The balance sheet and income statement shown below are for Koski 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 S) Assets Cash and securities Accounts receivable Inventories Total current assets Net plant and equipment Total assets Liabilities and Equity 2016 $2,145 8,970 12,480 $23,595 $15,405 $39,000 Accounts payable $7,410 Accruals 4,290 Notes payable 5,460 Total current liabilities $17,160 Long-term bonds $7,800 Total liabilities $24,960 Common stock $5,460 Retained earnings 8,580 Total common equity $14,040 Total liabilities and equity $39,000 Income Statement (Millions of S) 2016 Net sales $58,500 Operating costs except depreciation 54,698 Depreciation 1,024 Earnings before interest and taxes (EBIT) $2,779 Less interest 829 Earnings before taxes (EBT) $1,950 Taxes 683 Net income $1,268 Other data: Shares outstanding (millions) 500.00 Common dividends (millions of S) $443.63 Int rate on notes payable & L-T bonds Federal plus state income tax rate 6.25% Year-end stock price 35% $30.42 1. Refer to Koski Inc's balance sheet and income statement, what is the firm's current ratio? a 1.462 b. 1.645 c. 1.577 d. 1.375 e. 1.721 2. Refer to Kodki Ine's balance sheet and income statement, what is the firm's DSO ( outstanding? A47.37 b. 68.84 69.96 d 50.93 e 35.97 3. Refer to Koski Inc's balance sheet and income statement, what is the firm's TIE? a 3.35 b. 3.99 3.19 d. 3.76 e 3.82 4. Refer to Koski Inc's balance sheet and income statement, what is the firm's P/E ratio? a. 11.248 b. 12.637 c. 11.995 d. 13.256 e. 11.861 5. Refer to Koski Inc's balance sheet and income statement, what is the firm's profit margin? a. 2.41% b. 2.17% c. 1.76% d. 1.99% c. 2.56% 6. Klein Cosmetics has a profit margin of 5.0%, a total assets turnover ratio of 1.5 times, no debt and therefore an equity multiplier of 1.0, and an ROE of 7.5%. The CFO recommends that the firm borrow money, use the funds to buy back stock, and raise the equity multiplier to 2.0. The size of the firm (assets) would not change. She thinks that operations would not be affected, but interest on the new debt would lower the profit margin to 4.5%. This would probably be a good move, as it would increase the ROE from 7.5% to 13.5%. a. True b. False 7. Paper Mate's sales last year were $270,000, and its year-end inventories were $150,000. The average firm in the industry has a inventories turnover ratio of 2.4. The firm's new CFO believes the firm has excess inventories that can be sold so as to bring the inventories turnover ratio up to the industry average without affecting sales. By how much must the inventories be reduced to bring the inventories turnover ratio to the industry average, holding sales constant? a. $238,333 b. $112,500 c. $120,000 d. $37,500 e. $157,500 8. Soo Corp. has $375,000 of assets. The size of its common equity is half of its assets. Its sales for the last year were $520,000, and its net income was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15.0%. What profit margin would the firm need in order to achieve the 15% ROE, holding everything else constar Do not round your intermediate calculations. a. 11.03% b. 5.41% c. 11.82% d. 11.14% e. 12.98%