Answered: Following is the statement of financial…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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Question

Following is the statement of financial position for Kowalski Company in Warsaw, Poland, as of December 31, 2019 (currency in Polish złaty [‘z-wo-tee’], zł):

Non-current assets zł 242,000 Equity zł 107,000
Current assets 105,000 Non-current liabilities 160,000
________ Current liabilities 80,000
Total assets zł 347,000 Total equity and liabilities zł 347,000

In addition, Kowalski reported net income for 2019 of zł 140,000, income tax
expense of zł 28,000, and interest expense of zł 9,000.

Instructions:

A. Compute the debt ratio for Kowalski for 2019.
B. Compute the times interest earned for Kowalski for 2019.

* Use ‘zl’ if you have difficulty in typing in ‘zł’.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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