Question
In: Finance
Below is selected balance sheet and income statement information from Fuller Enterprises. 2017 2016 Current assets...
Below is selected balance sheet and income statement information from Fuller Enterprises.
|
2017 |
2016 |
|
|
Current assets |
$ 26,148 |
$ 29,879 |
|
Current liabilities |
38,063 |
36,129 |
|
Total debt |
123,896 |
125,545 |
|
Total Liabilities |
206,493 |
209,242 |
|
Equity |
76,434 |
72,613 |
|
Earnings before interest and taxes |
27,777 |
27,476 |
|
Interest expense |
3,180 |
3,384 |
|
Net cash flow from operating activities |
18,812 |
18,620 |
- Compute the current ratio for each year and discuss any trend in liquidity.
- Compute times interest earned, liabilities-to-equity, and cash from operations to total debt ratios for each year and discuss any trends for each.
Solutions
Expert Solution
| a. | ||||||
| Formula to calculate current ratio | ||||||
| Current ratio | Current assets/Current liabilities | |||||
| Current ratio 2016 | 29879/36129 | |||||
| Current ratio 2016 | 0.83 | |||||
| Current ratio 2017 | 26148/38063 | |||||
| Current ratio 2017 | 0.69 | |||||
| Current ratio indicates liquidity of business. The liquidity of company has decreased in 2017 as compared to 2016. | ||||||
| Also, company does not have sufficient current assets available to pay its current liabilities. | ||||||
| b. | ||||||
| Formula to calculate times interest earned | ||||||
| Times interest earned | EBIT/Interest expense | |||||
| Times interest earned 2016 | 27476/3384 | |||||
| Times interest earned 2016 | 8.12 | |||||
| Times interest earned 2017 | 27777/3180 | |||||
| Times interest earned 2017 | 8.73 | |||||
| The times interest earned ratio indicates the profit available to pay interest expense. The times interest earned ratio in 2017 has increased from 8.12 in 2016 to 8.73 in 2017. | ||||||
| Formula to calculate liabilities to equity ratio | ||||||
| Liabilities to equity ratio | Total liabilities/Total equity | |||||
| Liabilities to equity ratio 2016 | 209242/72613 | |||||
| Liabilities to equity ratio 2016 | 2.88 | |||||
| Liabilities to equity ratio 2017 | 206493/76434 | |||||
| Liabilities to equity ratio 2017 | 2.70 | |||||
| Liabilities to equity ratio indicates the proportion of total liabilities to equity. The liabilities to equity ratio has decreased in 2017 as compared to 2016. | ||||||
| Formula to calculate cash from operations to total debt ratio | ||||||
| Cash flow from operations to total debt ratio | Net cash flow from operating activities/Total debt ratio | |||||
| Cash flow from operations to total debt ratio 2016 | 18620/125545 | |||||
| Cash flow from operations to total debt ratio 2016 | 0.15 | |||||
| Cash flow from operations to total debt ratio 2017 | 18812/123896 | |||||
| Cash flow from operations to total debt ratio 2017 | 0.15 | |||||
| The cash flow from operations to total debt ratio is almost same for both years. | ||||||
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Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at December 31, 2016 and 2017, follow.
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Sales revenue
$
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Expenses
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Depreciation expense
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LANSING COMPANY
Income Statement
For Year Ended December 31, 2016
Sales revenue
$
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Expenses
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19,000
Depreciation expense
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Salaries expense
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Rent expense
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Insurance expense
1,900
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Utilities expense
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2016
2015
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$...
Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities)...
Lansing Company’s 2017 income statement and selected balance
sheet data (for current assets and current liabilities) at December
31, 2016 and 2017, follow. LANSING COMPANY Income Statement For
Year Ended December 31, 2017 Sales revenue $ 124,200 Expenses Cost
of goods sold 51,000 Depreciation expense 16,500 Salaries expense
27,000 Rent expense 9,900 Insurance expense 4,700 Interest expense
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Selected Balance Sheet Accounts At December 31 2017 2016 Accounts
receivable $ 6,500...
Lansing Company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities)...
Lansing Company’s 2017 income statement and selected balance
sheet data (for current assets and current liabilities) at December
31, 2016 and 2017, follow.
LANSING COMPANY
Income Statement
For Year Ended December 31, 2017
Sales revenue
$
97,200
Expenses
Cost of goods sold
42,000
Depreciation expense
12,000
Salaries expense
18,000
Rent expense
9,000
Insurance expense
3,800
Interest expense
3,600
Utilities expense
2,800
Net income
$
6,000
LANSING COMPANY
Selected Balance Sheet Accounts
At December 31
2017
2016
Accounts receivable
$
5,600...
Below is selected balance sheet and income statement information from O'Reilly (in millions) 2019 2017 Cash...
Below is selected balance sheet and income statement
information from O'Reilly
(in millions)
2019
2017
Cash
$ 1,600.00
$ 1,500.00
Accounts receivable
1,197.16
835.30
Current assets
4,013.56
3,018.33
Current liabilities
3,485.39
6,257.95
Long-term debt
17,620.81
3,611.63
Short-term debt
1,133.96
4,668.83
Total liabilities
23,318.42
26,463.17
Interest expense
1,666.90
1,438.29
Capital expenditures
1,645.48
1,211.50
Equity
4,600.00
-7,200.00
Cash from operations
610.89
685.98
Earnings before interest and taxes
1,594.84
2,002.84
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For the Year Ended December 31, 2016
($ in thousands)
Sales revenue
$
12,500
Operating
expenses:
Cost of goods sold
$
4,500
Depreciation
350
Insurance
650
Administrative and other
2,900
Total
operating expenses
8,400
Income before income
taxes
4,100
Income tax
expense
1,640
Net income
$
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Balance Sheet
Information ($ in thousands)
Dec. 31, 2016
Dec. 31, 2015
Assets:
Cash...
Presented below is the 2016 income statement and comparative balance sheet information for Tiger Enterprises. TIGER...
Presented below is the 2016 income statement and comparative
balance sheet information for Tiger Enterprises.
TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2016
($ in thousands)
Sales revenue
$
12,500
Operating
expenses:
Cost of goods sold
$
4,500
Depreciation
350
Insurance
650
Administrative and other
2,900
Total
operating expenses
8,400
Income before income
taxes
4,100
Income tax
expense
1,640
Net income
$
2,460
Balance Sheet
Information ($ in thousands)
Dec. 31, 2016
Dec. 31, 2015
Assets:
Cash...
Selected balance sheet information and the income statement for Fountainhead Corporation for the current year are...
Selected balance sheet
information and the income statement for Fountainhead Corporation
for the current year are presented below.
Selected
Balance Sheet Accounts
Prior Year
Current
Year
Accounts Receivable
$
26,200
$
18,000
Merchandise
Inventory
36,000
39,600
Prepaid
Rent
2,600
0
Accounts
Payable
20,600
26,800
Salaries and
Wages Payable
5,200
7,800
Income Statement
Sales Revenue
$
540,000
Expenses:
Cost of Goods
Sold
308,000
Depreciation
Expense
36,000
Salaries
Expense
54,000
Rent
Expense
21,600
Insurance
Expense
21,600
Interest
Expense
19,800
Utilities
Expense
18,000...
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Selected balance sheet and income statement information from
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$ millions 2016 2015
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . $
26,395 $ 22,355 Current liabilities. . . . . . . . . . . . . . . .
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Selected balance sheet and income statement information from CVS Health Corp. for 2014 through 2016 follows...
Selected balance sheet and income statement information from CVS
Health Corp. for 2014 through 2016 follows ($ millions).
Total Current Assets
Total Current Liabilities
EBIT (Operating income)
Interest Expense, Gross
Total Liabilities
Equity
2016
$31,042
$26,250
$10,338
$1,058
$57,628
$36,834
2015
29,158
23,169
9,454
838
55,234
37,203
2014
25,983
19,027
8,799
600
36,224
37,963
a. Compute times interest earned ratio for each year and discuss
any trends for each. Round answers to one decimal place.
Year
TIE Ratio
2016
Answer...
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