Ex. 266
Based on the following information, compute the (1) current ratio and (2) working capital.
Current assets¥180,000,000
Total assets900,000,000
Current liabilities80,000,000
Total liabilities500,000,000
Ex. 267
Mehring's 2014 financial statements contained the following data (in millions).
Current assets$20,890Accounts receivable$1,550
Total assets 42,430Interest expense980
Current liabilities 15,160Income tax expense1,270
Total liabilities 32,580Net income2,230
Cash 380
Instructions
Compute these values:
(a)Working capital.(b)Current ratio.
Ex. 268
Banks Company is considering two alternatives to finance its purchase of a new $4,000,000 office building.
(a)Issue 400,000 ordinary shares at $10 per share.
(b)Issue 8%, 10-year bonds at par ($4,000,000).
Income before interest and taxes is expected to be $3,000,000. The company has a 30% tax rate and has 800,000 ordinary shares outstanding prior to the new financing.
Instructions
Calculate each of the following for each alternative:
(1)Net income.
(2)Earnings per share.
Ex. 269
The board of directors of Gibson Corporation is considering two plans for financing the purchase of new plant equipment. Plan #1 would require the issuance of $4,000,000, 6%, 20-year bonds at face value. Plan #2 would require the issuance of 100,000 ordinary shares with a $5 par value which are selling for $40 per share on the open market. Gibson Corporation currently has 100,000 ordinary shares outstanding and the income tax rate is expected to be 30%. Assume that income before interest and income taxes is expected to be $800,000 if the new factory equipment is purchased.
Instructions
Prepare a schedule which shows the expected net income after taxes and the earnings per share under each of the plans that the board of directors is considering.