1)

Use the following information to answer this question.

Windswept, Inc. 2017 Income Statement ($ in millions)
Net sales	$	10,800
Cost of goods sold		7,950
Depreciation		420
Earnings before interest and taxes	$	2,430
Interest paid		100
Taxable income	$	2,330
Taxes		816
Net income	$	1,514

Windswept, Inc. 2016 and 2017 Balance Sheets ($ in millions)
		2016			2017				2016			2017
Cash	$	280		$	310		Accounts payable	$	1,790		$	1,842
Accounts rec.		1,110			1,010		Long-term debt		1,070			1,353
Inventory		2,000			1,745		Common stock		3,360			3,030
Total	$	3,390		$	3,065		Retained earnings		650			900
Net fixed assets		3,480			4,060
Total assets	$	6,870		$	7,125		Total liab. & equity	$	6,870		$	7,125

What is the equity multiplier for 2017?

• 2.35 times

• 1.81 times

• 1.34 times

• 3.56 times

• 2.75 times

2)

The 2017 balance sheet of Kerbers Tennis Shop, Inc., showed $2.25 million in long-term debt, $710,000 in the common stock account, and $6.1 million in the additional paid-in surplus account. The 2018 balance sheet showed $3.45 million, $895,000, and $7.85 million in the same three accounts, respectively. The 2018 income statement showed an interest expense of $230,000. The company paid out $650,000 in cash dividends during 2018. If the firm's net capital spending for 2018 was $690,000, and the firm reduced its net working capital investment by $165,000, what was the firm's 2018 operating cash flow, or OCF?

Multiple Choice

• $-1,730,000

• $2,585,000

• $-2,255,000

• $-4,080,000

• $-3,030,000