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Using carrot corp., what is the debt-to-equity ratio?

Using carrot corp., what is the debt-to-equity ratio?

Essentials Of Investments
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
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9. Using carrot corp., what is the debt-to-equity ratio?
 
a. 30.77 : 1
b. 31.60 : 1
c. 30.50 : 1
d. 31.20 : 1
Financial statements of CARROTS Corporation are reproduced below. The market price of Carrot's ordinary share was P20 per share on November 30, Year 2. Carrots Corporation Statement of Financial Position As of November 30 (in thousands of pesos) Year 2 Year 1 P 3,000 1,000 Cash P 2,000 Trading securities Accounts receivable (net) Merchandise inventory 1,000 14,000 11,000 24,000 16,000 P 30,000 P 42,000 68,000 10,000 Total current assets Property, plant, and equipment (net) Long-term investments 60,000 10,000 Total assets P120,000 P100,000 P 5,000 P 4,000 Accounts payable Wages payable 1,000 1,000 Total current liabilities Р 6,000 P 5,000 Bonds payable, 10% 20,000 20,000 P 26,000 P 25,000 P 25,000 P 25,000 Total liabilities Ordinary share capital, no par, 10,000,000 shares Accumulated profits Total shareholders' equity Total liabilities and shareholders' equity 69,000 50,000 P 94,000 P 75,000 P120,000 P100,000 Carrots Corporation Statement of Income For the Year Ended November 30, Year 2 (in thousands of pesos) Sales (all on credit) Cost of goods sold Gross margin P200,000 (120,000) 80,000 Operating expenses (38,000) Net operating income Interest expense 42,000 (2,000) Net income before income tax 40,000 Income tax expense (15,000) Net income P 25,000
Transcribed Image Text:Financial statements of CARROTS Corporation are reproduced below. The market price of Carrot's ordinary share was P20 per share on November 30, Year 2. Carrots Corporation Statement of Financial Position As of November 30 (in thousands of pesos) Year 2 Year 1 P 3,000 1,000 Cash P 2,000 Trading securities Accounts receivable (net) Merchandise inventory 1,000 14,000 11,000 24,000 16,000 P 30,000 P 42,000 68,000 10,000 Total current assets Property, plant, and equipment (net) Long-term investments 60,000 10,000 Total assets P120,000 P100,000 P 5,000 P 4,000 Accounts payable Wages payable 1,000 1,000 Total current liabilities Р 6,000 P 5,000 Bonds payable, 10% 20,000 20,000 P 26,000 P 25,000 P 25,000 P 25,000 Total liabilities Ordinary share capital, no par, 10,000,000 shares Accumulated profits Total shareholders' equity Total liabilities and shareholders' equity 69,000 50,000 P 94,000 P 75,000 P120,000 P100,000 Carrots Corporation Statement of Income For the Year Ended November 30, Year 2 (in thousands of pesos) Sales (all on credit) Cost of goods sold Gross margin P200,000 (120,000) 80,000 Operating expenses (38,000) Net operating income Interest expense 42,000 (2,000) Net income before income tax 40,000 Income tax expense (15,000) Net income P 25,000
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