Question
In: Accounting
Debt ratio, Ratio of Liabilities to Stockholders' Equity, and Times Interest Earned Camper Company and McSead,...
Debt ratio, Ratio of Liabilities to Stockholders' Equity, and Times Interest Earned
Camper Company and McSead, Inc., are the two largest toy companies. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows:
| Camper | McSead | ||||
| Current liabilities | $1,477,000 | $3,246,000 | |||
| Long-term debt | 795,800 | 1,906,000 | |||
| Total liabilities | $2,272,800 | $5,152,000 | |||
| Total stockholders' equity | 3,788,000 | 6,440,000 | |||
| Total liabilities and stockholders' equity | $6,060,800 | $11,592,000 | |||
The income from operations and interest expense from the income statement for both companies were as follows:
| Camper | McSead | |||
| Income from operations before tax | $513,345.6 | $1,485,210 | ||
| Interest expense | 43,200 | 159,700 | ||
a. Determine the debt ratio for both companies. Round to one decimal place.
| Camper | % |
| McSead | % |
b. Determine the ratio of liabilities to stockholders' equity for both companies. Enter your answers as decimal values rounded to one decimal place.
| Camper | |
| McSead |
c. Determine the number of times interest charges are earned for both companies. Round to one decimal place.
| Camper | |
| McSead |
d. What conclusions can be drawn from these
data as to the ability of these two companies to meet their
interest obligations?
Solutions
Expert Solution
Solution:-
a. Determine the debt ratio for both companies. Round to one decimal place:-
| Camper |
= [ $1,477,000 + 795,800 ] / [ $6,060,800 ] = 2,272,800 / 6,606,800 = 0.340 = 34% |
| McSead |
= [ $3,246,000 + 1,906,000 ] / [ $11,592,000 ] = 5,152,000 / 11,592,000 = 0.44 = 44% |
b. Determine the ratio of liabilities to stockholders' equity for both companies. Enter your answers as decimal values rounded to one decimal place. :-
| Camper |
= [ $1,477,000 + 795,800 ] / 3,788,000 = 2,272,800 / 3,788,000 = 0.6 |
| McSead |
= [ $3,246,000 + 1,906,000 ] / 6,440,000 = 5,152,000 / 6,440,000 = 0.8 |
c. Determine the number of times interest charges are earned for both companies. Round to one decimal place.
| Camper |
= [ $513,345.6 + 43,200 ] / 43,200 = 556,545.6 / 43,200 = 12.88 = 13 |
| McSead |
= [ $1,485,210 + 159,700 ] / 159,700 = 1,644,910 / 159,700 = 10.3 |
d. What conclusions can be drawn from these data as to the ability of these two companies to meet their interest obligations?
- Acquiring seem all that could possibly be needed for the two organizations to make their required intrigue installments.
ekkarill92 answered 1 year agoRelated Solutions
Ratio of Liabilities to Stockholders' Equity and Number of Times Interest Earned The following data were...
Ratio of Liabilities to Stockholders' Equity and Number of Times
Interest Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$982,000
$229,000
Current maturities of serial bonds payable
580,000
580,000
Serial bonds payable, 10%
2,310,000
2,890,000
Common stock, $1 par value
100,000
120,000
Paid-in capital in excess of par
1,060,000
1,070,000
Retained earnings
3,680,000
2,920,000
The income before income tax was $809,200 and...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned Hasbro, Inc. and Mattel, Inc., are...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
Hasbro, Inc. and Mattel, Inc., are the two largest toy companies
in North America. Condensed liabilities and stockholders' equity
from a recent balance sheet are shown for each company as follows
(in thousands):
Hasbro
Mattel
Liabilities:
Current liabilities
$2,742,000
$4,818,000
Long-term debt
1,476,000
1,912,000
Other liabilities
_
918,000
Total liabilities
$4,218,000
$7,648,000
Shareholders' equity:
Common stock
$191,000
$860,000
Additional paid in capital
591,000
3,155,000
Retained earnings
3,675,000
3,251,000
Accumulated other...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current
YearPrevious
Year
Accounts payable$622,000 $168,000
Current maturities of serial bonds payable380,000 380,000
Serial bonds payable, 10%1,560,000 1,940,000
Common stock, $1 par value70,000 90,000
Paid-in capital in excess of par810,000 810,000
Retained earnings2,780,000 2,210,000
The income before income tax expense was $814,800 and $713,000
for the current and previous years, respectively....
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities
to Stockholders' Equity and Times Interest Earned
The following data
were taken from the financial statements of Hunter Inc. for
December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$744,000
$198,000
Current maturities of serial bonds payable
460,000
460,000
Serial bonds payable, 10%
1,890,000
2,350,000
Common stock, $1 par value
90,000
110,000
Paid-in capital in excess of par
970,000
980,000
Retained earnings
3,360,000
2,670,000
The income before
income tax was $564,000 and $493,500 for...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$260,000
$224,000
Current maturities of serial bonds payable
340,000
340,000
Serial bonds payable, 10%
1,680,000
2,020,000
Common stock, $1 par value
70,000
100,000
Paid-in capital in excess of par
840,000
840,000
Retained earnings
2,890,000
2,290,000
The income before income tax was $666,600 and $583,300 for...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$552,000
$162,000
Current maturities of serial bonds payable
370,000
370,000
Serial bonds payable, 10%
1,520,000
1,890,000
Common stock, $1 par value
80,000
100,000
Paid-in capital in excess of par
900,000
900,000
Retained earnings
3,090,000
2,460,000
The income before income tax was $529,200 and $463,100 for...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$604,000
$290,000
Current maturities of serial bonds payable
530,000
530,000
Serial bonds payable, 10%
2,370,000
2,900,000
Common stock, $1 par value
90,000
110,000
Paid-in capital in excess of par
960,000
970,000
Retained earnings
3,330,000
2,640,000
The income before income tax was $1,044,000 and $913,500 for...
Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from...
Ratio of Liabilities to Stockholders' Equity and Times Interest
Earned
The following data were taken from the financial statements of
Hunter Inc. for December 31 of two recent years:
Current Year
Previous Year
Accounts payable
$628,000
$193,000
Current maturities of serial bonds payable
410,000
410,000
Serial bonds payable, 10%
1,710,000
2,120,000
Common stock, $1 par value
90,000
120,000
Paid-in capital in excess of par
1,010,000
1,010,000
Retained earnings
3,480,000
2,760,000
The income before income tax was $572,400 and $500,900 for...
For each year (2019 and 2018) compute Times interest earned Debt ratio Debt/equity ratio Debt to...
For each year (2019 and 2018) compute
Times interest earned
Debt ratio
Debt/equity ratio
Debt to tangible net worth ratio
Balance Sheet
(in
thousands)
2019
2018
Current assets
$ 449,195
$ 433,049
Investments
32,822
55,072
Deferred charges
4,905
12,769
Property, plant, and equipment, net
350,921
403,128
Trademarks and leaseholds
45,031
47,004
Excess of cost over fair market value of net
assets acquired
272,146
276,639
Assets held for disposal
6,062
10,247
$1,161,082
$1,237,908
Total liabilities
$ 689,535
$ 721,149
Total stockholders' equity
471,547
516,759
$1,161,082...
a. For the years 2005–2009, calculate Boeing’s: i. Total liabilities-to-equity ratio ii. Times interest earned ratio...
a. For the years 2005–2009, calculate Boeing’s:
i. Total liabilities-to-equity ratio
ii. Times interest earned ratio
iii. Times burden covered ratio
b. What percentage decline in earnings before interest and taxes
could Boeing have sustained in these years before failing to
cover:
i. Interest and principal repayment requirements?
ii. Interest, principal, and common dividend payments?
c. What do these calculations suggest about Boeing’s financial
leverage during this period?
I am aware that this question has been submitted and answered by...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
- Topic - Construction: Structural, loads, tension 1.) Explain why pure tension members are the most efficient...
- Procter and Gamble (PG) paid an annual dividend of $ 1.62$1.62 in 2009. You expect PG...
- locate a recent case of online child pornography. Write a summary of the incident and describe...
- #Python 5. Write function called evaluate() that evaluates the following Python expressions or assignments as specified:...
ADVERTISEMENT