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Consider the following company’s balance sheet and income statement. Number of days in inventory. Debt-to-asset ratio. Cash-flow-to-debt ratio.

Consider the following company’s balance sheet and income statement. Number of days in inventory. Debt-to-asset ratio. Cash-flow-to-debt ratio.

Essentials Of Investments
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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Consider the following company’s balance sheet and income statement.

  1. Number of days in inventory.

  2. Debt-to-asset ratio.

  3. Cash-flow-to-debt ratio.

**Balance Sheet** **Assets** - Cash: $4,000 - Accounts receivable: $52,000 - Inventory: $40,000 *Total current assets: $96,000* - Fixed assets: $44,000 **Total assets: $140,000** **Liabilities and Equity** - Accounts payable: $30,000 - Notes payable: $12,000 *Total current liabilities: $42,000* - Long-term debt: $36,000 *Total liabilities: $78,000* - Equity: $62,000 **Total liabilities and equity: $140,000** --- **Income Statement** - Sales (all on credit): $200,000 - Cost of goods sold: $130,000 *Gross margin: $70,000* - Selling and administrative expenses: $20,000 - Depreciation: $8,000 *EBIT: $42,000* - Interest expense: $4,800 *Earnings before tax: $37,200* - Taxes: $11,160 **Net income: $26,040**
Transcribed Image Text:**Balance Sheet** **Assets** - Cash: $4,000 - Accounts receivable: $52,000 - Inventory: $40,000 *Total current assets: $96,000* - Fixed assets: $44,000 **Total assets: $140,000** **Liabilities and Equity** - Accounts payable: $30,000 - Notes payable: $12,000 *Total current liabilities: $42,000* - Long-term debt: $36,000 *Total liabilities: $78,000* - Equity: $62,000 **Total liabilities and equity: $140,000** --- **Income Statement** - Sales (all on credit): $200,000 - Cost of goods sold: $130,000 *Gross margin: $70,000* - Selling and administrative expenses: $20,000 - Depreciation: $8,000 *EBIT: $42,000* - Interest expense: $4,800 *Earnings before tax: $37,200* - Taxes: $11,160 **Net income: $26,040**
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