The net profit margin in year 2 is equal to 

The price-earnings ratio in year 2 is equal to 

The market-to-book value ratio in year 2 is equal to 

Use the Balance Sheet and Income Statement of ABC Corporation to answer questions 26 – 42. ABC Corporation Balance Sheets ($ Millions)   Year 2 Year 1 Assets     Cash and equivalents 100   85   Accounts receivable 275   300   Inventories 375   250         Total current assets 750   635   Net plant and equipment 2,300   1,490   Total assets 3,050   2,125   Liabilities and Equity     Accounts payable 150   85   Accruals 75   50   Notes payable 150   75         Total current liabilities 375   210   Long-term debt 450   290         Total liabilities 825   500   Common stock 1,225   1,225   Retained earnings 1,000   400   Common equity 2,225   1,625   Total liabilities and equity 3,050   2,125         Additional Information     Excess Cash 0 0 Cost of goods sold is 75% of sales Income Statements ($ Millions)   Year 2 Year 1 Sales 2,285   1,585   Operating costs excluding depreciation 1,250   1,000   Depreciation and amortization 100   75   Earnings Before Interest and Taxes 935   510   Interest 63   46   Earnings Before Taxes 872   464   Taxes (25%) 218   116   Net income 654   348         Dividends paid 54   48   Addition to retained earnings 600   300         Additional Information     Number of Shares outstanding (in Millions) 100   100   Stock Price per Share ($) 27.78   25.28     The current ratio in year 2 is equal to 

The net operating working capital in year 2 is equal to 

Lower expected inflation will lead to a

The debt ratio in year 2 is equal to 

Kay Corporation’s 5-year bonds yield 6.70% and 5-year T-bonds yield 4.40%. The risk-free rate is 4.00%, the default risk premium for Kay’s bonds is 1.30% versus zero for T-bonds, and the maturity risk premium for all bonds is 1.00%. What is the liquidity premium on Kay’s bonds?

The net working capital in year 2 is equal to 

As the bond approaches maturity, even without changes in market interest rates, the