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Debit ratio i got 0.220156 it would 22.0% however saying its incorrect

Debit ratio i got 0.220156 it would 22.0% however saying its incorrect

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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Debit ratio i got 0.220156 it would 22.0% however saying its incorrect
(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.) an example Get more help - K 3 80 F3 E D C $ 4 DOD DOD 54 F4 R F % 5 V F5 T A 6 MacBook Air .***. F6 B Y & 7 H 44 F7 U N * CO 8 PII FA - ( 9 K M DD F9 ) O MOSISO O V 4 H F10 L Clear all P FII : > ● command . + { Final check = [ 49 sky FIZ 11 ? option
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.) an example Get more help - K 3 80 F3 E D C $ 4 DOD DOD 54 F4 R F % 5 V F5 T A 6 MacBook Air .***. F6 B Y & 7 H 44 F7 U N * CO 8 PII FA - ( 9 K M DD F9 ) O MOSISO O V 4 H F10 L Clear all P FII : > ● command . + { Final check = [ 49 sky FIZ 11 ? option
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
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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