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ltoid Co.Balance Sheet At December 31, 2018 Cash                                   &n

ltoid Co.Balance Sheet At December 31, 2018

Cash                                           150

Short-term investments                         200

Accounts receivable (net)                      300

Inventories                                    450

Property, plant, and equipment (net) Total assets 1100

Total assets                                   2200

Liabilities and shareholders’ equity:         

Current liabilities                            450

Long-term liabilities                          600

Paid-in capital                               150

Retained earnings                              1000

Total liabilities and shareholders’ equity    2200

Net sales                                      7700

Operating expenses                             7110

Income before interest and taxes               590

Interest expense                               90

Income tax expense                             150

Net income                                     350

Compute the following financial statement ratios for 2018:

6) Altoid Co.'s current ratio. Round your answer to two decimal places.

7) Altoid Co.'s acid-test ratio. Round your answer to two decimal places.

8) Altoid Co.'s debt to equity ratio. Round your answer to two decimal places.

9) Altoid Co.'s times interest earned ratio. Round your answer to two decimal places.

10) Altoid Co.'s long term debt to equity ratio. Round your answer to two decimal places.) Use this information to answer the following questions:

Spartan Sportswear's current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement:

Inventories $180,000

Total assets $720,000

Current ratio 2.75

Acid-test ratio 1.5

Debt to equity ratio 1.4

Required: Compute the following for Spartan:

11) Current assets

12) Shareholders' equity

Solutions

Expert Solution

6 Current ratio = Current Assets / Current liabilities (150+200+300+450)/450
2.44
7 acid-test ratio = Quick assets/ Current liabilities (150+200+300)/450
1.44
8 Debt-to-equity ratio Debt/ Equity
(450+600)/(150+1000)
0.91
9 Times interest earned ratio EBIT/ Interest expense
(350 + 150 + 90) / 90
6.56
10 Long term debt-to-equity Long-term debt ÷ (Common stock + Preferred stock)
600/(1000+150)
0.52
11 Current assets
CA/CL = 2.75
CA= 2.75CL
QA = 1.5
CA-Inventory = 1.5 CL
CA-180000 = 1.5 CL
2.75 CL -180000 = 1.5CL
1.25 CL = 180000
CL = 144000
CA = 2.75*144000
       = 396000
12 Shareholders' equity
Total debt + Total equity = Total assets
Debt/Equity = 1.4
Debt = 1.4 Equity
1.4 Equity + 1 Equity = 720000
2.4 Equity = 720000
Equity = 300000

ekkarill92 answered 2 years ago
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