Question
Zellers Department Stores has $54 million of current assets and $58 million of noncurrent assets. It forecasts an EBIT of $10.4 million and pays income
Zellers Department Stores has $54 million of current assets and $58 million of noncurrent assets. It forecasts an EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5% interest rate, and the company can issue long-term bonds at 7%. The company has set a target debt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company's abbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company's financial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order to evaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluate the company's risk and return. Please help with the information above and how it is placed in the spreadsheet.
A Current assets Noncurrent assets Total Assets Current liabilities Long-term liabilities Total debit Stockholders' equity Total liabilities & equity BEBIT Interest on current liabilities Interest on noncurrent debt Total interest Earnings before taxes Income taxes Net income C Net income Stockholders' equity Return on equity D Current assets Current liabilities Return on equityStep by Step Solution
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