Answer Happy

Loblaws Companies have $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.
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 equity