Use the following information to answer this question. windswept, inc. 2017 income statement ($ in millions) net sales $ 11,400 cost of goods sold 8,150 depreciation 440 earnings before interest and taxes $ 2,810 interest paid 108 taxable income $ 2,702 taxes 946 net income $ 1,756 windswept, inc. 2016 and 2017 balance sheets ($ in millions) 2016 2017 2016 2017 cash $ 320 $ 350 accounts payable $ 1,950 $ 2,022 accounts rec. 1,190 1,090 long-term debt 1,110 1,393 inventory 2,120 1,805 common stock 3,440 3,070 total $ 3,630 $ 3,245 retained earnings 690 940 net fixed assets 3,560 4,180 total assets $ 7,190 $ 7,425 total liab. & equity $ 7,190 $ 7,425 what is the equity multiplier for 2017?

1.85

Explanation:

Given:

In 2017:

Net sales = $11,400

Cost of goods sold = $8,150

Depreciation = $440

Earnings before interest and taxes = $2,810

Taxes = $946

Net income = $1,756

Now,

Equity Multiplier (2017) =

Total assets of 2017 = $7,425  [given in the question]

Stockholder's equity for 2017

= Common Stock of 2017 + Retained earnings of 2017

= $3,070 + $940

= $4,010

Therefore,

Equity Multiplier (2017) =

or

Equity Multiplier (2017) = 1.85

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