answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
shusha [124]
2 years ago
15

Emma's Electronics Incorporated has total assets of $56 and total debt of $43 million. The company also has operating profits of

$27 million with interest expenses of $8 million.
Required:
a. What is Emma's debt ratio?
b. What is Emma's times interest earned?
c. Based on the information above, would you recommend to Emma's management that the firm is in a strong enough position to assume more debt and increase interest expense to $10 million?
Business
1 answer:
podryga [215]2 years ago
4 0

Answer:

a. Debt Ratio = Debt / Total Assets

Debt Ratio = $43 million / $56 million

Debt Ratio = 0.76786

Debt Ratio = 76.79%

b. Time Interest Earned = EBIT / Interest

Time Interest Earned = $27 million / $8 million

Time Interest Earned = 3.375 times

c.  If Interest expense is increased to 10 lmillion. The new Time Interest Earned = $27 million / $10 million = 2.7 times. The new time Interest Earned is at 3 times and this indicate that the company can easily raise more debt for its funding needs.

You might be interested in
Which of the following are useful for conducting market research? A. Focus groups B. Cost-benefit analysis C. Budget spreadsheet
rewona [7]
A- Focus Groups. You gotta know how the customers feel
7 0
2 years ago
Read 2 more answers
When you purchase an existing business why is it important to know the owners reason for selling
Neporo4naja [7]
Because maybe they were problem with the business like they might need reapairs or a bad location to make porfit.Or he just want to get rid of it to make it someone else problem
5 0
2 years ago
On June 30, 2018, the High Five Surfboard Company had outstanding accounts receivable of $600,000. On July 1, 2018, the company
attashe74 [19]

Answer:

The Journal entry is as follows:

On July 1,

Cash A/c                                  Dr. $439,200

Finance charge Expense A/c Dr. $10,800

To Financing arrangement A/c                       $450,000

(To record the amount of borrowings)

Workings:

Finance charge expense = ($600,000 × 1.8%)

                                          = $10,800

So, cash account = $450,000 - $10,800

                             = $439,200

4 0
2 years ago
Bernie Madoff invites you to invest $1,000 in his fund now and be guaranteed at least $1,500 in 4 years. What is the effective r
Nady [450]

Answer: 10.67%

Explanation:

Mr Madoff is offering to grow the current value of $1,000 to a future value of $1,500 in 4 years.

This is a future value problem.

1,500 = 1,000 * ( 1 + interest) ^ 4 years

( 1 + interest) ^ 4 = 1,500/1,000

( 1 + interest) = 4√(1,500/1,000)

1 + interest = 1.1066819197

Interest = 1.1066819197 - 1

= 10.67%

8 0
2 years ago
Effective teams (1) function so well they create their own magnetism, (2) are interested in others' success as well as their own
MariettaO [177]

Answer:Only statements 1 and 2 are correct

Explanation: An effective team involves people who interact with each other to accomplish certain goals or meet certain needs. Team members work intensely with each other to achieve a specific, common goal or objective. This therefore attracts other people to them, that is magnetism. In as much as they look out to achieve their goals, they are also interested in others' success.

7 0
2 years ago
Read 2 more answers
Other questions:
  • ​greg, a​ landscaper, is planning on opening his own landscaping company. he currently earns​ $40,000 per year working for his u
    5·1 answer
  • A department store has budgeted sales of 12,800 men's coats in September. Management wants to have 6,800 coats in inventory at t
    5·1 answer
  • Darren has the option of investing in either Stock A or Stock B. There is a 45 percent chance that the return on Stock A will be
    8·1 answer
  • Rosie Dry Cleaning was started on January 1, 2018. It experienced the following events during its first two years of operation:
    11·1 answer
  • Autumn works as a paralegal for a defense attorney. What kind of education might
    12·1 answer
  • A price index that tends to be a leading indicator of future inflation rates is the
    12·1 answer
  • "​Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $ 1 comma 100​, variable costs are
    9·1 answer
  • A goal programming problem had two goals (with no priorities assigned). Goal number 1 was to achieve a profit of $2,400 and goal
    10·1 answer
  • TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at
    5·1 answer
  • Work cell at Chris Ellis Commercial Laundry has a workstation with two​ machines, and each unit produced at the station needs to
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!