Here are simplified financial statements for Phone Corporation in 2020: INCOME STATEMENT (Figures in $ millions) Net sales $ 12,300 Cost of goods sold 3,610 Other expenses 4,022 Depreciation 2,248 Earnings before interest and taxes (EBIT) $ 2,420 Interest expense 640 Income before tax $ 1,780 Taxes (at 21%) 374 Net income $ 1,406 Dividends $ 756 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 80 $ 149 Receivables 1,932 2,310 Inventories 142 193 Other current assets 822 887 Total current assets $ 2,976 $ 3,539 Net property, plant, and equipment 19,883 19,825 Other long-term assets 4,126 3,680 Total assets $ 26,985 $ 27,044 Liabilities and shareholders’ equity Payables $ 2,474 $ 2,950 Short-term debt 1,374 1,528 Other current liabilities 766 742 Total current liabilities $ 4,614 $ 5,220 Long-term debt and leases 9,259 8,444 Other long-term liabilities 6,088 6,059 Shareholders’ equity 7,024 7,321 Total liabilities and shareholders’ equity $ 26,985 $ 27,044 Calculate the following financial ratios for Phone Corporation: Note: Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places. 1. Times interest earned................... 2. Cash coverage ratio..................... 3. Current ratio (Use end-of-year balance sheet figure)............. 4. Quick ratio (Use end-of-year balance sheet figure).............

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Here are simplified financial statements for Phone Corporation in 2020:

INCOME STATEMENT
(Figures in $ millions)
Net sales	$ 12,300
Cost of goods sold	3,610
Other expenses	4,022
Depreciation	2,248
Earnings before interest and taxes (EBIT)	$ 2,420
Interest expense	640
Income before tax	$ 1,780
Taxes (at 21%)	374
Net income	$ 1,406
Dividends	$ 756

BALANCE SHEET
(Figures in $ millions)
	End of Year	Start of Year
Assets
Cash and marketable securities	$ 80	$ 149
Receivables	1,932	2,310
Inventories	142	193
Other current assets	822	887
Total current assets	$ 2,976	$ 3,539
Net property, plant, and equipment	19,883	19,825
Other long-term assets	4,126	3,680
Total assets	$ 26,985	$ 27,044
Liabilities and shareholders’ equity
Payables	$ 2,474	$ 2,950
Short-term debt	1,374	1,528
Other current liabilities	766	742
Total current liabilities	$ 4,614	$ 5,220
Long-term debt and leases	9,259	8,444
Other long-term liabilities	6,088	6,059
Shareholders’ equity	7,024	7,321
Total liabilities and shareholders’ equity	$ 26,985	$ 27,044

Calculate the following financial ratios for Phone Corporation:

Note: Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places.

1. Times interest earned...................

2. Cash coverage ratio.....................

3. Current ratio (Use end-of-year balance sheet figure).............

4. Quick ratio (Use end-of-year balance sheet figure).............

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.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions