### Analysis of Alpine Chemical Company Financial StatementsMargaret O’Flaherty, a portfolio manager for MCF Investments, is evaluating the potential investment in Alpine Chemical 7% bonds, which mature in 10 years. The following is a detailed transcription and assessment of Alpine Chemical's financial statements to determine the risk level of the bonds.#### Balance Sheet Summary (in millions)**Assets**- **Current Assets**: - Cash: Declines from $190 in 20X1 to $0 in 20X6. - Accounts Receivable: Shows variation, rising to $3,451 in 20X6. - Inventories: Starts at $2,021, with a generally decreasing trend to $1,643 in 20X6. - Other Current Assets: Increases from $17 to $171 by 20X6.- **Fixed Assets**: - Gross Fixed Assets: Growth from $4,650 to $7,187 over the period. - Accumulated Depreciation: Increases, reaching $3,893 in 20X6. - Net Fixed Assets: A stable increase to $3,294 by 20X6.**Total Assets**: The total grows from $6,338 to $8,559.**Liabilities and Net Worth**- **Liabilities**: - Notes Payable: Increases significantly to $1,900 in 20X6. - Accounts Payable: Peaking at $978 in 20X6. - Accrued Liabilities: Growth to $761 in 20X6. - Current Liabilities: Expands noticeably from $1,501 to $3,639 by 20X6. - Long-term Debt: Notably reduced to $1,491 by 20X6. - Deferred Tax Credits: Increase to $354.- **Net Worth**: - Total Liabilities: Rise from $3,838 to $5,484. - Common Stock remains constant at $50. - Capital Surplus unchanged at $100. - Retained Earnings: A steady increment to $2,975. - Total Net Worth: Grows from $2,500 to $3,075.**Total Liabilities and Net Worth**: Shows an overall growth aligning with total assets.#### Income Statement Summary (in millions)- **Net Sales**: **Required:**1. Using the data provided in the accompanying financial statements, calculate the following ratios for Alpine Chemical for 20X6: a. **EBIT/Interest expense** b. **Long-term debt/Total capitalization at December 31** c. **Funds from operations/Total debt** d. **Operating income/Sales** Use the following conventions: EBIT is earnings before interest and taxes; Total capitalization is interest-bearing long-term debt plus net worth; Funds from operations means net income plus depreciation expense; and Total debt includes interest-bearing short-term and long-term debt.2. Insert your answers to requirement 1 into Table 1 that follows. Then from Table 2, select an appropriate credit rating for Alpine Chemical.**Table 1: Alpine Chemical Company**| | 20X1 | 20X2 | 20X3 | 20X4 | 20X5 | 20X6 ||--------|------|------|------|------|------|------|| EBIT/Interest expense | 4.95 | 3.46 | 4.96 | 4.79 | 4.70 | ? || Long-term debt/Total capitalization | 44% | 28% | 34% | 34% | 34% | ? || Funds from operations/Total debt | 54% | 84% | 93% | 56% | 51% | ? || Operating income/Sales | 13% | 13% | 13% | 14% | 12% | ? |**Table 2: Industry Data**Three-Year Medians (20X4–20X6) by Credit-Rating Category| | AAA | AA | A | BBB | BB | B ||---------------|------|------|------|------|------|------|| EBIT/Interest expense | 11.0 | 9.5 | 4.5 | 3.0 | 2.0 | 1.0 || Long-term debt/Total capitalization | 13.0 | 16.5 | 29.5 | 39.0 | 45.5 | 63.5 || Funds from operations/Total debt

Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Required: 1. Using the data provided in the accompanying financial statements, calculate the following ratios for Alpine Chemical for 20X6: a. EBIT/Interest expense b. Long-term debt/Total capitalization at December 31 c. Funds from operations/Total debt d. Operating income/Sales Use the following conventions: EBIT is earnings before interest and taxes; Total capitalization is interest-bearing long-term debt plus net worth; Funds from operations means net income plus depreciation expense; and Total debt includes interest-bearing short-term and long-term debt.

Required: 1. Using the data provided in the accompanying financial statements, calculate the following ratios for Alpine Chemical for 20X6: a. EBIT/Interest expense b. Long-term debt/Total capitalization at December 31 c. Funds from operations/Total debt d. Operating income/Sales Use the following conventions: EBIT is earnings before interest and taxes; Total capitalization is interest-bearing long-term debt plus net worth; Funds from operations means net income plus depreciation expense; and Total debt includes interest-bearing short-term and long-term debt.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.7 Return on assets (ROA) 4% Return on equity (ROE) 6% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. %
Based on the Balance sheet calculate: 1.Current Ratio 2. Acid Test or Quick Ratio 3. Cash Ratio 4. Debt Ratio 5. Debt to Equity Ratio 6. Asset Turnover Ratio 7. Receivable Turnover Ratio and 8. Day Sales to Inventory Ratio. Based on the calculations presented above interpret the overall performance of BMW AG Group’s and the line items it must stay focused upon. Discuss its overall financial status having calculated the ratios across the years, considering the impact of Covid-19 while support decision-making related to its future growth and profitability
1. Solve the following ratios from year 2018-2020. Show complete solutions/computations. -CURRENT RATIO -QUICK RATIO -OPERATING MARGIN -PROFIT MARGIN - RETURN ON TOTAL ASSETS (ROA) - BASIC EARNINGS POWER -RETURN ON EQUITY (ROE) -INVENTORY TURNOVER RATIO -DAYS SALES OUTSTANDING -FIXED ASSETS TURNOVER -TOTAL ASSETS TURNOVER -INVENTORY CONVERSION PERIOD -TOTAL DEBT TO TOTAL ASSETS -TOTAL DEBT TO TOTAL CAPITAL -TIMES-INTEREST-EARNED RATIO -EARNINGS PER SHARE -PRICE EARNINGS RATIO -MARKET BOOK VALUE RATIO
VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Secuities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 220,000 200,000 160,000 P445,000 P380,000 245,000 Operating Expenses: Fixed Assets Selling Expenses 22,000 25,000 Total…
Definitional problems: Listed are 11 terms that relate to ratio analysis:1. Book value per share2.Inventoryturnover3. Debt-to-equity ratio4. Average collection period5. Average sales period6. Return on common equity7. Earnings per share8. Price/earnings ratio9. Return on total assets10. Current ratio11. Accounts-receivable turnoverChoose the financial ratio or term from the list that most appropriately completes each of the following statements:1. The__________ tends to have an effect on the market price per share asreflected in the price/earnings ratio.2. The__________ indicates whether a stock is relatively cheap or relativelyexpensive in relation to current earnings. 3. The________ measures the amount that would be distributed to holders of common stock if all assets were sold at their balance-sheet carrying amount and if all creditors were paid off.4. The_____________ is a rough measure of how many times a company'saccounts…
Calculate the following ratios and interpret the results: (Use the information attached with the paper). Debt to Capitalization ratio Acid test ratio Inventory turnover ratio (in days) Times interest earned ratio
Using the following Balance Sheet summary information, calculate for the two companies presented:working capitalcurrent ratio Company L and Company M, respectively: Current assets $124,680, $180,550. Current liabilities 63,250, 153,250.
Given the following information for the Duke Tire Company, find the firm's debt ratio (i.e., total liabilities / total assets): ROE (N/E) = 0.37 (expressed as a decimal) Total asset turnover ratio (S/A) = 2.2 Net profit margin (N/S) = 0.09 (expressed as a decimal)