Calculation of operating income and ebit

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Reference no: EM1315662

Calculation of operating income, EBIT and dividend per share.

1. Companies generate income from their "regular" operations and from things like interest on securities they hold, which is called non-operating income. Mitel Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's operating income, or EBIT?

a. $1,100

b. $1,200

c. $1,300

d. $1,400

e. $1,500

2. Collins Inc's latest net income was $1 million, and it had 200,000 shares outstanding. The company wants to pay out 40% of its income. What dividend per share should the company declare?

a. $1.60

b. $1.70

c. $1.80

d. $1.90

e. $2.00

Reference no: EM1315662

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