Question
In: Finance
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to
SFAS No. 13, it merely footnoted lease obligations in the
balance sheet, which appeared as follows: Use Appendix D for an
approximate answer but calculate your final answer using the
formula and financial calculator methods.
| In $ millions | In $ millions | ||||
| Current assets | $ | 55 | Current liabilities | $ | 10 |
| Fixed assets | 55 | Long-term liabilities | 35 | ||
| Total liabilities | $ | 45 | |||
| Stockholders' equity | 65 | ||||
| Total assets | $ | 110 | Total liabilities and stockholders' equity | $ | 110 |
The footnotes stated that the company had $21 million in annual
capital lease obligations for the next 20 years.
a. Discount these annual lease obligations back to
the present at a 10 percent discount rate. (Do not round
intermediate calculations. Round your answer to the nearest
million. Input your answer in millions of dollars (e.g., $6,100,000
should be input as "6").)
PV of lease
obligations:
b. Construct a revised balance sheet that includes
lease obligations. (Do not round intermediate calculations.
Round your answers to the nearest million. Input your answer in
millions of dollars (e.g., $6,100,000 should be input as
"6").)
|
|||||||||||||||||||||||||||||
c. Compute the total debt to total asset ratio for
the original and revised balance sheets. (Input your
answers as a percent rounded to 2 decimal
places.)
|
d. Compute the total debt to total equity ratio for the original and revised balance sheets. (Input your answers as a percent rounded to 2 decimal places.)
|
Solutions
Expert Solution
Calculate the annual lease obligation as follows:
Annual lease obligation = Annual lease payment * PVAF(10%,20)
= $21 * 8.514
=$179.
Therefore, the annual lease obligation is $179.
-------------------------------------------------------------------------
Calculate the revised balance sheet as follows:
Formulas:
jeff jeffy answered 1 year agoRelated Solutions
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to SFAS
No. 13, it merely footnoted lease obligations in the balance sheet,
which appeared as follows: Use Appendix D for an approximate answer
but calculate your final answer using the formula and financial
calculator methods. In $ millions In $ millions Current assets $ 55
Current liabilities $ 20 Fixed assets 55 Long-term liabilities 25
Total liabilities $ 45 Stockholders' equity 65 Total assets $ 110
Total liabilities and stockholders' equity...
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to
SFAS No. 13, it merely footnoted lease obligations in the
balance sheet, which appeared as follows: Use Appendix D for an
approximate answer but calculate your final answer using the
formula and financial calculator methods.
In $ millions
In $ millions
Current assets
$
85
Current liabilities
$
30
Fixed assets
85
Long-term liabilities
50
Total liabilities
$
80
Stockholders' equity
90
Total assets
$
170
Total liabilities and stockholders' equity...
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to SFAS
No. 13, it merely footnoted lease obligations in the balance sheet,
which appeared as follows: Use Appendix D for an approximate answer
but calculate your final answer using the formula and financial
calculator methods. In $ millions In $ millions Current assets $ 75
Current liabilities $ 35 Fixed assets 75 Long-term liabilities 20
Total liabilities $ 55 Stockholders' equity 95 Total assets $ 150
Total liabilities and stockholders' equity...
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to SFAS
No. 13, it merely footnoted lease obligations in the balance sheet,
which appeared as follows: Use Appendix D for an approximate answer
but calculate your final answer using the formula and financial
calculator methods.
Current Assets
75
Current Liabilities
35
Fixed Assets
75 Long
Term Liabilities 20
Total
Liabilitites
55
Stockholders equity 95
Total
Assets 150
Total liabilities & stockholders equity 150
The footnotes stated that the company had $15...
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to
SFAS No. 13, it merely footnoted lease obligations in the
balance sheet, which appeared as follows: Use Appendix D for an
approximate answer but calculate your final answer using the
formula and financial calculator methods.
In $ millions
In $ millions
Current assets
$
65
Current liabilities
$
20
Fixed assets
65
Long-term liabilities
35
Total liabilities
$
55
Stockholders' equity
75
Total assets
$
130
Total liabilities and stockholders' equity...
The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease...
The Ellis Corporation has heavy lease commitments. Prior to
SFAS No. 13, it merely footnoted lease obligations in the
balance sheet, which appeared as follows: Use Appendix D for an
approximate answer but calculate your final answer using the
formula and financial calculator methods.
In $ millions
In $ millions
Current assets
$
90
Current liabilities
$
30
Fixed assets
90
Long-term liabilities
55
Total liabilities
$
85
Stockholders' equity
95
Total assets
$
180
Total liabilities and stockholders' equity...
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