Sales $ 79,000 $ 74,000 Cost of goods sold 52,000 48,000 Gross margin 27,000 26,000 Selling and administrative expenses: Selling expenses 8,500 8,000 Administrative expenses 12,000 11,000 Total selling and administrative expenses 20,500 19,000 Net operating income 6,500 7,000 Interest expense 600 600 Net income before taxes 5,900 6,400 Income taxes 2,360 2,560 Net income 3,540 3,840 Dividends to common stockholders 320 600 Net income added to retained earnings 3,220 3,240 Beginning retained earnings 26,660 23,420 Ending retained earnings $ 29,880 $ 26,660 Required: Compute the following financial ratios for this year: Times interest earned ratio. Debt-to-equity ratio. Equity multiplier.

Sales $ 79,000 $ 74,000 Cost of goods sold 52,000 48,000 Gross margin 27,000 26,000 Selling and administrative expenses: Selling expenses 8,500 8,000 Administrative expenses 12,000 11,000 Total selling and administrative expenses 20,500 19,000 Net operating income 6,500 7,000 Interest expense 600 600 Net income before taxes 5,900 6,400 Income taxes 2,360 2,560 Net income 3,540 3,840 Dividends to common stockholders 320 600 Net income added to retained earnings 3,220 3,240 Beginning retained earnings 26,660 23,420 Ending retained earnings $ 29,880 $ 26,660 Required: Compute the following financial ratios for this year: Times interest earned ratio. Debt-to-equity ratio. Equity multiplier.

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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Sales	$ 79,000	$ 74,000
Cost of goods sold	52,000	48,000
Gross margin	27,000	26,000
Selling and administrative expenses:
Selling expenses	8,500	8,000
Administrative expenses	12,000	11,000
Total selling and administrative expenses	20,500	19,000
Net operating income	6,500	7,000
Interest expense	600	600
Net income before taxes	5,900	6,400
Income taxes	2,360	2,560
Net income	3,540	3,840
Dividends to common stockholders	320	600
Net income added to retained earnings	3,220	3,240
Beginning retained earnings	26,660	23,420
Ending retained earnings	$ 29,880	$ 26,660

Required:

Compute the following financial ratios for this year:

Times interest earned ratio.
Debt-to-equity ratio.
Equity multiplier.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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