The balance sheet for Shaver Corporation reported the following: cash, $11,500; short term investments, $16,500; net accounts receivable, $48,000; inventory, $53,000; prepaids, $16,500; equipment, $102,000; current liabilities, $53,000; notes payable (long-term), $83,000; total stockholders' equity, $111,500; net income, $4,620; interest expense, $7,000; income before income taxes, $9,180. Required: 1. Compute Shaver's debt-to-assets ratio and times interest earned ratio. 2-a. Based on these ratios, does it appear Shaver relies mainly on debt or equity to finance its assets? 2-b. Is it probable that Shaver will be able to meet its future interest obligations? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Compute Shaver's debt-to-assets ratio and times interest earned ratio. (Round your a Debt-to-Assets Times Interest Earned Ratio Ratio
The balance sheet for Shaver Corporation reported the following: cash, $11,500; short term investments, $16,500; net accounts receivable, $48,000; inventory, $53,000; prepaids, $16,500; equipment, $102,000; current liabilities, $53,000; notes payable (long-term), $83,000; total stockholders' equity, $111,500; net income, $4,620; interest expense, $7,000; income before income taxes, $9,180. Required: 1. Compute Shaver's debt-to-assets ratio and times interest earned ratio. 2-a. Based on these ratios, does it appear Shaver relies mainly on debt or equity to finance its assets? 2-b. Is it probable that Shaver will be able to meet its future interest obligations? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Compute Shaver's debt-to-assets ratio and times interest earned ratio. (Round your a Debt-to-Assets Times Interest Earned Ratio Ratio
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The balance sheet for Shaver Corporation reported the following: cash, $11,500; short-
term investments, $16,500; net accounts receivable, $48,000; inventory, $53,000;
prepaids, $16,500; equipment, $102,000; current liabilities, $53,000; notes payable
(long-term), $83,000; total stockholders' equity, $111,500; net income, $4,620; interest
expense, $7,000; income before income taxes, $9,180.
Required:
1. Compute Shaver's debt-to-assets ratio and times interest earned ratio.
2-a. Based on these ratios, does it appear Shaver relies mainly on debt or equity to
finance its assets?
2-b. Is it probable that Shaver will be able to meet its future interest obligations?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Req 2B
Compute Shaver's debt-to-assets ratio and times interest earned ratio. (Round your ans
Debt-to-Assets
Times Interest Earned Ratio
Ratio
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