Sandhill Medical manufactures hospital beds and other institutional furniture. The company’s comparative balance sheet and income statement for 2019 and 2020 follow. Sandhill Medical Comparative Balance Sheet As of December 31     2020   2019   Assets           Current assets             Cash   $380,000   $417,500     Accounts receivable, net   1,023,000   776,400     Inventory   742,000   681,050     Other current assets   381,300   247,050   Total current assets   2,526,300   2,122,000   Property, plant, & equipment, net   8,703,820   8,439,965     Total assets   $11,230,120   $10,561,965               Liabilities and Stockholders’ Equity           Current liabilities   $3,169,000   $2,846,000   Long-term debt   3,702,700   3,892,600     Total liabilities   6,871,700   6,738,600   Preferred stock, $5 par value   58,950   58,950   Common stock, $0.25 par value   104,600   103,900   Retained earnings   4,194,870   3,660,515     Total stockholders’ equity   4,358,420   3,823,365     Total liabilities and stockholders’ equity   $11,230,120   $10,561,965     Sandhill Medical Comparative Income Statement and Statement of Retained Earnings For the Year     2020   2019   Sales revenue (all on account)   $10,177,300   $9,614,000   Cost of goods sold   5,612,000   5,298,700     Gross profit   4,565,300   4,315,300   Operating expenses   2,840,300   2,634,200   Net operating income   1,725,000   1,681,100   Interest expense   300,350   308,650   Net income before taxes   1,424,650   1,372,450   Income taxes (30%)   427,395   411,735   Net income   $997,255   $960,715   Dividends paid             Preferred dividends   29,450   29,500     Common dividends   433,450   413,050     Total dividends paid   462,900   442,550   Net income retained   534,355   518,165   Retained earnings, beginning of year   3,660,515   3,142,350   Retained earnings, end of year   $4,194,870   $3,660,515   Calculate the following leverage ratios for 2020. (Round all answers to 2 decimal places, e.g. 2.55% or 2.55.) a. Debt ratio enter percentages %   b. Debt-to-equity ratio enter a ratio   c. Times interest earned ratio enter a number of times times

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Chapter1: Financial Statements And Business Decisions
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Sandhill Medical manufactures hospital beds and other institutional furniture. The company’s comparative balance sheet and income statement for 2019 and 2020 follow.

Sandhill Medical
Comparative Balance Sheet
As of December 31
   
2020
 
2019
 
Assets          
Current assets
         
  Cash
  $380,000   $417,500  
  Accounts receivable, net
  1,023,000   776,400  
  Inventory
  742,000   681,050  
  Other current assets
  381,300   247,050  
Total current assets
  2,526,300   2,122,000  
Property, plant, & equipment, net
  8,703,820   8,439,965  
  Total assets
  $11,230,120   $10,561,965  
           
Liabilities and Stockholders’ Equity          
Current liabilities
  $3,169,000   $2,846,000  
Long-term debt
  3,702,700   3,892,600  
  Total liabilities
  6,871,700   6,738,600  
Preferred stock, $5 par value
  58,950   58,950  
Common stock, $0.25 par value
  104,600   103,900  
Retained earnings
  4,194,870   3,660,515  
  Total stockholders’ equity
  4,358,420   3,823,365  
  Total liabilities and stockholders’ equity
  $11,230,120   $10,561,965  

 

Sandhill Medical
Comparative Income Statement and Statement of Retained Earnings
For the Year
   
2020
 
2019
 
Sales revenue (all on account)
  $10,177,300   $9,614,000  
Cost of goods sold
  5,612,000   5,298,700  
  Gross profit
  4,565,300   4,315,300  
Operating expenses
  2,840,300   2,634,200  
Net operating income
  1,725,000   1,681,100  
Interest expense
  300,350   308,650  
Net income before taxes
  1,424,650   1,372,450  
Income taxes (30%)
  427,395   411,735  
Net income
  $997,255   $960,715  
Dividends paid
         
  Preferred dividends
  29,450   29,500  
  Common dividends
  433,450   413,050  
  Total dividends paid
  462,900   442,550  
Net income retained
  534,355   518,165  
Retained earnings, beginning of year
  3,660,515   3,142,350  
Retained earnings, end of year
  $4,194,870   $3,660,515  


Calculate the following leverage ratios for 2020. (Round all answers to 2 decimal places, e.g. 2.55% or 2.55.)

a.
Debt ratio
enter percentages %  
b.
Debt-to-equity ratio
enter a ratio  
c.
Times interest earned ratio
enter a number of times times
 
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