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
Related questions
Question
100%
Debit ratio i got 0.220156 it would 22.0% however saying its incorrect
Transcribed Image Text:(Financial statement analysis) The T. P. Jarmon Company manufactures and sells a line of exclusive sportswear. The firm's sales were $600,100 for the year just ended, and its total assets
exceeded $500,000. The company was started by Mr. Jarmon just 10 years ago and has been profitable every year since its inception. The chief financial officer for the firm, Brent Vehlim, has
decided to seek a line of credit from the firm's bank totaling $83,000. In the past, the company has relied on its suppliers to finance a large part of its needs for inventory. However, in recent months
tight money conditions have led the firm's suppliers to offer sizable cash discounts to speed up payments for purchases. Mr. Vehlim wants to use the line of credit to supplant a large portion of
the firm's payables during the summer, which is the firm's peak seasonal sales period.
The firm's two most recent balance sheets were presented to the bank in support of its loan request. In addition, the firm's income statement for the year just ended was provided. These statements
are found in the following tables: Jan Fama, associate credit analyst for the Merchants National Bank of Midland, Michigan, was assigned the task of analyzing Jarmon's loan request.
F2
a. Calculate the following financial ratios for 2013:
b. Which of the ratios calculated in part (a) do you think should be most crucial in determining whether the bank should extend the line of credit?
c. Use the information provided by the financial ratios and industry-norm ratios to decide if you would support making the loan. Discuss the basis for your recommendation.
a. Calculate the following financial ratios for 2013:
T. P. Jarmon's current ratio is 1.84. (Round to two decimal places.)
T. P. Jarmon's acid-test ratio is 0.72. (Round to two decimal places.)
T. P. Jarmon's debt ratio is %. (Round to one decimal place.)
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Transcribed Image Text:6/2/23, 5:57 PM
T. P. Jarmon Company Balance Sheets
Cash
Marketable securities
Accounts receivable
Inventory
Prepaid rent
Total current assets
Net plant and equipment
Total assets
Accounts payable
Notes payable
Accruals
Total current liabilities
Long-term debt
Common stockholders' equity
Total liabilities and owners' equity
Total
Earnings before taxes
Less: Taxes
Net income available to common stockholders
Less: Cash dividends
Change in retained earnings
(Click on the icon
2012
I
$15.000
6,010
42,100
51,000
1,210
$115,320
285,900
$401,220
2012
(Click on the icon in order to copy its contents into a spreadsheet.)
T.P. Jarmon Company
Income Statement for 2013
Sales (all credit)
Less: Cost of goods sold
Gross profit
Less Operating and interest expenses
General and administrative
interest
Depreciation
(30,000)
$48,000
14,900
5,990
$68,890
160,000
172,330
$401,220
in order to copy its contents into a spreadsheet)
$(29,900)
(10,000)
(30,000)
Data Table
2013
$14,000
8.200
2013
32,900
84,000
1,100
$138,200
270,100
$408,300
$56,900
13.100
4,990
$74.990
149.900
183,410
$408,300
$600,100
(460, 100)
$140.000
https://mylab.pearson.com/Student/PlayerHomework aspx homeworkld-649793962&questionld-9&flushed-false&cld-7403828&back-DoAssignments.aspx?view...
$(69.900)
$70,100
(27.000)
$43.100
(31,900)
$11.200
1/1
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