Question

Financial? ratios: Financial leverage.??The financial statements for Tyler? Toys, Inc. are shown in the table below.

Calculate the debt? ratio, times interest earned? ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the? shareholders?

Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
	2014	2013
Revenue	$14,146,827	$13,567,406
Cost of goods sold	$-8,447,289	$-8,133,000
Selling, general, and administrative expenses	$-998,776	$-981,369
Depreciation	$-1,497,076	$-1,472,890
EBIT	$3,203,686	$2,980,147
Interest expense	$-375,270	$-355,003
Taxes	$-1,074,798	$-997,555
Net income	$1,753,618	$1,627,589

????????????????????????????????????????????????????????????????????????????????????????????????????????????

Tyler Toys, Inc.
Balance Sheet as of December 31, 2013 and 2014
ASSETS	2014	2013	LIABILITIES	2014	2013
Current assets			Current liabilities
Cash	$191,881	$187,911	Accounts payable	$1,545,150	$1,456,934
Investments	$180,418	$120,518	Short-term debt	$311,990	$332,379
Accounts receivable	$668,100	$630,428	Total current liabilities	$1,857,140	$1,789,313
Inventory	$587,775	$563,564	Long-term liabilities
Total current assets	$1,628,174	$1,502,421	Debt	$7,286,382	$6,603,431
Long-term assets			Other liabilities	$1,463,360	$1,346,460
Investments	$3,053,680	$2,828,346	Total liabilities	$10,606,882	$9,739,204
Plant, property, and equipment	$8,497,419	$8,481,663	OWNERS’ EQUITY
Goodwill	$348,126	$346,692	Common stock	$1,458,864	$1,453,563
Intangible assets	$1,158,929	$956,986	Retained earnings	$2,620,582	$2,923,341
			Total owners’ equity	$4,079,446	$4,376,904
			TOTAL LIABILITIES
TOTAL ASSETS	$14,686,328	$14,116,108	AND OWNERS’ EQUITY	$14,686,328	$14,116,108

? ??????????????????????????????????????????????????????????????????????????????????????????????????????

Answer 1

Formulas for above values are as follows: