Chapter 1 Introduction to Accounting and BusinessEX 1-27 Ratio of liabilities to stockholders' equityLowe's Companies Inc., a major competitor of The Home Depot in the home improve-ment business, operates over 1,800 stores. Lowe's recently reported the following balancesheet data (in millions):OBJ. 62: 5.01REALVORLDYear 2Year 1Total assets$35,291$34,408Total liabilities29,41827,974FAIa. Determine the total stockholders' equity at the end of Years 2 and 1.b. Determine the ratio of liabilities to stockholders' equity for Year 2 and Year 1. Round totwo decimal places.What conclusions regarding the risk to the creditors can you draw from (b)?C.d. Using the balance sheet data for The Home Depot in Exercise 1-26, how does the ratioof liabilities to stockholders' equity of Lowe's compare to that of The Home Depot?roblems: Series AOBJ, 4PR 1-1A Transactions

Shareholder’s Equity represents the ownership of company’s resources in the form of small separable…

Answered: Chapter 1 Introduction to Accounting…

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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Knowledge Check 01 Total Assets for a company are $700,000: Accounts Payable is $75,000, Bonds Payable is $225,000; Common Stock is $300,000 and Retained Earnings is $100,000. The common-size percent for Accounts Payable is 0933% 0933.3% - 10.7% - 100.7%
Current Position Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash $395,200 $324,000 Marketable securities 457,600 364,500 Accounts and notes receivable (net) 187,200 121,500 Inventories 617,800 411,800 Prepaid expenses 318,200 263,200 Total current assets $1,976,000 $1,485,000 Current liabilities: Accounts and notes payable (short-term) $301,600 $315,000 Accrued liabilities 218,400 135,000 Total current liabilities $520,000 $450,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place. Current Year Previous Year 1. Working capital %24 2. Current ratio 3. Quick ratio
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Ratio of Liabilities to Stockholders' Equity and Times Interest Earned Hasbro, Inc. and Mattel, Inc. are the two largest toy companies in North America. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows (in thousands): Hasbro Mattel Liabilities: Current liabilities $2,788,000 $5,359,000 Long-term debt 1,500,800 2,127,000 Other liabilities _ 1,020,400 Total liabilities $4,288,800 $8,506,400 Shareholders' equity: Common stock $243,000 $1,094,000 Additional paid in capital 751,000 4,010,000 Retained earnings 4,670,000 4,131,000 Accumulated other comprehensive income (loss) and other equity items 54,000 (668,000) Treasury stock, at cost (2,144,000) (2,491,000) Total stockholders' equity $3,574,000 $6,076,000 Total liabilities and stockholders' equity $7,862,800 $14,582,400 The…
Current Position Analysis The following items are reported on a company's balance sheet: Cash $537,500 Marketable securities 419,900 Accounts receivable (net) 334,600 Inventory 387,600 Accounts payable 646,000 Determine (a) the current ratio and (b) the quick ratio. Round your answers to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio
Cunent POsition Analysis The following data were taken from the balance sheet of Nilo Company at the end of two recent fiscal years: Current Year Previous Year Current assets: Cash $426,400 $319,200 Marketable securities 493,700 359,100 Accounts and notes receivable (net) 201,900 119,700 Inventories 958,300 695,400 Prepaid expenses 493,700 444,600 Total current assets $2,574,000 $1,938,000 Current liabilities: Accounts and notes payable (short-term) $382,800 $399,000 Accrued liabilities 277,200 171,000 Total current liabilities $660,000 $570,000 a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
Debt and price-earnings ratios The Home Depot, Inc. (HD) operates over 2,200 home improvement retail stores and is a competitor of Lowe's (LOW). The following data (in millions) were adapted from recent financial statements of The Home Depot. Year 2 Year 1 Total assets $39,946 $40,518 Total liabilities 30,624 27,996 Total stockholders’ equity 9,322 12,522 Earnings per share $4.74 $3.78 1. Compute the debt ratio for Years 1 and 2. Round to one decimal place. Year 2 Year 1 Debt ratio __________ % __________ % 2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets? Round to one decimal place. Year 2 Year 1 Ratio of stockholders' equity to total assets __________ % __________ % 3. Compute the ratio of liabilities to stockholders' equity. Round to one decimal place. Year 2 Year 1 Ratio of liabilities to stockholders' equity __________ % __________ % 4. A high ratio of…
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Current Position Analysis The following items are reported on a company's balance sheet: Cash $423,700 Marketable securities 331,000 Accounts receivable (net) 304,500 Inventory 264,800 Accounts payable 662,000 Determine (a) the current ratio and (b) the quick ratio. Round to one decimal place. a. Current ratio fill in the blank 1 b. Quick ratio fill in the blank 2
Selected financial data for Wilmington Corporation is presented below. WILMINGTON CORPORATION Balance Sheet As of December 31 Year 7 Year 6 Current Assets Cash and cash equivalents $ 634,527 $ 335,597 Marketable securities 166,106 187,064 Accounts receivable (net) 284,226 318,010 Inventories 466,942 430,249 Prepaid expenses 60,906 28,060 Other current assets 83,053 85,029 Total Current Assets 1,695,760 1,384,009 Property, plant and equipment 1,384,217 625,421 Long-term investment 568,003 425,000 Total Assets $3,647,980 $2,434,430 Current Liabilities Short-term borrowings $ 306,376 $ 170,419 Current portion of long-term debt 155,000 168,000 Accounts payable 279,522 314,883 Accrued liabilities 301,024 183,681 Income taxes payable 107,509 196,802 Total Current Liabilities 1,149,431…

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