15–10. (Analyzing coverage ratios) The income statements for Lowe's Companies, Inc.(LOW), spanning the period 2014–2016 (just before the housing crash, so these arerepresentative years) are as follows:201620152014Net operating income (EBIT)Interest expenseEarnings before taxesIncome taxes$4,971,000(552,000)$4,420,000(1,870,000)$2,550,000$4,792,000(516,000)$4,280,000$4,149,000(476,000)$3,670,000(1,580,000)$2,700,000(1,390,000)$2,290,000Net incomea. Calculate the times interest earned ratio for each of the years for which youhave data.b. What is your assessment of how the firm's ability to service its debt obligationshas changed over this period?c. (Optional) How does Lowe's compare to Home Depot (HD) in Study Problem15-9? Is it better able to service its debt than Home Depot? Why or why not?

Interest Earned Ration is the ratio which is calculated with the help of Operating Income which is…

15–10. (Analyzing coverage ratios) The income statements for Lowe's Companies, Inc. (LOW), spanning the period 2014–2016 (just before the housing crash, so these are representative years) are as follows: 2016 2015 2014 Net operating income (EBIT) Interest expense Earnings before taxes Income taxes Net income $4,971,000 (552,000) $4,420,000 (1,870,000) $2,550,000 $4,792,000 (516,000) $4,280,000 (1,580,000) $2,700,000 $4,149,000 (476,000) $3,670,000 (1,390,000) $2,290,000 a. Calculate the times interest earned ratio for each of the years for which you

15–10. (Analyzing coverage ratios) The income statements for Lowe's Companies, Inc. (LOW), spanning the period 2014–2016 (just before the housing crash, so these are representative years) are as follows: 2016 2015 2014 Net operating income (EBIT) Interest expense Earnings before taxes Income taxes Net income $4,971,000 (552,000) $4,420,000 (1,870,000) $2,550,000 $4,792,000 (516,000) $4,280,000 (1,580,000) $2,700,000 $4,149,000 (476,000) $3,670,000 (1,390,000) $2,290,000 a. Calculate the times interest earned ratio for each of the years for which you

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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These are the current ratios for Facebook INC. for the 2018 and 2017 years. Based on these numbers, how well or poorly is the company doing?
Flounder Company has been operating for several years, and on December 31, 2017, presented the following balance sheet. FLOUNDER COMPANY BALANCE SHEET DECEMBER 31, 2017 Cash $20,900 Accounts payable $80,000 Receivables 117,000 Long-term notes payable 181,000 Inventory 75,000 Common stock (no par) 110,000 Plant assets (net) 354,000 Retained earnings 195,900 $566,900 $566,900 The net income for 2017 was $43,000. Assume that total assets are the same in 2016 and 2017.
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Following are income statements for Hossa Corporation for 2017 and 2016. Percentage of sales amounts are also shown for each operating expense item. Hossa’s income tax rate was 38% in 2016 and 40% in 2017. How do you calculate the cause of change analysis past sales?
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V3
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