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High's Companies, a home improvement store chain, reported the following summarized figures: E (Click the icon to view the income statement.) E (Click the icon to view the balance sheets.) High's has 50,000 common shares outstanding during 2018. Read the requirements. Requirement 1. Compute the debt ratio and the debt to equity ratio at May 31, 2018, for High's Companies. Begin by selecting the formula to calculate High's Companies debt ratio. Then enter the amounts and calculate the debt ratio for 2018. (Round the ratio to one tenth of a percent, X_X%.). Debt ratio Income Statement Requirements High's Companies Income Statement Years Ended May 31, 2018 and 2017 1. Compute the debt ratio and the debt to equity ratio at May 31, 2018, for High's Companies 2. Is High's ability to pay its liabilities strong or weak? Explain your reasoning. 2018 2017 Net Sales Revenue %$4 46,500 $ 39 800 Cost of Goods Sold 20,600 29 300 Interest Expense 140 Print Done 400 All Other Expenses 7,500 7.800 Net Income %24 18,000 $ 2,560 Print Done

High's Companies, a home improvement store chain, reported the following summarized figures: E (Click the icon to view the income statement.) E (Click the icon to view the balance sheets.) High's has 50,000 common shares outstanding during 2018. Read the requirements. Requirement 1. Compute the debt ratio and the debt to equity ratio at May 31, 2018, for High's Companies. Begin by selecting the formula to calculate High's Companies debt ratio. Then enter the amounts and calculate the debt ratio for 2018. (Round the ratio to one tenth of a percent, X_X%.). Debt ratio Income Statement Requirements High's Companies Income Statement Years Ended May 31, 2018 and 2017 1. Compute the debt ratio and the debt to equity ratio at May 31, 2018, for High's Companies 2. Is High's ability to pay its liabilities strong or weak? Explain your reasoning. 2018 2017 Net Sales Revenue %$4 46,500 $ 39 800 Cost of Goods Sold 20,600 29 300 Interest Expense 140 Print Done 400 All Other Expenses 7,500 7.800 Net Income %24 18,000 $ 2,560 Print Done

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Atigh's Companies Balance Sheet** *As of May 31, 2018 and 2017* **Assets** | Category | 2018 | 2017 | |-------------------------|--------|--------| | Cash | $2,000 | $1,600 | | Short-term Investments | $24,000| $14,000| | Accounts Receivable | $7,200 | $5,600 | | Merchandise Inventory | $7,100 | $7,200 | | Other Current Assets | $11,000| $2,400 | | **Total Current Assets**| $51,300| $30,800| | All Other Assets | $31,000| $23,000| | **Total Assets** | $82,300| $53,800| **Liabilities** | Category | 2018 | 2017 | |------------------------------------|--------|--------| | Total Current Liabilities | $23,000| $13,000| | Long-term Liabilities | $13,600| $12,400| | **Total Liabilities** | $36,600| $25,400| **Stockholders’ Equity** | Category | 2018 | 2017 | |-----------------------|--------|--------| | Common Stock | $9,000 | $9,000 | | Retained Earnings | $36,700| $19,400| | **Total Equity** | $45,700| $28,400| **Total Liabilities and Equity** | 2018 | 2017 | |--------|--------| | $82,300| $53,800| This balance sheet provides a snapshot of the financial health of Atigh's Companies as of May 31, 2018 and 2017, detailing the company's assets, liabilities, and stockholders' equity for those years. The balance between total assets and total liabilities plus equity demonstrates the accounting equation: Assets = Liabilities + Equity.
Transcribed Image Text:**Atigh's Companies Balance Sheet** *As of May 31, 2018 and 2017* **Assets** | Category | 2018 | 2017 | |-------------------------|--------|--------| | Cash | $2,000 | $1,600 | | Short-term Investments | $24,000| $14,000| | Accounts Receivable | $7,200 | $5,600 | | Merchandise Inventory | $7,100 | $7,200 | | Other Current Assets | $11,000| $2,400 | | **Total Current Assets**| $51,300| $30,800| | All Other Assets | $31,000| $23,000| | **Total Assets** | $82,300| $53,800| **Liabilities** | Category | 2018 | 2017 | |------------------------------------|--------|--------| | Total Current Liabilities | $23,000| $13,000| | Long-term Liabilities | $13,600| $12,400| | **Total Liabilities** | $36,600| $25,400| **Stockholders’ Equity** | Category | 2018 | 2017 | |-----------------------|--------|--------| | Common Stock | $9,000 | $9,000 | | Retained Earnings | $36,700| $19,400| | **Total Equity** | $45,700| $28,400| **Total Liabilities and Equity** | 2018 | 2017 | |--------|--------| | $82,300| $53,800| This balance sheet provides a snapshot of the financial health of Atigh's Companies as of May 31, 2018 and 2017, detailing the company's assets, liabilities, and stockholders' equity for those years. The balance between total assets and total liabilities plus equity demonstrates the accounting equation: Assets = Liabilities + Equity.
## High's Companies Financial Analysis **Overview** High's Companies, a home improvement store chain, provided summarized financial figures for analysis. The focus is on computing key financial ratios related to debt and equity, as well as assessing the company's ability to meet its liabilities. ### Requirements 1. **Compute the Debt Ratio and Debt to Equity Ratio (as of May 31, 2018)** - Utilize the provided balance sheet and income statement to calculate the debt ratio. - The formula and components required for these calculations should be selected and inputs filled accordingly. - Round the debt ratio to one-tenth of a percent (X.X%). 2. **Evaluate High's Ability to Pay Liabilities** - Assess whether High's Companies has a strong or weak liability management following the calculations. Provide detailed reasoning. ### Income Statement Summary **High's Companies: Years Ended May 31, 2018 and 2017** | Metric | 2018 | 2017 | |-----------------------------|-------------|-------------| | Net Sales Revenue | $46,500 | $39,800 | | Cost of Goods Sold | $20,600 | $29,300 | | Interest Expense | $400 | $140 | | All Other Expenses | $7,500 | $7,800 | | Net Income | $18,000 | $2,560 | ### Instructions - Click the respective icons to view the detailed income statement and balance sheets as needed for precise calculations. - High's Companies had 50,000 common shares outstanding during 2018. **Tasks:** - Apply appropriate formulas to compute the required financial metrics. - Analyze and interpret the results to give insights into the financial health with respect to liabilities. This exercise aims to enhance understanding of financial statement analysis and the importance of debt management in business operations.
Transcribed Image Text:## High's Companies Financial Analysis **Overview** High's Companies, a home improvement store chain, provided summarized financial figures for analysis. The focus is on computing key financial ratios related to debt and equity, as well as assessing the company's ability to meet its liabilities. ### Requirements 1. **Compute the Debt Ratio and Debt to Equity Ratio (as of May 31, 2018)** - Utilize the provided balance sheet and income statement to calculate the debt ratio. - The formula and components required for these calculations should be selected and inputs filled accordingly. - Round the debt ratio to one-tenth of a percent (X.X%). 2. **Evaluate High's Ability to Pay Liabilities** - Assess whether High's Companies has a strong or weak liability management following the calculations. Provide detailed reasoning. ### Income Statement Summary **High's Companies: Years Ended May 31, 2018 and 2017** | Metric | 2018 | 2017 | |-----------------------------|-------------|-------------| | Net Sales Revenue | $46,500 | $39,800 | | Cost of Goods Sold | $20,600 | $29,300 | | Interest Expense | $400 | $140 | | All Other Expenses | $7,500 | $7,800 | | Net Income | $18,000 | $2,560 | ### Instructions - Click the respective icons to view the detailed income statement and balance sheets as needed for precise calculations. - High's Companies had 50,000 common shares outstanding during 2018. **Tasks:** - Apply appropriate formulas to compute the required financial metrics. - Analyze and interpret the results to give insights into the financial health with respect to liabilities. This exercise aims to enhance understanding of financial statement analysis and the importance of debt management in business operations.
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