Thomson Trucking has $16 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 19%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places.

x

Commonwealth Construction (CC) needs $2 million of assets to get started, and it expects to have a basic earning power ratio of 30%. CC will own no securities, so all of its income will be operating income. If it so chooses, CC can finance up to 55% of its assets with debt, which will have an 9% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used. Assuming a 30% tax rate on all taxable income, what is the difference between CC's expected ROE if it finances these assets with 55% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.

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MPI Incorporated has $5 billion in assets, and its tax rate is 35%. Its basic earning power (BEP) ratio is 10%, and its return on assets (ROA) is 5%. What is MPI's times-interest-earned (TIE) ratio? Round your answer to two decimal places.

x

The Stewart Company has $2,137,500 in current assets and $812,250 in current liabilities. Its initial inventory level is $534,375, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest cent.

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Ferrell Inc. recently reported net income of $6 million. It has 640,000 shares of common stock, which currently trades at $61 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $10.5 million. Over the next year, it also anticipates issuing an additional 256,000 shares of stock so that 1 year from now it will have 896,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.

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