Income statement Taco Hut for year ending 12312017 sales 200

Income statement

Taco Hut for year ending 12-31-2017

sales

2000000

Cost of goods sold

-600000

Operating income

1400000

expense

-120000

Expense

-180000

ebit

      1100000

interest

-100000

ebt

     1000000

taxes

-250000

Net income

       750000

Balance sheet

Taco Hut on 12-31-2017

cash

200,000

accounts receivable

300,000

Mortgage

1,250,000

land

650,000

Preferred equity

0

goodwill

350,000

Net equipment

500,000

Common equity

?

Total assets

[RR1] 2,000,000

Total debt & equity

?

1. What is the tax rate?

2. What percentage of sales is cost of goods sold?

3. What is the interest rate that the company is paying for its debt?

4. How much does Taco Hut have is current assets?

5. What is the common equity?

sales	2000000
Cost of goods sold	-600000
Operating income	1400000
expense	-120000
Expense	-180000
ebit	1100000
interest	-100000
ebt	1000000
taxes	-250000
Net income	750000

Solution

1. Tax Rate = Taxes/EBT = 250000/1000000 = 25%

2. COGS/Sales = 600000/2000000 = 30%

3. Interest Rate = Interest/Debt = 100000/1250000 = 8%

4. Current Assets = Cash + AR = 200000+300000 = $500000