Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 1, Problem 4MCQ
What is Ella Company’s debt ratio?
a. 25.78%
b. 100.00%
c. 74.22%
d. 137.78%
e. 34.74%
Use the following information for question 2 through 5.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
a. Compute the following ratios:
i. Accounts Receivable Turnover ratio;ii. Accounts Payable Turnover ratio;iii. Average Collection Period;iv. Average Payable Period;v. Quick Ratio;vi. Gross Profit Margin.vii. Net Profit Marginviii. Debt ratiob
b. Explain briefly what is factoring?
STEP 3: Solve
Calculating the four benchmark financial ratios found in Table 15.3, we get the following:
Ratio with
Ratio
Existing Common Stock with Debt
Financing
Ratio
Formula
Ratio
Financing
Debt ratio
Total Liabilities
35.2%
26.4%
51.5%
Total Assets
Interest-bearing
Interest-Bearing Debt
20.1
15.1
40.2
debt ratio
Total Assets
Times interest
Net Operating Income or EBIT
27.08
31.25
11.72
earned
Interest Expense
Depreciation Amortization
6.84
8.20
3.08
EBITDA
Earnings Before
coverage ratio
Interest and Taxes
Expense
Expense
Principal Payments
Interest Expense + (-
1
Tax Rate
STEP 4: Analyze
Whether the entire $10 million is raised by issuing equity or by borrowing has a dramatic effect on the firm's
capital structure. For example, the debt ratio will either drop from 35.2 percent to 26.4 percent if equity is used or
increase to 51.5 percent if debt is used. The interest-bearing debt ratio will change in a similar manner, dropping
from 20.1 percent to 15.1 percent if equity financing…
Required:
Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should
be entered as 12.34).)
1. Gross margin percentage.
2. Net profit margin percentage.
3. Return on total assets.
4. Return on equity.
5. Was financial leverage positive or negative for the year?
1. Gross margin percentage
%
2. Net profit margin percentage
%
3. Return on total assets
%
4. Return on equity
%
5. Financial Leverage
Chapter 1 Solutions
Managerial Accounting
Ch. 1 - Prob. 1MCQCh. 1 - What is Ella Company’s current ratio? a.0.69...Ch. 1 - What is Ella Company’s acid-test ratio? a.2.39...Ch. 1 - What is Ella Company’s debt ratio? a. 25.78% b....Ch. 1 - What is Ella Company’s equity ratio? a.25.78%...Ch. 1 - Describe the managerial accountant’s role in...Ch. 1 - Distinguish between managerial and financial...Ch. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Distinguish between (a) factory overhead and (b)...
Ch. 1 - Prob. 6DQCh. 1 - What product cost is both a prime cost and a...Ch. 1 - APPLE Assume that we tour Apple’s factory where it...Ch. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - What are the three categories of manufacturing...Ch. 1 - List several examples of factory overhead.Ch. 1 - Prob. 20DQCh. 1 - GOOGLE Prepare a proper title for the annual...Ch. 1 - Prob. 22DQCh. 1 - Prob. 23DQCh. 1 - Prob. 24DQCh. 1 - Prob. 25DQCh. 1 - Prob. 1QSCh. 1 - Prob. 2QSCh. 1 - Fixed and variable costs C2 Listed below are...Ch. 1 - QS 14-4 Direct and indirect costs C2
Diez Company...Ch. 1 - Classifying product costs C2 Identify each of the...Ch. 1 - QS 14-6 Product and period costs C3
Identify each...Ch. 1 - Prob. 7QSCh. 1 - Prob. 8QSCh. 1 - Prob. 9QSCh. 1 - Prob. 10QSCh. 1 - Prob. 11QSCh. 1 - Prob. 12QSCh. 1 - Prob. 13QSCh. 1 - Prob. 14QSCh. 1 - Prob. 15QSCh. 1 - Prob. 16QSCh. 1 - Raw materials inventory management A1 Nestlé...Ch. 1 - Exercise 14-1 Sources of accounting information C1...Ch. 1 - Prob. 2ECh. 1 - Exercise 14-3 Cost classifications for a service...Ch. 1 - Exercise 14-4 Cost classifications for a service...Ch. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Exercise 14-9 Preparing financial statements for a...Ch. 1 - Prob. 10ECh. 1 - Prob. 11ECh. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Prob. 14ECh. 1 - Prob. 15ECh. 1 - Prob. 16ECh. 1 - Exercise 14-17 Lean business practice C6 Many...Ch. 1 - Prob. 18ECh. 1 - Prob. 19ECh. 1 - Prob. 1PSACh. 1 - Prob. 2PSACh. 1 - Prob. 3PSACh. 1 - Prob. 4PSACh. 1 - Prob. 5PSACh. 1 - Prob. 1PSBCh. 1 - Prob. 2PSBCh. 1 - Problem 14-3B Schedule of cost of goods...Ch. 1 - Problem 14-4B Ending inventory computation and...Ch. 1 - Prob. 5PSBCh. 1 - Prob. 1SPCh. 1 - Prob. 1AACh. 1 - Both Apple and Google (Alphabet) invest in...Ch. 1 - Samsung’s 2017 annual report discloses the...Ch. 1 - Prob. 1BTNCh. 1 - Prob. 2BTNCh. 1 - Prob. 3BTNCh. 1 - Prob. 4BTNCh. 1 - Prob. 5BTNCh. 1 - Prob. 6BTN
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Assume that you are given the following ratios: Asset turn-over: -1.5x Return on Assets: -3% Return on equity: -5% What is the debt ratio?arrow_forwardConsider this simplified balance sheet for Geomorph Trading: Current assets Long-term assets $ 245 Current liabilities Long-term debt 630 Other liabilities Equity $ 875 Required: a. What is the company's debt-equity ratio? (Hint: debt = Current liabilities, Long-term debt, and Other liabilities) Note: Round your answer to 2 decimal places. b. What is the ratio of total long-term debt to total long-term capital? Note: Round your answer to 2 decimal places. c. What is its net working capital? d. What is its current ratio? Note: Round your answer to 2 decimal places. $ 170 215 140 350 $ 875 a Debt-equity ratio b. Long-term debt-to-capital ratio c. Net working capital d. Current ratioarrow_forward4. What is the debt to total assets ratio of the Company? a. 107% c. 35% b. 30%. d. 14% 5. What is the times interest earned ratio of the company?a. 5% c. 22% b. 2.5%. d. 2%arrow_forward
- Questions: 1. Times interest earned ratio 2. Debt to equity ratioarrow_forwardCompany has return on assets 12.4% and debt-equity ratio is 0.25. What is ROE? Select one: a.35.43% b.9.18% c.9.3% d.15.5%arrow_forwardAssume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.5 Return on assets (ROA) 4% Return on equity (ROE) 6% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forward
- Give typed solutionarrow_forwardConsider this simplified balance sheet for Geomorph Trading: Current assets Long-term assets $ 110 510 Net working capital $ 620 a. Debt-equity ratio b Long-term debt-to-capital ratio C. d. Current ratio a. What is the company's debt-equity ratio? (Round your answer to 2 decimal places.) b. What is the ratio of total long-term debt to total long-term capital? (Round your answer to 2 decimal places.) c. What is its net working capital? d. What is its current ratio? (Round your answer to 2 decimal places.) Current liabilities Long-term debt Other liabilities Equity $ 65 275 80 200 $ 620arrow_forwardly course FINA 415-1-202 General UNIT and For short term credit decisions which ratio is used? Select one: O a. Current Ratio O b. None O c. Savings ratio O d. Solvency ratio e. Return on Equityarrow_forward
- At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable Common stock, $10 par value Retained earnings Total liabilities and equity Cost of goods sold Other operating expenses Current Year $ 26,053 77,051 95, 908 8, 732 242,846 $ 450, 590 Interest expense Income tax expense Total costs and expenses Net income Earnings per share 1 Year Ago Current Year $ 31, 386 54, 925 69, 706 $ 66,303 $ 113, 319 87, 252 162, 500 87, 519 89, 341 162,500 70, 296 $ 450, 590 $ 388, 440 $ 357, 318 181, 588 9,958 7,615 7,994 224, 429 388, 440 The company's income statements for the current year and one year ago, follow. 1 Year Ago For Year Ended December 31 Sales $ 585, 767 2 Years Ago 556, 479 S 29, 288 $ 1.80 $31, 085 43, 156 46,425 3,596 199, 438 $ 323, 700 $ 42,728 70, 822 162,500 47,650 $ 323, 700 $ 300, 459 116, 948 10, 632 6,934 $ 462,244 434,973 $ 27,271 $ 1.68arrow_forwardNeed help with this Question please providearrow_forwardWhat is the debt ratio? What is the equity-debt ratio? (Equity/Total Debt) What is the debt to equity ratio?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License