please help me answeer the following given Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $3,780,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industr, averages and Creek's recent financial statements, evaluate and recommend appropriate action on the loan request.Industry averages Creek Enterprises Income Statement: Debt ratio 0 50Times interest earned ratio 7.42Fixed-payment coverage ratio 2.03 Creek Enterprises Balance Sheet: Creek Enterprises's debt ratio is _____ (Round to two decimal places.)Creek Enterprises's times interest earned ratio is ______ (Round to two decimal places.)Creek Enterprises's fixed-payment coverage ratio is. ______ (Round to two decimal places.)Complete the following summary of ratios and compare Creek Enterprises's ratios vs. the industry average: (Round to two decimal places.)Creek Debt ratio Industry 0.50Times interest earned ratio 7.42Fixed-payment coverage ratio 2.03Do you agree or disagree with the decision below? Data table(Click the icon here a in order to copy the contents of the data table below into a spreadsheet.)Creek Enterprises Balance Sheet December 31, 2022AssetsLiabilities and Stockholders' EquityCurrent liabilitiesAccounts payableNotes payableAccrualsCurrent assetsCash$959,0002,954,000$8,009,0008,038,000506,000Marketable securitiesAccounts receivable12,039,000Inventories7,524,000Total current liabilities$16,553,000Total current assets$23,476,000 Long-term debt (includesfinancial leases)**Stockholders' equityPreferred stock (24,400shares, $3.75 dividend)Common stock (1.04 millionshares at $5.25 par)$39,451,000 Paid-in capital in excess of$19,437,000Gross fixed assets (at cost)*Land and buildings$10,966,000$2,511,000Machinery and equipment20,472,0008,013,000Furniture and fixtures5,460,000Gross fixed assetspar valueRetained earnings3,964,0001,980,000Less: Accumulated depreciation13,022,000PrintDone Data table(Click the icon here o in order to copy the contents of the data table below into a spreadsheet.)Creek Enterprises Income Statement for the Year Ended December 31, 2022Sales revenueLess: Cost of goods soldGross profitsLess: Operating expensesSelling expenseGeneral and administrative expensesS30,049,00020,977,000$9,072,000S2,974,0001,777,000Lease expenseDepreciation expenseTotal operating expense162,000976,0005,889,000Operating profitsLess: Interest expense$3,183,0001,040,000Net profits before taxesLess: Taxes (rate =21%)Net profits after taxes$2,143,000450,030$1,692,970Less: Preferred stock dividends91,500Earnings available for common stockholders$1,601,470PrintDone

Ratio Analysis: Ratio analysis is the analysis where data in a company's financial statements is…

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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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please help me answeer the following given

Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $3,780,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industr, averages and Creek's recent financial statements, evaluate and recommend appropriate action on the loan request.

Industry averages Creek Enterprises Income Statement:

Debt ratio 0 50

Times interest earned ratio 7.42

Fixed-payment coverage ratio 2.03

Creek Enterprises Balance Sheet:

Creek Enterprises's debt ratio is _____ (Round to two decimal places.)

Creek Enterprises's times interest earned ratio is ______ (Round to two decimal places.)

Creek Enterprises's fixed-payment coverage ratio is. ______ (Round to two decimal places.)

Complete the following summary of ratios and compare Creek Enterprises's ratios vs. the industry average: (Round to two decimal places.)

Creek Debt ratio Industry 0.50

Times interest earned ratio 7.42

Fixed-payment coverage ratio 2.03

Do you agree or disagree with the decision below?

Data table
(Click the icon here a in order to copy the contents of the data table below into a spreadsheet.)
Creek Enterprises Balance Sheet December 31, 2022
Assets
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable
Notes payable
Accruals
Current assets
Cash
$959,000
2,954,000
$8,009,000
8,038,000
506,000
Marketable securities
Accounts receivable
12,039,000
Inventories
7,524,000
Total current liabilities
$16,553,000
Total current assets
$23,476,000 Long-term debt (includes
financial leases)**
Stockholders' equity
Preferred stock (24,400
shares, $3.75 dividend)
Common stock (1.04 million
shares at $5.25 par)
$39,451,000 Paid-in capital in excess of
$19,437,000
Gross fixed assets (at cost)*
Land and buildings
$10,966,000
$2,511,000
Machinery and equipment
20,472,000
8,013,000
Furniture and fixtures
5,460,000
Gross fixed assets
par value
Retained earnings
3,964,000
1,980,000
Less: Accumulated depreciation
13,022,000
Print
Done

Data table
(Click the icon here o in order to copy the contents of the data table below into a spreadsheet.)
Creek Enterprises Income Statement for the Year Ended December 31, 2022
Sales revenue
Less: Cost of goods sold
Gross profits
Less: Operating expenses
Selling expense
General and administrative expenses
S30,049,000
20,977,000
$9,072,000
S2,974,000
1,777,000
Lease expense
Depreciation expense
Total operating expense
162,000
976,000
5,889,000
Operating profits
Less: Interest expense
$3,183,000
1,040,000
Net profits before taxes
Less: Taxes (rate =21%)
Net profits after taxes
$2,143,000
450,030
$1,692,970
Less: Preferred stock dividends
91,500
Earnings available for common stockholders
$1,601,470
Print
Done

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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