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Use for financial statements for Yellow Hammer to answer problems 1-3 L. Assess Yellow Hammer's income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios using EBIT and EBITDA for each year. 2. Assess Yellow Hammer's balance sheet by calculating the leverage ratios using of Debt/Capitalization and Debt/EBITDA. 3. Using the table below and the ratios that you've calculated, insert the EBIT interest coverage, EBITDA interest coverage, Debt/EBITDA and Debt to Capitalization and then provide an assessment of Yellow Hammer's credit quality.

Use for financial statements for Yellow Hammer to answer problems 1-3 L. Assess Yellow Hammer's income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios using EBIT and EBITDA for each year. 2. Assess Yellow Hammer's balance sheet by calculating the leverage ratios using of Debt/Capitalization and Debt/EBITDA. 3. Using the table below and the ratios that you've calculated, insert the EBIT interest coverage, EBITDA interest coverage, Debt/EBITDA and Debt to Capitalization and then provide an assessment of Yellow Hammer's credit quality.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assets Current Assets Cash Accounts receivable Inventories Other current assets Total current assets Long-Term Assets Land Total assets Buildings Equipment Less accumulated depreciation Net property, plant, and equipment Goodwill and intangible assets Other long-term assets Total long-term assets 2021 17.01 23.82 48.30 2.00 91.13 95.50 36.50 39.70 -18.70 153.00 20.00 21.88 194.88 286.01 2020 14.18 19.85 40.25 4.00 78.28 95.50 30.50 33.00 -17.50 141.50 20.00 13.80 175.30 253.58 Yellow Hammer Corporation Consolidated Balance Sheet Year Ended December 31 (in $ millions) Depreciation and amortization Operating Income Interest income (expense) Pretax Income Taxes Net Income Total sales Cost of sales Gross Profit Selling, general, and administrative expenses Research and development Liabilities and Stockholders' Equity Current Liabilities Accounts payable Notes payable/short-term debt Current maturies of long-term debt Other current liabilities Long-Term Liabilities Long-term debt Deferred taxes Total Liabilities Stockholders' Equity Yellow Hammer Corporation Income Statement Year Ended December 31 (in $ millions) Total current liabilities Total Liabilities and Stockholders' Equity 2021 207.00 144.90 62.10 24.80 8.20 2.00 27.10 10.80 16.30 4.10 12.20 Total long-term liabilities 2020 172.50 120.80 51.70 20.70 7.60 1.50 21.90 10.20 11.70 2.90 8.80 2019 150.00 105.00 45.00 18.00 6.40 1.00 19.60 8.00 11.60 2.90 8.70 2021 15.88 25.20 5.50 12.77 59.35 104.50 11.96 116.46 175.81 110.20 286.01 2020 13.23 11.50 5.50 6.50 36.73 110.00 7.45 117.45 154.18 99.40 253.58
Transcribed Image Text:Assets Current Assets Cash Accounts receivable Inventories Other current assets Total current assets Long-Term Assets Land Total assets Buildings Equipment Less accumulated depreciation Net property, plant, and equipment Goodwill and intangible assets Other long-term assets Total long-term assets 2021 17.01 23.82 48.30 2.00 91.13 95.50 36.50 39.70 -18.70 153.00 20.00 21.88 194.88 286.01 2020 14.18 19.85 40.25 4.00 78.28 95.50 30.50 33.00 -17.50 141.50 20.00 13.80 175.30 253.58 Yellow Hammer Corporation Consolidated Balance Sheet Year Ended December 31 (in $ millions) Depreciation and amortization Operating Income Interest income (expense) Pretax Income Taxes Net Income Total sales Cost of sales Gross Profit Selling, general, and administrative expenses Research and development Liabilities and Stockholders' Equity Current Liabilities Accounts payable Notes payable/short-term debt Current maturies of long-term debt Other current liabilities Long-Term Liabilities Long-term debt Deferred taxes Total Liabilities Stockholders' Equity Yellow Hammer Corporation Income Statement Year Ended December 31 (in $ millions) Total current liabilities Total Liabilities and Stockholders' Equity 2021 207.00 144.90 62.10 24.80 8.20 2.00 27.10 10.80 16.30 4.10 12.20 Total long-term liabilities 2020 172.50 120.80 51.70 20.70 7.60 1.50 21.90 10.20 11.70 2.90 8.80 2019 150.00 105.00 45.00 18.00 6.40 1.00 19.60 8.00 11.60 2.90 8.70 2021 15.88 25.20 5.50 12.77 59.35 104.50 11.96 116.46 175.81 110.20 286.01 2020 13.23 11.50 5.50 6.50 36.73 110.00 7.45 117.45 154.18 99.40 253.58
Use for financial statements for Yellow Hammer to answer problems 1-3 1. Assess Yellow Hammer's income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios using EBIT and EBITDA for each year. 2. Assess Yellow Hammer's balance sheet by calculating the leverage ratios using of Debt/Capitalization and Debt/EBITDA. 3. Using the table below and the ratios that you've calculated, insert the EBIT interest coverage, EBITDA interest coverage, Debt/EBITDA and Debt to Capitalization and then provide an assessment of Yellow Hammer's credit quality. Oper. income (bef. D&A)/revenues (%) Return on capital (%) EBIT interest coverage (x) EBITDA interest coverage (x) FFO/debt (%) Free oper. cash flow/debt (%) Disc. cash flow/debt (%) Debt/EBITDA (x) Debt/debt plus equity (%) AA 32.1 19.7 13.1 17.9 72.3 43.9 18.3 1.0 21.0 A 19.1 16.8 8.1 11.6 53.0 28.4 10.6 1.4 32.1 BBB 17.1 12.0 4.5 7.1 34.5 15.5 6.9 2.1 42.2 BB 20.4 9.5 3.0 4.9 24.0 9.0 3.9 2.9 47.4 B 15.3 7.2 1.3 2.5 10.4 2.9 0.4 5.1 70.2
Transcribed Image Text:Use for financial statements for Yellow Hammer to answer problems 1-3 1. Assess Yellow Hammer's income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios using EBIT and EBITDA for each year. 2. Assess Yellow Hammer's balance sheet by calculating the leverage ratios using of Debt/Capitalization and Debt/EBITDA. 3. Using the table below and the ratios that you've calculated, insert the EBIT interest coverage, EBITDA interest coverage, Debt/EBITDA and Debt to Capitalization and then provide an assessment of Yellow Hammer's credit quality. Oper. income (bef. D&A)/revenues (%) Return on capital (%) EBIT interest coverage (x) EBITDA interest coverage (x) FFO/debt (%) Free oper. cash flow/debt (%) Disc. cash flow/debt (%) Debt/EBITDA (x) Debt/debt plus equity (%) AA 32.1 19.7 13.1 17.9 72.3 43.9 18.3 1.0 21.0 A 19.1 16.8 8.1 11.6 53.0 28.4 10.6 1.4 32.1 BBB 17.1 12.0 4.5 7.1 34.5 15.5 6.9 2.1 42.2 BB 20.4 9.5 3.0 4.9 24.0 9.0 3.9 2.9 47.4 B 15.3 7.2 1.3 2.5 10.4 2.9 0.4 5.1 70.2
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