Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2. Windswept Woodworks, Incorporated Input Data (millions of dollars) Year 2 Year 1 Accounts payable Accounts receivable Accumulated depreciation Cash & equivalents Common stock Cost of goods sold Depreciation expense Common stock dividends paid Interest expense Inventory Addition to retained earnings Long-term debt Notes payable Gross plant & equipment Retained earnings 542 1,386 6,852 330 474 920 6,722 218 1,210 1,290 1,510 n.a. n.a. n.a. 150 1,120 602 918 n.a. 1,116 n.a. 826 390 10,040 2,566 240 10,300 3,168 3,028 126 21% $ 19.80 500 million Sales n.a. Other current liabilities Tax rate Market price per share - year end Number of shares outstanding 106 n.a. $ 17.50 500 million (For all requirements, round your answers to 2 decimal places.) Required: a. Interest coverage ratio (Assume that year 1 EBIT was 1,307 and year 1 interest expense was 120.) Answer is complete and correct. Year 2 interest coverage ratio Year 1 interest coverage ratio 9.25 10.89 O b. Averege collection period (Assume that the accounts receivable balence was 960 on December 31 of the previous year and that year 1 sales were 2,728.) (Use 365 days in a year.)
Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2. Windswept Woodworks, Incorporated Input Data (millions of dollars) Year 2 Year 1 Accounts payable Accounts receivable Accumulated depreciation Cash & equivalents Common stock Cost of goods sold Depreciation expense Common stock dividends paid Interest expense Inventory Addition to retained earnings Long-term debt Notes payable Gross plant & equipment Retained earnings 542 1,386 6,852 330 474 920 6,722 218 1,210 1,290 1,510 n.a. n.a. n.a. 150 1,120 602 918 n.a. 1,116 n.a. 826 390 10,040 2,566 240 10,300 3,168 3,028 126 21% $ 19.80 500 million Sales n.a. Other current liabilities Tax rate Market price per share - year end Number of shares outstanding 106 n.a. $ 17.50 500 million (For all requirements, round your answers to 2 decimal places.) Required: a. Interest coverage ratio (Assume that year 1 EBIT was 1,307 and year 1 interest expense was 120.) Answer is complete and correct. Year 2 interest coverage ratio Year 1 interest coverage ratio 9.25 10.89 O b. Averege collection period (Assume that the accounts receivable balence was 960 on December 31 of the previous year and that year 1 sales were 2,728.) (Use 365 days in a year.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
6
Transcribed Image Text:Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2.
Windswept woodworks, Incorporated
Input Data
(millions of dollars)
Year 2
Year 1
Accounts payable
Accounts receivable
Accumulated depreciation
Cash & equivalents
Common stock
Cost of goods sold
Depreciation expense
Common stock dividends paid
Interest expense
Inventory
Addition to retained earnings
Long-term debt
Notes payable
Gross plant & equipment
Retained earnings
542
474
1,386
6,852
330
920
6,722
218
1,290
1,510
1,210
n.a.
n.a.
n.a.
150
1,120
602
918
n.a.
1,116
n.a.
826
240
10,300
3,168
3,028
126
21%
$ 19.80
500 million
390
10,040
2,566
Sales
n.a.
Other current liabilities
Tax rate
Market price per share - year end
Number of shares outstanding
106
n.a.
$ 17.50
500 million
(For all requirements, round your answers to 2 decimal places.)
Required:
e. Interest coverage ratio (Assume that year 1 EBIT was 1,307 and year 1 interest expense was 120.)
Answer is complete and correct.
Year 2 interest coverage ratio
9.25 O
Year 1 interest coverage ratio
10.89
b. Averege collection period (Assume that the occounts receivable bolonce was 960 on December 31 of the previous yeor and thot
year 1 sales were 2,728.) (Use 365 days in a year.)
Transcribed Image Text:b. Average collection period (Assume that the accounts receivable balance was 960 on December 31 of the previous year and that
year 1 sales were 2,728.) (Use 365 days in a year.)
Answer is complete and correct.
138.98
Year 2 ACP
Year 1 ACP
days
125.77 O days
c. Current ratio
O Answer is complete but not entirely correct.
Year 2 current ratio
Year 1 current ratio
4.25 8
3.89 O
d. Quick ratio
Answer is complete but not entirely correct.
Year 2 quick ratio
Year 1 quick ratio
2.57 X
1.96 0
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