QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

65. Assume U.S. GAAP (generally accepted accounting principles) applies unless

otherwise noted.

An analyst is forecasting EPS for a company. She prepares the following common

sized data from its recent annual report and estimates sales for 2009.

2009

2008

2007

forecast

actual

Sales $ millions 2,250.0 2,150.0 1,990.0

Sales as % of sales 100.00% 100.00%

Cost of goods sold 45.00% 45.00%

Operating Expenses 40.00% 40.00%

Interest expense 3.72% 4.02%

Restructuring expense 7.20%

Pre-tax margin 11.28% 3.78%

Taxes (35%) 3.95% 1.32%

Net Income 7.33% 2.46%

The capital structure of the company has not changed and the company has no

short-term interest bearing debt outstanding. The projected net income (in $

millions) for 2009 is closest to:

A. 162.8

B. 164.9

C. 167.4