Question: Find below the financial data for Costa. Note that the firm has no amortization charges, it pays $100 in lease, and has $0 debt retired

Find below the financial data for Costa. Note that the firm has no amortization charges, it pays $100 in lease, and has $0 debt retired during the next 5 years (notes payable will be rolled over). Assume a 365-day year.

COSTA. BALANCE SHEET (millions of dollars) Cash $ 140.0

Accounts payable $ 800.0 Accts. receivable 880.0

Notes payable 600.0

Inventories 1,320.0 Accruals 400.0

Total current assets $2,340.0

Total current liabilities $1,800.0

Long-term bonds 1,000.0 Total debt $2,800.0

Common stock 200.0

Retained earnings 1,000.0

Net plant & equip. 1,660.0

Total common equity $1,200.0

Total assets $4,000.0

Total liabilities & equity $4,000.0

OTHER DATA Sales = $ 6,000.0

Depreciation expense = $ 100.2

Operating income = $ 300.0

Interest expense = $ 96.0 Net income = $ 122.4

a. Calculate the ratios that you think would be useful in this analysis.

b. Analyze the firm's:

I. Liquidity position.

II. Debt Management.

c. Calculate the firm's ROE using Du-pont equation.

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