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Business
Accounting
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.

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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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:

  1. Times interest earned ratio.

  2. Debt-to-equity ratio.

  3. Equity multiplier.

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