5.

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		$	5,600
Accounts receivable			17,500
Inventories			18,900
Total current assets		$	42,000
Net plant and equipment			28,000
Total assets		$	70,000
Liabilities and Equity
Accounts payable		$	24,548
Accruals			11,552
Notes payable			5,000
Total current liabilities		$	41,100
Long-term bonds			10,000
Total liabilities		$	51,100
Common stock			5,103
Retained earnings			13,797
Total common equity		$	18,900
Total liabilities and equity		$	70,000
Income Statement (Millions of $)	2021
Net sales		$	126,000
Operating costs except depreciation			117,180
Depreciation			2,240
Earnings before interest and taxes (EBIT)		$	6,580
Less interest			900
Earnings before taxes (EBT)		$	5,680
Taxes (25%)			1,420
Net income		$	4,260
Other data:
Shares outstanding (millions)			500.00
Common dividends (millions of $)		$1,491.00
Int. rate on notes payable & L-T bonds			6%
Federal plus state income tax rate			25%
Year-end stock price			$80.94

What is the firm's P/E ratio? Do not round your intermediate calculations.

a. 9.50

b. 11.36

c. 13.16

d. 8.52

6.

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		$	6,000
Accounts receivable			15,000
Inventories			15,000
Total current assets		$	36,000
Net plant and equipment			24,000
Total assets		$	60,000
Liabilities and Equity
Accounts payable		$	16,120
Accruals			8,680
Notes payable			8,000
Total current liabilities		$	32,800
Long-term bonds			11,000
Total liabilities		$	43,800
Common stock			4,698
Retained earnings			11,502
Total common equity		$	16,200
Total liabilities and equity		$	60,000
Income Statement (Millions of $)	2021
Net sales		$	90,000
Operating costs except depreciation			83,700
Depreciation			1,920
Earnings before interest and taxes (EBIT)		$	4,380
Less interest			1,140
Earnings before taxes (EBT)		$	3,240
Taxes (25%)			810
Net income		$	2,430
Other data:
Shares outstanding (millions)			500.00
Common dividends (millions of $)		$850.50
Int. rate on notes payable & L-T bonds			6%
Federal plus state income tax rate			25%
Year-end stock price			$58.32

What is the firm's ROE? Do not round your intermediate calculations.

a. 15.00%

b. 10.80%

c. 27.04%

d. 20.00%

e. 21.13%