The assignment is as the following (in the pictures). Actually I only have trouble with the calculation of current short term and long term debts.
I know the formulas for other required items, but some of them depend on the current short term and long term debts.
If OK, please still help me with the step-by-step answer.
Facts : It is 2019 and Lion Computer Co. ( " LCC " ) is considering making an offer to purchase Buckeye Computer , Inc . ( " BCI " ) . YOU are a financial analyst working in the corporate strategy division of LCC and have been tasked with determining* a value for BCI . You have determined that BCI will require additional capital to support the production and distribution of its second generation of products . Accordingly , You must now determine the optimal debt level that BCI can comfortably support in light of its financial condition . You are uncertain of BCI's appropriate Coverage Ratio ( h ) and Cost of Capital ( (D ) , but you are aware of the following :" 1 . In 2018 , BCI issued $97 million in debt with an interest rate of 8 . 25% ; and 2. LCC , a direct competitor of BCI , uses a Coverage Ratio of 2 . Additionally , you are aware that BCI has 50 , 000 , 000 shares outstanding with a current stock price of $58 / share . Assignment : Using the historical financial information provided in the Excel file* titled " HW # 3 - Exhibit " , and the above- provided information , calculate the following for BC1 :` 1 . Optimal debt level ;" 2 . Current short - and long-term debt ;! 3 . Additional long-term debt ; 4 . 1 Market value of equity ; 5 . Total capital ;\\ 6 . Current debt : total capital ratio ; 7. Current equity : total capital ratio . Instructions : Please copy the Excel file and show your work on the spreadsheet . NOTE : Round all dollar amounts to the nearest dollar and all percentages to the nearest whole percent .A A B 1_ 2_ 3 BUCKEYE COMPUTERS, INC. : Selected Financial Information (2014-2018) 5 ($ millions) L 7 Income Statement 2014 201 5 2016 201? 2018 8_ Sales 1604 1,950 2240 2,456 3017 L Cost of Goods Sold 842 1.020 1226 1.517 1739 11 R&D Expense 158 203 240 278 327 I; SG&A Expense Q Q m 1; Operating Income (EBIT) 237 281 295 139 402 1; Interest Expense 8 6 5 E E 1: Earnings before Tax 229 275 290 126 388 1; Income Taxes g E m E E 1i Net Income 144 16? 183 86 247 ll Dividends 0 E E g Q lg to Retained Earnings 144 149 155 41 198 19 20 Balance Sheet 2014 2015 2016 2017 2018 2L Cash 103 58 45 17 30 2; Accounts Receivable 219 283 328 349 431 21 Inventory 282 348 420 500 584 21 Other Current Assets E Q g 2 2; Current Assets ' 622 ' 711' 81? ' 894 ' 1'07? 21 Plant' Property 8. Equipment (n: 410 482 536 610 686 21 Other Fixed Assets 2 E g m 21 Total Assets 1064 1.232 1398 1.553 1824 29 31 Accounts Payable 145 177 203 233 285 3L Accrued Expenses 30 32 34 18 31 3; Short Term Debt Q g E m E 31 Current Liabilities 216 240 256 375 351 Bi Long Term Debt 55 50 45 40 137 3; Total Liabilities 2T1 290 301 415 488 Bi Net Worth E 942 1097 1.138 1336 37 Liabilities 8. Net Worth 1064 1,232 1398 1,553 1824
