Operating
Review the following financial statements for BCD Corporation:
Income Statement ($ millions)
- Sales: $5,500
- Cost of Sales: $3,000
- Gross Profit: $2,500
- Operating Expenses: $1,800
- Operating Profit: $700
- Interest Expense: $150
- Tax Expense: $100
- Net Income: $450
Balance Sheet ($ millions)
- Current Assets:
- Cash: $80
- Accounts Receivable: $400
- Inventory: $500
- Total Current Assets: $980
- Non-current Assets:
- Property, Plant & Equipment: $1,800
- Other Long-term Assets: $720
- Total Non-current Assets: $2,520
- Total Assets: $3,500
- Current Liabilities:
- Trade Payables: $350
- Short-term Loans: $200
- Total Current Liabilities: $550
- Long-term Liabilities:
- Long-term Debt: $1,000
- Total Liabilities: $1,550
- Equity:
- Common Stock: $200
- Retained Earnings: $1,750
- Total Equity: $1,950
- Total Liabilities & Equity: $3,500
Requirements:
a) Suggest methods for BCD Corporation to secure $100 million for a new plant without using its cash reserves. b) Calculate the quick ratio. c) Determine the return on equity (ROE). d) Assess the interest coverage ratio.
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