What will be the value of AHS' equity multiplier during 2007? a. 0.44 b. 0.56 c. 1.78
Question:
What will be the value of AHS' equity multiplier during 2007?
a. 0.44
b. 0.56
c. 1.78
d. 1.82
Transcribed Image Text:
AHS INC. 2007 Income Statement (S in millions) Net sales S 9625 Cost of goods sold 5225 Depreciation 1890 Earnings before interest and taxes $ 2510 Interest paid 850 Taxable income S 1660 Taxes (35%) Net income 581 S 1079 Dividends $ 679 Addition to retained earnings 400 Figure 4-7 AHS income statement. AHS INC. Balance Sheets as of December 31,2006 and 2007 ($in millions) 2006 2007 2006 2007 Assets Liabilities and owners' equity Current assets Current liabilities Cash $ Accounts receivable 1455 S 2460 260 Accounts payable $ 1150 S 2863 3975 Notes payable 2600 1628 Inventory 1405 885 Total S 3750 S 4491 Total $ 5320 $ 5120 Fixed assets Long-term debt 7000 7600 Net fixed assets $ 19.300 S 21.720 Owners' equity Total assets $ 24,620 S 26,840 Figure 4-8 AHS balance sheets. Common stock and paid-in surplus Retained earnings Total Total liabilities and owners' equity 5500 5700 8370 9049 $ 13.870 S 14.749 $ 24.620 S 26,840
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