Question
In: Accounting
Suppose McDonald’s 2020 financial statements contain the following selected data (in millions). Current assets $3,390.0 Interest...
Suppose McDonald’s 2020 financial statements
contain the following selected data (in millions).
| Current assets | $3,390.0 | Interest expense | $476.0 | |||
| Total assets | 29,040.0 | Income taxes | 1,891.0 | |||
| Current liabilities | 2,940.0 | Net income | 4,481.0 | |||
| Total liabilities | 15,682.0 |
(a1) Compute the following values.
| 1. | Working capital. | $ | millions | ||
| 2. | Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) | :1 | |||
| 3. | Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) | % | |||
| 4. | Times interest earned. (Round to 2 decimal places, e.g. 6.25.) | times |
Solutions
Expert Solution
Answer:
| Working capital | $ 450.00 |
| Current Ratio | 1.15 |
| Debt to Total assets Ratio | 44% |
| Times interest earned ratio | 14.39 |
Calculation:
| Particulars | Amount | |
| A | Current assets | $ 3,390 |
| B | Current liablites | $ 2,940 |
| A-B | Working capital | 450.0 |
| Particulars | Amount | |
| A | Current assets | $ 3,390 |
| B | Current liablites | $ 2,940 |
| A/B | Current Ratio | 1.15 |
| Particulars | Amount | |
| A | Debt (15682-2940) | $ 12,742 |
| B | Total assets | $ 29,040 |
| A/B | Debt to Total assets Ratio | 44% |
| Particulars | 2016 | |
| A | EBIT (4481+1891+476) | $ 6,848 |
| B | Interest | $ 476 |
| A/B | Times interest earned ratio | 14.39 |
In case of any doubt, please feel free to comment.
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