What is Lone Star's Plastics EBIT?
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Lone Star Plastics has the following data:
Assets: $100,000; Profit margin: 6.0%; Tax rate: 40%; Debt ratio: 40.0%; Interest rate: 8.0%: Total assets turnover: 3.0.
What is Lone Star's EBIT?
a. $ 3,200
b. $12,000
c. $18,000
d. $30,000
e. $33,200
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Write down equations with given data, then find unknowns:
Profit margin = NI/S = 0.06.
Debt ratio = D/A = D/100,000-------- = 0.4; D = $40,000.
TA ...
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