j. times interest earnedk. cash coverage ratiol. current ratio and quick ratio Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent7.year:INCOME STATEMENT(Figures in $ millions)13,1934,060Net salesCost of goods soldOther expensesDepreciationEarnings before interest and taxes (EBIT)Interest expense4,0492,5182,566685Income before tax1,881Taxes (at 35%)658Net income1,223Dividends856BALANCE SHEET(Figures in $ millions)End of YearStart of YearAssetsCash and marketable securities$ 89%24158Receivables2,3821872,490Inventories ne238Other current assets867932$ 3,525$ 3,81819,915Total current assetsNet property, plant, and equipmentOther long-term assets19,9734,216$27,7143,770$27,503Total assetsLiabilities and shareholders' equityPayablesShort-term debt$ 2,564$ 3,0401,5731,419Other current liabilities811787Total current liabilities$ 4,794$ 5,400Long-term debt and leasesOther long-term liabilitiesShareholders' equityTotal liabilities and shareholders' equity7,0186,8336,1499,121$27,5036,1789,724$27,714Calculate the following financial ratios for Phone Corporation: (LO4-3)

Times interest earned is a ratio which tells how much earnings does the company has so that it is…

Answered: times interest earned k. cash coverage…

Business

Finance

times interest earned k. cash coverage ratio l. current ratio and quick ratio

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

See similar textbooks

Related questions

Q: Which one of the following is a measure of long term solvency? A. Price earning ratio B. Profit…

A: Solvency refers to a firm's ability to meet its long term financial obligations or debt.

Q: Define the following "ratios" by using the appropiate mathematical expression . Give 1 sentence…

A: There are various financial ratios -

Q: A(n) a. inventory turnover ratio b. current ratio is useful in evaluating liquidity policies. c.…

A: Liquidity refers to the company's ability to determine how quickly it can convert the assets and use…

Q: Bond interest payments before and after taxes Charter Corp. has issued 1,719 debentures with a total…

A: The interest rate on the debenture is calculated on the face value. The company gets a tax benefit…

Q: Total debt-to-assets ratio, debt-to-equity ratio and Long-term debt-to-capital ratio are examples of…

A: Financial ratios are based on the relationship between two financial line items. For instance, the…

Q: How do you calculate net sales? Also... Do you only look at current year data or do you factor…

A: Net Sales=Gross Sales-Returns-Allowances-Discounts where, Gross sales=the total unadjusted sales of…

Q: Assignment 1: Financial Statement Analysis and Interpretation of the Results • Select two different…

A: The objective of this question is to conduct a financial analysis of two different corporations from…

Q: Which statement is correct?

A: A current ratio is one of the ratios used to assess the liquidity of the company. It shows that the…

Q: 1) Quick ratio 2) Inventory turnover 3) Total debt to total capital ratio 4) ROE 5) Price to earning…

A: We use financial ratios to determine and assess the financial health and financial position of a…

Q: The discount rate is the combination of what two types of discounting? a. exponential and linear…

A: Discount rates are used for discounting the future cash flows. It helps in determining the time…

Q: Which of the following ratios is most useful in evaluating solvency? Multiple Choice Current ratio…

A: The ratio measures the company's financial performance and progress over time. It is the quantity…

Q: hich of the following provides information about how many months of living expenses you can cover…

A: Just like companies we also use financial ratios for a person to determine the state of financial…

Q: The return on assets ratio is a: OLiquidity ratio. O Solvency ratio. O Profitability ratio.

A: · Ratio analysis used to identify the business performance of the company.· It is used to measure…

Q: Define each of the following terms: d. Forecasted financial statement approach using percentage of…

A: Forecasted financial statement approach using percent of sales: This process begins with future…

Q: The percentage analysis of increases and decreases in individual items on comparative financial…

A: A financial statement is a group of four statements of a company. These statements are as follows:…

Q: Which one of the following formulas is correct? O i) Profit margin = EBIT / Sales O ii) ROA = ROE /…

A: ROA = ROE / Equity Multiplier ROA = Net Income / Total Assets ROE = Net Income / Shareholders'…

Q: Which of the following best describes the current ratio? a) Liquidity ratio b) Debt ratio c)…

A: Investors, analysts, and many other stakeholders utilize financial ratios as tools to assess a…

Q: a. Compute the current ratio for the current year. (Abbreviations used: STI = Short-term…

A: *Since you have posted multiple sub parts at a time. As per guidelines I can solve only first three…

Q: In horizontal analysis, each item is expressed as a percentage of the O a. latest year figure. O b.…

A: Lets understand the basics.Balance sheet analysis gets divided into main two types which are,(1)…

Q: Question: Which financial ratio measures the proportion of net income generated per dollar of…

A: The question is asking for the financial ratio that measures the proportion of net income generated…

Q: Present formulas and examples of the following financial ratios (Financial ratios) a. gross margin…

A: Financial ratios are used to measure the financial performance of a company . Such ratios provide…

Q: sing the information from 27A prepare the following ratios: gross profit margin profit margin…

A: Accounting ratios are determined to know the efficiency, effectiveness and performance of the firm.…

Q: Define times-interest-earned (TIE) ratio

A: The number of times can a business pays off its interest obligation with the current earnings is…

Question

j. times interest earned

k. cash coverage ratio

l. current ratio and quick ratio

Financial Ratios. Here are simplified financial statements for Phone Corporation in a recent
7.
year:
INCOME STATEMENT
(Figures in $ millions)
13,193
4,060
Net sales
Cost of goods sold
Other expenses
Depreciation
Earnings before interest and taxes (EBIT)
Interest expense
4,049
2,518
2,566
685
Income before tax
1,881
Taxes (at 35%)
658
Net income
1,223
Dividends
856
BALANCE SHEET
(Figures in $ millions)
End of Year
Start of Year
Assets
Cash and marketable securities
$ 89
%24
158
Receivables
2,382
187
2,490
Inventories ne
238
Other current assets
867
932
$ 3,525
$ 3,818
19,915
Total current assets
Net property, plant, and equipment
Other long-term assets
19,973
4,216
$27,714
3,770
$27,503
Total assets
Liabilities and shareholders' equity
Payables
Short-term debt
$ 2,564
$ 3,040
1,573
1,419
Other current liabilities
811
787
Total current liabilities
$ 4,794
$ 5,400
Long-term debt and leases
Other long-term liabilities
Shareholders' equity
Total liabilities and shareholders' equity
7,018
6,833
6,149
9,121
$27,503
6,178
9,724
$27,714
Calculate the following financial ratios for Phone Corporation: (LO4-3)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 calculation of ratios

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Subject : Accounting
Selected income statement and balance sheet data from Merck & Co. for Year 9 are reproduced below: MERCK & COMPANY, INC. Year 9 Selected Financial Data ($ millions) Merck & Co. Income Statement Data Sales revenue... Depreciation...... Interest expense. $7,120 230 10 Pretax income... 2,550 Income taxes.. 900 Net income. 1,650 Balance Sheet Data Current assets... $4,850 Fixed assets, net... 2,400 Total assets.. 7,250 Current liabilities... 3,290 Long-term debt... 100 Shareholders' equity... 3,860 Total liabilities & shareholders' equity.. Required: a. Calculate return on common equity for Year 9 using year-end amounts and assuming no preferred dividends. b. Disaggregate Merck's ROCE. Comment on Merck's use of leverage. (Assume all assets and current liabilities are operating and a 35% tax rate.). c. Disaggregate ROA and comment on that.
Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT(Figures in $ millions) Net sales $ 13,700 Cost of goods sold 4,360 Other expenses 4,047 Depreciation 2,698 Earnings before interest and taxes (EBIT) $ 2,595 Interest expense 715 Income before tax $ 1,880 Taxes (at 35%) 658 Net income $ 1,222 Dividends $ 916 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 95 $ 164 Receivables 2,682 2,610 Inventories 217 268 Other current assets 897 962 Total current assets $ 3,891 $ 4,004 Net property, plant, and equipment 20,033 19,975 Other long-term assets 4,276 3,830…
Net sales Cost of goods sold Selling and administrative expenses Interest expense Other income (expense) Income tax expense Net income Current assets Noncurrent assets Total assets Current liabilities Long-term debt Total stockholders' equity Total liabilities and stockholders' equity Total assets Total stockholders' equity Current liabilities Target Corporation Income Statement Data for Year $65,357 45,583 15,101 707 (94) 1,384 $ 2,488 $18,424 26,109 Balance Sheet Data (End of Year) $44,533 $11,327 17,859 15,347 Walmart Inc. $44,533 $408,214 304,657 79,607 10,512 2,065 (411) 7,139 $ 14,335 $48,331 122,375 $170,706 $55,561 44,089 71,056 $170,706 Beginning-of-Year Balances $44,106 13,712 $163,429 65,682 55,390
Compute the ratios for the current and past year for Dollar Tree In. on the Ratio and Comments worksheet.
Required information [The following information applies to the questions displayed below.] Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 $ 431,313 $ 330,421 259,650 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes. Income tax expense Net income Assets Current assets Long-term investments Plant assets, net Total assets 171,663 61,246 38,818 100,064 Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings Total liabilities and equity December 31 209,156 121,265 KORBIN COMPANY Comparative Balance Sheets 71,599 13,317 $ 58,282 $ 37,039 2021 45,598 29,077 74,675 46,590 9,551 $ 54,729 0 103,218 $ 157,947 $ 2019 229,300 146,752 82,548 30,268 19,032 49,300 33,248 6,749 $ 26,499 $ 19,550 71,000 8,875 31,781 2019 2020 $36,630 $ 48,966 700 93,876 $131,206 $ 108,704 4,660 55,078 $ 19,023…
Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 14,000 Cost of goods sold 4,510 Other expenses 4,212 Depreciation 2,788 Earnings before interest and taxes (EBIT) $ 2,490 Interest expense 730 Income before tax $ 1,760 Taxes (at 30%) 528 Net income $ 1,232 Dividends $ 946    BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 98 $ 167 Receivables 2,832 2,670 Inventories 232 283 Other current assets 912 977 Total current assets $ 4,074 $ 4,097 Net property, plant, and equipment 20,063 20,005 Other long-term assets 4,306 3,860 Total assets $ 28,443 $ 27,962 Liabilities and shareholders’ equity Payables $ 2,654 $ 3,130 Short-term debt 1,464 1,618 Other current…
Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT(Figures in millions of dollars)   Net sales 13,600   Cost of goods sold 4,310   Other expenses 4,162   Depreciation 2,668   Earnings before interest and taxes (EBIT) 2,460   Interest expense 710   Income before tax 1,750   Taxes (at 30%) 525   Net income 1,225   Dividends 906 BALANCE SHEET(Figures in millions of dollars) End of Year Start of Year   Assets      Cash and marketable securities 94        163             Receivables 2,632        2,590             Inventories 212        263             Other current assets 892        957                Total current assets 3,830        3,973             Net property, plant, and equipment 20,023        19,965             Other long-term assets 4,266        3,820                Total assets 28,119        27,758…
Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT (Figures in $ millions) Net sales $ 13,600 Cost of goods sold 4,310 Other expenses 4,162 Depreciation 2,668 Earnings before interest and taxes (EBIT) $ 2,460 Interest expense 710 Income before tax $ 1,750 Taxes (at 30%) 525 Net income $ 1,225 Dividends $ 906    BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 94 $ 163 Receivables 2,632 2,590 Inventories 212 263 Other current assets 892 957 Total current assets $ 3,830 $ 3,973 Net property, plant, and equipment 20,023 19,965 Other long-term assets 4,266 3,820 Total assets $ 28,119 $ 27,758 Liabilities and shareholders’ equity Payables $ 2,614 $ 3,090 Short-term debt 1,444 1,598 Other current…
What is the debit to asset ratio?
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $900.00 Cost of goods sold Depreciation Earnings before interest and taxes (EBIT) Interest expense Income before tax 760.00 50.00 $ 90.00 31.00 $ 59.00 12.39 $ 46.61 Taxes Net income BALANCE SHEET (Figures in $ millions) End of Start Year of Year Assets Current assets $ 388 $ 350 Long-term assets 296 241 Total assets $ 684 $ 591 Liabilities and shareholders' equity Current liabilities $ 176 $ 213 Long-term debt Shareholders' equity 127 140 344 256 Total liabilities and shareholders' equity $ 684 $ 572 The company's cost of capital is 8.5%. a. Calculate Watervan's economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is the company's return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2…
Suppose McDonald's 2022 financial statements contain the following selected data (in millions). Current assets Total assets Current liabilities Total liabilities (a1) a. b. Compute the following values. C. $3,416.0 Interest expense 30,224.0 d. 2,988.0 16,191.0 Income taxes Net income $473.0 1,936.0 4,551.0 Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) Working capital. (Round to 1 decimal place, e.g. 5,275.5) Debt to assets ratio. (Round to 0 decimal places, e.g. 62%.) Times interest earned. (Round to 2 decimal places, e.g. 6.25.) millions :1 % times