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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.

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Balance Sheet (Millions of $) 2021
Assets
Cash and securities $ 4,200
Accounts receivable 17,500
Inventories 20,300
Total current assets $ 42,000
Net plant and equipment 28,000
Total assets $ 70,000
Liabilities and Equity
Accounts payable $ 27,531
Accruals 12,369
Notes payable 5,000
Total current liabilities $ 44,900
Long-term bonds 9,000
Total liabilities $ 53,900
Common stock 3,864
Retained earnings 12,236
Total common equity $ 16,100
Total liabilities and equity $ 70,000
Income Statement (Millions of $) 2021
Net sales $ 112,000
Operating costs except depreciation 104,160
Depreciation 2,240
Earnings before interest and taxes (EBIT) $ 5,600
Less interest 840
Earnings before taxes (EBT) $ 4,760
Taxes (25%) 1,190
Net income $ 3,570
Other data:
Shares outstanding (millions) 500.00
Common dividends (millions of $) $1,249.50
Int. rate on notes payable & L-T bonds 6%
Federal plus state income tax rate 25%
Year-end stock price $85.68

What is the firm’s inventory turnover ratio? Assume that the firm’s cost of goods sold is 65% of sales. Do not round your intermediate calculations.

a. 3.59
b. 2.21
c. 2.60
d. 3.34

e. 5.52

8.

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 $) 2021
Assets
Cash and securities $ 5,000
Accounts receivable 12,500
Inventories 12,500
Total current assets $ 30,000
Net plant and equipment 20,000
Total assets $ 50,000
Liabilities and Equity
Accounts payable $ 13,200
Accruals 6,800
Notes payable 7,000
Total current liabilities $ 27,000
Long-term bonds 12,000
Total liabilities $ 39,000
Common stock 3,190
Retained earnings 7,810
Total common equity $ 11,000
Total liabilities and equity $ 50,000
Income Statement (Millions of $) 2021
Net sales $ 50,000
Operating costs except depreciation 46,500
Depreciation 1,600
Earnings before interest and taxes (EBIT) $ 1,900
Less interest 1,140
Earnings before taxes (EBT) $ 760
Taxes (25%) 190
Net income $ 570
Other data:
Shares outstanding (millions) 500.00
Common dividends (millions of $) $199.50
Int. rate on notes payable & L-T bonds 6%
Federal plus state income tax rate 25%
Year-end stock price $13.68

What is the firm’s operating margin? Do not round your intermediate calculations.

a. 1.52%
b. 4.09%
c. 1.14%
d. 1.63%
e. 3.80%

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