May I ask for a solution and explanation to the problem for a better understanding. Thank you! For Carrot Corp, what is the debt to asset ratio? a. 25.52 : 1 b. 23.64 : 1 c. 20 : 1 d. 22.54 : 1
May I ask for a solution and explanation to the problem for a better understanding. Thank you! For Carrot Corp, what is the debt to asset ratio? a. 25.52 : 1 b. 23.64 : 1 c. 20 : 1 d. 22.54 : 1
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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May I ask for a solution and explanation to the problem for a better understanding. Thank you!
For Carrot Corp, what is the debt to asset ratio?
a. 25.52 : 1
b. 23.64 : 1
c. 20 : 1
d. 22.54 : 1
Transcribed Image Text:Carrots Corporation
Statement of Income
For the Year Ended November 30, Year 2
(in thousands of pesos)
Sales (all on credit)
Cost of goods sold
Gross margin
Operating expenses
P200,000
(120,000)
80,000
(38,000)
Net operating income
Interest expense
42,000
(2,000)
Net income before income tax
40,000
Income tax expense
(15,000)
P 25,000
Net income
Transcribed Image Text:Financial statements of CARROTS Corporation are reproduced below. The market price of Carrot's ordinary share
was P20 per share on November 30, Year 2.
Carrots Corporation
Statement of Financial Position
As of November 30
(in thousands of pesos)
Year 2
Year 1
Cash
P 3,000
P 2,000
Trading securities
Accounts receivable (net)
Merchandise inventory
1,000
1,000
14,000
11,000
24,000
16,000
Total current assets
P 42,000
P 30,000
Property, plant, and equipment (net)
Long-term investments
68,000
60,000
10,000
10,000
Total assets
P120,000
P100,000
P 5,000
P 4,000
Accounts payable
Wages payable
1,000
1,000
Total current liabilities
P 6,000
P 5,000
Bonds payable, 10%
20,000
20,000
P 25,000
P 26,000
P 25,000
Total liabilities
Ordinary share capital, no par, 10,000,000 shares
Accumulated profits
Total shareholders' equity
Total liabilities and shareholders' equity
P 25,000
69.000
50,000
P 94,000
P 75,000
P120.000
P100,000
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