Question Content AreaDebt Management RatiosFinancial statements for Steele Inc. follow.Steele Inc.Consolidated Income Statements(in thousands except per share amounts) 202320222021Net sales$7,245,088 $6,944,296 $6,149,218 Cost of goods sold(5,286,253) (4,953,556) (4,355,675) Gross margin$1,958,835 $1,990,740 $1,793,543 General and administrative expenses(1,259,896) (1,202,042) (1,080,843) Special and nonrecurring items2,617 0 0 Operating income$701,556 $788,698 $712,700 Interest expense(63,685) (62,398) (63,927) Other income7,308 10,080 11,529 Gain on sale of investments0 9,117 0 Income before income taxes$645,179 $745,497 $660,302 Provision for income taxes(254,000) (290,000) (257,000) Net income$391,179 $455,497 $403,302 Steele Inc.Consolidated Balance Sheets(in thousands)ASSETSDec. 31, 2023Dec. 31, 2022Current assets:Cash and equivalents$320,558 $41,235 Accounts receivable1,056,911 837,377 Inventories733,700 803,707 Other109,456 101,811 Total current assets$2,220,625 $1,784,130 Property and equipment, net1,666,588 1,813,948 Other assets247,892 248,372 Total assets$4,135,105 $3,846,450 LIABILITIES AND STOCKHOLDERS’ EQUITYCurrent liabilities:Accounts payable$250,363 $309,092 Accrued expenses347,892 274,220 Other current liabilities15,700 0 Income taxes93,489 137,466 Total current liabilities$707,444 $720,778 Long-term debt650,000 541,639 Deferred income taxes275,101 274,844 Other long-term liabilities61,267 41,572 Total liabilities1,693,812 1,578,833 Stockholders’ equity:Preferred stock$100,000 $100,000 Common stock89,727 89,727 Additional paid-in capital—common stock128,906 127,776 Retained earnings2,397,112 2,136,794 $2,715,745 $2,454,297 Less: Treasury stock, at cost(274,452) (186,680) Total stockholders’ equity$2,441,293 $2,267,617 Total liabilities and stockholders’ equity$4,135,105 $3,846,450 Required:1. Compute the five debt management ratios for 2022 and 2023. Round your answers to two decimal places.

To compute the five debt management ratios for Steele Inc., we need to use the following formulas:…

Answered: Compute the five debt management ratios…

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 Content Area

Debt Management Ratios

Financial statements for Steele Inc. follow.

Steele Inc.
Consolidated Income Statements
(in thousands except per share amounts)
	2023	2022	2021
Net sales	$7,245,088		$6,944,296	$6,149,218
Cost of goods sold	(5,286,253)		(4,953,556)	(4,355,675)
Gross margin	$1,958,835		$1,990,740	$1,793,543
General and administrative expenses	(1,259,896)		(1,202,042)	(1,080,843)
Special and nonrecurring items	2,617		0	0
Operating income	$701,556		$788,698	$712,700
Interest expense	(63,685)		(62,398)	(63,927)
Other income	7,308		10,080	11,529
Gain on sale of investments	0		9,117	0
Income before income taxes	$645,179		$745,497	$660,302
Provision for income taxes	(254,000)		(290,000)	(257,000)
Net income	$391,179		$455,497	$403,302

Steele Inc.
Consolidated Balance Sheets
(in thousands)
ASSETS	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Cash and equivalents	$320,558		$41,235
Accounts receivable	1,056,911		837,377
Inventories	733,700		803,707
Other	109,456		101,811
Total current assets	$2,220,625		$1,784,130
Property and equipment, net	1,666,588		1,813,948
Other assets	247,892		248,372
Total assets	$4,135,105		$3,846,450
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$250,363		$309,092
Accrued expenses	347,892		274,220
Other current liabilities	15,700		0
Income taxes	93,489		137,466
Total current liabilities	$707,444		$720,778
Long-term debt	650,000		541,639
Deferred income taxes	275,101		274,844
Other long-term liabilities	61,267		41,572
Total liabilities	1,693,812		1,578,833
Stockholders’ equity:
Preferred stock	$100,000		$100,000
Common stock	89,727		89,727
Additional paid-in capital—common stock	128,906		127,776
Retained earnings	2,397,112		2,136,794
	$2,715,745		$2,454,297
Less: Treasury stock, at cost	(274,452)		(186,680)
Total stockholders’ equity	$2,441,293		$2,267,617
Total liabilities and stockholders’ equity	$4,135,105		$3,846,450

Required:

1. Compute the five debt management ratios for 2022 and 2023. Round your answers to two decimal places.

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