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
Problem 1PS
Related questions
Question
Question 96
Using Financial Statements for 2020, long-term debt to total assets for the year 2020 is 0.23.
TRUE OR FALSE?
Transcribed Image Text:**Balance Sheet (2020)**
**Assets**
- Cash: $280,000
- Accounts Receivable: $117,600
- Inventory: $89,600
- Prepaid Expenses: $14,000
**Total Current Assets**: $501,200
- Fixed Assets: $33,600
**Total Assets**: $534,800
**Liabilities & Equity**
**Liabilities**
- Accounts Payable: $90,916
- Notes Payable: $48,132
- Accrued Expenses: $42,784
- Taxes Payable: $37,436
- Deferred Taxes: $48,132
**Total Current Liabilities**: $267,400
- Long-Term Notes: $123,004
**Total Liabilities**: $390,404
**Equity**
- Capital Stock: $53,480
- Retained Earnings: $90,916
**Total Equity**: $144,396
**Total Liabilities & Equity**: $534,800
---
**Income Statement (2020)**
**Income**
- Sales: $530,000
- Cost of Goods Sold: $148,400
**Gross Profit**: $381,600
- Interest Income: $53,200
**Total Income**: $434,800
**Expenses**
- Sales Salaries: $121,900
- Office Salaries: $26,500
- Office Equipment Rental: $37,100
- Interest Expense: $15,900
- General & Administrative: $4,770
**Total Expenses**: $206,170
**Income Before Tax**: $228,430
**Income Taxes**: $132,500
**Net Income**: $95,930
---
This report provides a breakdown of the financial position and performance for the year 2020. The Balance Sheet gives a snapshot of what the organization owns and owes at the end of the year, while the Income Statement outlines the company's profitability over the year.
Expert Solution
Step 1
Long term debt to total asset is a coverage ratio that gives the long term financial position of the company. It shows the ratio of the company’s asset financed through long term debt.
|
Long term debt ratio |
long term debt / total assets |
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