Santa Corporation
NOTE: These Multiple Choice Questions Require Present Value

question 33

Multiple Choice

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property, plants, and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below are selected financial data for Santa and a portion of the company's operating lease footnote.
$\begin{array}{lrrr}&2012&2011&2010\\\text { Property, Plant, \& Equipment (net) } & \$ 882,468 & \$ 717,453 & \$ 658,214 \\\text { Total Assets } & 1,756,854 & 1,405,484 & 1,254,896 \\\text { Common Shareholders' Equity } & 867,992 & 652,626 & 587,951\end{array}$


$\begin{array}{lrrrr}\text { Sales } & \$ 2,922,915 & \$ 2,415,632 & \\\text { Cost of Goods Sold } & 2,016,811 & 1,642,630 & \\\text { Depreciation Expense } & 78,584 & 67,542 & \\\text { Interest Expense } & 106,663 & 90,343 & \\\text { Net Income } & 248,448 & 217,407 &\end{array}$

sante corp.
Operatine Laraca Disclasure (anounts in thausands)
Operating Lease Camnitsents at the end of 2012
$\begin{array}{rc}{\text { Year }} & \text { Reported Lease Commitments } \\\hline 2013 & \$ 148,239 \\2014 & \$ 252,800 \\2015 & \$ 278,327 \\2016 & \$ 279,210 \\2017 & \$ 285,452 \\\text { Beyond } 2017 & \$ 2471,600\end{array}$

-Using the information provided by Santa Corporation,calculate the company's 2012 fixed asset ratio.

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Definitions:

Self-Correction Mechanism

The market's ability to adjust back to equilibrium without intervention, often used in the context of economic cycles.

Supply-Side Economists

Economists who advocate for policies that increase production as the best way to foster economic growth, emphasizing the role of supply in driving economic outcomes.

Tax Rates

The percentage at which an individual or corporation is taxed by the government on income or profits.

Tax Revenue

Revenue collected by governments from taxes.