The following data are for the 2018 fiscal year of Meme-Me Corporation and Sozhal Incorporated. All dollar amounts are in thousands. Account Title Current assets Total assets Current liabilities. Total liabilities Stockholders' equity Interest expense Income tax expense Net income Mene-Me Corporation $135,729 233,370 34,907 55,430 177,940 116 4,195 31,217 Sozhal Incorporated $50,485 97,828 7,068 13,476 84,932 24 3,347 22,804 Required a. Calculate the EBIT for each company. b. Calculate each company's debt-to-assets ratio, current ratio, and the times-interest-earned ratio. c. Calculate each company's return-on-assets ratio using EBIT instead of net earnings. Calculate each company's return-on- equity ratio using net earnings.
The following data are for the 2018 fiscal year of Meme-Me Corporation and Sozhal Incorporated. All dollar amounts are in thousands. Account Title Current assets Total assets Current liabilities. Total liabilities Stockholders' equity Interest expense Income tax expense Net income Mene-Me Corporation $135,729 233,370 34,907 55,430 177,940 116 4,195 31,217 Sozhal Incorporated $50,485 97,828 7,068 13,476 84,932 24 3,347 22,804 Required a. Calculate the EBIT for each company. b. Calculate each company's debt-to-assets ratio, current ratio, and the times-interest-earned ratio. c. Calculate each company's return-on-assets ratio using EBIT instead of net earnings. Calculate each company's return-on- equity ratio using net earnings.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following data are for the 2018 fiscal year of Meme-Me Corporation and Sozhal Incorporated. All dollar amounts are in
thousands.
Account Title
Current assets
Total assets
Current liabilities.
Total liabilities
Stockholders' equity
Interest expense
Income tax expense
Net income
Meme Me
Corporation
$135,729
233,370
34,907
55,430
177,940
116.
4,195
31,217
Sozhal
Incorporated
$50,485
97,828
7,068
13,476
84,932
24
3,347
22,804
Required
a. Calculate the EBIT for each company.
b. Calculate each company's debt-to-assets ratio, current ratio, and the times-interest-earned ratio.
c. Calculate each company's return-on-assets ratio using EBIT instead of net earnings. Calculate each company's return-on-
equity ratio using net earnings..
d. Meme-Me Corporation reported interest expense of $116 million, before taxes. What was its after-tax interest expense in
dollars? (Hint: You will need to compute its tax rate by dividing income tax expense by earnings before taxes, which must be
computed.)
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