Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $3,700,000 Long-term debt (12% interest rate) $600,000 Total stockholders' equity $2,500,000 Interest paid on long-term debt $70,000 Net Income $290,000 Total assets at the beginning of the year were $3,100,000; total stockholders' equity was $2,300,000. The company's tax rate is 30%. 1. Compute the return on total assets. 2. Compute the return on equity.

Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $3,700,000 Long-term debt (12% interest rate) $600,000 Total stockholders' equity $2,500,000 Interest paid on long-term debt $70,000 Net Income $290,000 Total assets at the beginning of the year were $3,100,000; total stockholders' equity was $2,300,000. The company's tax rate is 30%. 1. Compute the return on total assets. 2. Compute the return on equity.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

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Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.
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Ratio of liabilities to stockholders equity and times interest earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: The income before income tax expense was 480,000 and 420,000 for the current and previous years, respectively. A. Determine the ratio of liabilities to stockholders equity at the end of each year. Round to one decimal place. B. Determine the times interest earned ratio for both years. Round to one decimal place. C. What conclusions can be drawn from these data as to the companys ability to meet its currently maturing debts?
Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $5,300,000 Long-term debt (9% interest rate) $ 730, 000 Total stockholders' equity $ 2,500,000 Interest paid on long-term debt $ 65,700 Net income $ 400,000 Total assets at the beginning of the year were $5, 100,000; total stockholders' equity was $2,300,000. The company's tax rate is 40%. Required: 1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i. e., 0.1234 should be entered as 12.3).) 3. Is financial leverage positive or negative?
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Financial Accounting
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The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Line Item Description CurrentYear PreviousYear Accounts payable $184,000 $162,000 Current maturities of serial bonds payable 240,000 240,000 Serial bonds payable, 10% 1,190,000 1,430,000 Common stock, $1 par value 60,000 60,000 Paid-in capital in excess of par 590,000 600,000 Retained earnings 2,040,000 1,630,000 The income before income tax expense was $400,400 and $350,400 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round your answers to one decimal place. Line Item Description Ratio Current year fill in the blank 1 Previous year fill in the blank 2 b. Determine the times interest earned ratio for both years. Round your answers to one decimal place. Line Item Description Ratio Current year fill in the blank 3 Previous year…