Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.

Balance Sheet (Millions of $)
Assets
Cash and securities $ 1,554.0
Accounts receivable 9,660.0
Inventories 13,440.0
Total current assets $24,654.0
Net plant and equipment 17,346.0
Total assets $42,000.0
Liabilities and Equity
Accounts payable $ 7,980.0
Notes payable 5,880.0
Accruals 4,620.0
Total current liabilities $18,480.0
Long-term bonds 10,920.0
Total liabilities $29,400.0
Common stock 3,360.0
Retained earnings 9,240.0
Total common equity $12,600.0
Total liabilities and equity $42,000.0
Income Statement (Millions of $)
Net sales $58,800.0
Operating costs except depr'n $55,274.0
Depreciation $ 1,029.0
Earnings bef int and taxes (EBIT) $ 2,497.0
Less interest 1,050.0
Earnings before taxes (EBT) $ 1,447.0
Taxes $ 314.0
Net income $ 1,133.0
Other data:
Shares outstanding (millions) 175.00
Common dividends $ 509.83
Int rate on notes payable & L-T bonds 6.25%
Federal plus state income tax rate 21.7%
Year-end stock price $ 77.69

Refer to the data for Pettijohn Inc. What is the firm's ROE?

a. 9.91%
b. 10.41%
c. 8.99%
d. 8.54%
e. 9.44%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance For Housing An Introduction

Authors: Cathy Davis

1st Edition

1447306481, 978-1447306481

More Books

Students also viewed these Finance questions

Question

Define the doctrine of strict liability.

Answered: 1 week ago

Question

Types of Interpersonal Relationships?

Answered: 1 week ago

Question

Self-Disclosure and Interpersonal Relationships?

Answered: 1 week ago