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2 years ago

Ratios Analyzing Long-Term Firm Solvency

Business

1 answer:

Tpy6a [65]2 years ago

4 0

Answer:

0.57 and 9.24 times

Explanation:

The computation is shown below:

a. Debt to equity ratio

= Total Liabilities ÷ Share holders' equity

= $2,400,000 ÷ $4,200,000

= 0.57

And, the times interest earned ratio is

= EBIT ÷ interest expense

where,

EBIT is

= Net income + taxes + interest

= $496,500 + $203,500 + $85,000

= $785,000

And, the interest expense is $85,000

So, times interest earned ratio is

= $785,000 ÷ $85,000

= 9.24 times

We simply applied the above formulas

Plus the year is 2019 not 2016

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Sample Response: The text uses graphs, charts, tables, headings, and subheadings to help the reader find and understand important information. The headings organize the text in a logical way and help the reader identify main ideas. The tables and graphs provide specific data that both support and supplement the information in the text. These features are effective aids to understanding.

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2 years ago

Read 2 more answers

On January 1, 2021, Wright Transport sold four school buses to the Elmira School District. In exchange for the buses, Wright rec

maria [59]

Solution:

1. (i)

Sales revenue = Present value of the note receivable

= $528,000 x .86384 = $456,108

Present value of $1: n = 3, i = 5% (PV of $1)

(ii)

December 31, 2018:

Interest revenue: ($456,108 x 5%) = $22,805

December 31, 2019:

Interest revenue: (($456,108 + $22,805) x 5%) = $23,946

December 31, 2020:

Interest revenue: (($456,108 + $22,805 + $23,946) x 5%) = $25,143

2. Journal entries to record the sale of merchandise on January 1, 2020

Date General Journal Debit Credit.

Jan 01, 2018 Note receivable 528,000

Discount on note receivable 71,892

Sales revenue 456,108

Dec 31' 2018 Discount on note receivable 22,805

Interest revenue 22,805

Dec 31, 2019 Discount on note receivable 23,946

Interest revenue 23,946

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Discount on note receivable 25,143

Interest revenue 25,143

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7 0

2 years ago

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: M N OUnit sale

kolbaska11 [484]

Answer:

Selling price per composite unit= $11.3

Explanation:

Giving the following information:

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2.

Unit price and cost data are: M N OUnit sales price$12 $10 $11

<u>First, we need to calculate the sales proportion for each product:</u>

M= 3/6= 0.5

N= 1/6= 0.17

O= 2/6= 0.33

<u>Now, the selling price per composite unit:</u>

Selling price per composite unit= (0.5*12) + (0.17*10) + (0.33*11)

Selling price per composite unit= $11.3

6 0

1 year ago

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchai

Cloud [144]

Answer:

Considering the allocate fixed cost, it would not be a good option.

It will generate a financial disadvantage of 22,950

Explanation:

$\left[\begin{array}{cccc}&produce&buy&Differential\\Purchase&&282,600&-282,600\\Variable Cost&270,000&&270,000\\Fixed Cost&68,400&32,850&-35,550\\Total Cost&338,400&315,450&-22,950\\\end{array}\right]$

Fixed overhead; 38 x 1800 = 68,400

There is a portion of 35,550 fixed cost which is tracable to the real wheel assembly line thus, will be eliminated.

But 32,850 would not.

Considering this, it would not be a good option to stop the assembly line and purchase the component

7 0

2 years ago

Blue Hamster Manufacturing Inc. just reported earnings after tax (also called net income) of $8,000,000, and a current stock pri

tatuchka [14]

Answer:

$38.80 per share

Explanation:

The computation of the stock price one year from now is shown below:

But before that first need to do the following calculations

Current Year Price earning ratio is

= ($39.50 × 5,500,000) ÷ $8,000,000

= $27.15

Now

Next year earnings = $8,000,000 × (1 + 25%)

= $10,000,000

Finally,

Share price next year = ($10,000,000 × $27.15) ÷ 7,000,000

= $38.80 per share

6 0

2 years ago