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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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