Calculate the leverage ratio which includes total debt to total assets ratio, equity multiplier, debt to equity ratio, current liabilities to total debt ratio, interest coverage, and fixed charges coverage. 20192020Net salesCOGSGross profitOperating expensesDepreciation375.000 $450.000$-225.000 $-270.000150.000 $180.000-46.000 $-46.000$-25.000 $-30.000Interest-4.000 $-4.000EBIT75.000 $100.000Income taxes-20.000 $-30.000Net income$55.000 $70.000Cash dividends17.000 $20.000 20192020CashAccount receivablesInventoriesTotal current assetsGross fixed assetsAccumulated depreciationNet fixed assetsTotal Assets$39.000 $16.000$50.000 $80.000151.000 $204.000240.000 $300.000$200.000 $290.000$-95.000 $-125.000$105.000 $165.000$345.000 $465.000Accounts PayableBank loanAccrued liabilitiesTotal current liabilitiesLong term debt30.000 $45.000$20.000 $27.000$10.000 $23.00060.000 $15.000 $95.00015.000Common stock$85.000 $120.000Retained earningsTotal liabilities and equity185.000 $235.000$345.000 $465.000

Total Debts to Assets ratio = Long term debt + Short term DebtTotal Assets Equity Multiplier = Total…

Calculate the leverage ratio which includes total debt to total assets ratio, equity multiplier, debt to equity ratio, current liabilities to total debt ratio, interest coverage, and fixed charges coverage.

Calculate the leverage ratio which includes total debt to total assets ratio, equity multiplier, debt to equity ratio, current liabilities to total debt ratio, interest coverage, and fixed charges coverage.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

2019
2020
Net sales
COGS
Gross profit
Operating expenses
Depreciation
375.000 $
450.000
$
-225.000 $
-270.000
150.000 $
180.000
-46.000 $
-46.000
$
-25.000 $
-30.000
Interest
-4.000 $
-4.000
EBIT
75.000 $
100.000
Income taxes
-20.000 $
-30.000
Net income
$
55.000 $
70.000
Cash dividends
17.000 $
20.000

2019
2020
Cash
Account receivables
Inventories
Total current assets
Gross fixed assets
Accumulated depreciation
Net fixed assets
Total Assets
$
39.000 $
16.000
$
50.000 $
80.000
151.000 $
204.000
240.000 $
300.000
$
200.000 $
290.000
$
-95.000 $
-125.000
$
105.000 $
165.000
$
345.000 $
465.000
Accounts Payable
Bank loan
Accrued liabilities
Total current liabilities
Long term debt
30.000 $
45.000
$
20.000 $
27.000
$
10.000 $
23.000
60.000 $
15.000 $
95.000
15.000
Common stock
$
85.000 $
120.000
Retained earnings
Total liabilities and equity
185.000 $
235.000
$
345.000 $
465.000

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