Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 3MAD
a.
To determine
Compute times-interest-earned ratio for each year.
b.
To determine
Plot the graph with the four points and the years in the horizontal axis.
c.
To determine
Interpret the trend in the ratio from the graph.
d.
To determine
Identify the cause for an increase in interest expense in Year 4.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Rick's Travel Service has asked you to help piece together financial information on the firm for the most current year. Managers give
you the following information: sales are $7.4 million, total debt is $2.00 million, debt ratio is 35 percent, and ROE is 17.1 percent.
Using the above information, calculate Rick's ROA.
Note: Round your answer to 2 decimal places.
ROA
%
⦁ Let’s assume the following annual information provided by your client.⦁ Student Loans $12,000⦁ Auto Insurance $1,400⦁ Utilities $1,900⦁ Gross income $88,000 ⦁ Rent $16,500 ⦁ Dry Cleaning $150⦁ Car Loan Payment $4,600⦁ Annual Savings $2,550 ⦁ Credit Cards Payment $1,000⦁ Entertainment $2,500
Calculate the following ratios to determine the client’s financial situation. Comment on the ratio results by using targeted benchmarks.
⦁ Housing Ratio 1 =? ⦁ Housing Ratio 2 =?⦁ Emergency fund =?⦁ Current ratio =?
1. The annual net income of MAC Industries since 2005 is given
below.
Years t (since 2005)
Net Income
1
4
6
12
15
$1,500 $2,500 $2,875 $2,850 $2,250
a. Create a scatter plot that includes your curve of best fit on
top of the data. You should try several functions and make
your choice based on best r-squared value.
b. Find the year that Net Income was at its highest point.
c. What was the income in that year?
Chapter 11 Solutions
Financial And Managerial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Fleeson Company needs additional funds to purchase...Ch. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 1ECh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 7ECh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 9ECh. 11 - Present value of an annuity On January 1, you win...Ch. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Appendix 2 Amortize premium by interest method...Ch. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PACh. 11 - Entries for bonds payable, including bond...Ch. 11 - Appendix 1 and Appendix 2 Bond discount, entries...Ch. 11 - Prob. 5PACh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PBCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Prob. 3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Prob. 1TIFCh. 11 - Prob. 3TIFCh. 11 - Prob. 4TIF
Knowledge Booster
Similar questions
- Consider again the example introduced in Section 7.5 of a credit card company that has a database of information provided by its customers when they apply for credit cards. An analyst has created a multiple regression model for which the dependent variable in the model is credit card charges accrued by a customer in the data set over the past year (y), and the independent variables are the customers annual household income (x1), number of members of the household (x2), and number of years of post-high school education (x3). Figure 7.23 provides Excel output for a multiple regression model estimated using a data set the company created. a. Estimate the corresponding simple linear regression with the customers annual household income as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the customers annual household income and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year is explained by this simple linear regression model? b. Estimate the corresponding simple linear regression with the number of members in the customers household as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the number of members in the customers household and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year is explained by this simple linear regression model? c. Estimate the corresponding simple linear regression with the customers number of years of posthigh school education as the independent variable and credit card charges accrued by a customer over the past year as the dependent variable. Interpret the estimated relationship between the customers number of years of posthigh school education and credit card charges accrued over the past year. How much variation in credit card charges accrued by a customer over the past year is explained by this simple linear regression model? d. Recall the multiple regression in Figure 7.23 with credit card charges accrued by a customer over the past year as the dependent variable and customers annual household income (x1), number of members of the household (x2), and number of years of post-high school education (x3) as the independent variables. Do the estimated slopes differ substantially from the corresponding slopes that were estimated using simple linear regression in parts (a), (b), and (c)? What does this tell you about multicollinearity in the multiple regression model in Figure 7.23? e. Add the coefficients of determination for the simple linear regression in parts (a), (b), and (c), and compare the result to the coefficient of determination for the multiple regression model in Figure 7.23. What does this tell you about multicollinearity in the multiple regression model in Figure 7.23? f. Add age, a dummy variable for sex, and a dummy variable for whether a customer has exceeded his or her credit limit in the past 12 months as independent variables to the multiple regression model in Figure 7.23. Code the dummy variable for sex as 1 if the customer is female and 0 if male, and code the dummy variable for whether a customer has exceeded his or her credit limit in the past 12 months as 1 if the customer has exceeded his or her credit limit in the past 12 months and 0 otherwise. Do these variables substantially improve the fit of your model?arrow_forwardUsing the following select financial statement information from Mover Supply Depot, compute the accounts receivable turnover ratios for 2018 and 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Mover Supply Depot if the industry average is 4 times?arrow_forwardThe following historical information is from Assisi Community Markets. Calculate the working capital and current ratio for each year. What observations do you make, and what actions might the owner consider taking?arrow_forward
- Calculate the Current Ratio, Debt Ratio, Return on Assets (ROA) and Return on Equity (ROE). For the ROA and ROE, you should use the average total assets and the average total equity in your calculations. (The average is the total across two years divided by two). Calculate these values for each of 2011-2014. Interpret your calculations: what does this information mean? How is the company doing?arrow_forwardQuestion: Rick's Travel Service has asked you to help piece together financial information on the firm for the most current year. Managers give you the following information: sales are $8.0 million, total debt is $3.5685 million, debt ratio is 65 percent, and ROE is 17.8 percent. Using the above information, calculate Rick's ROAarrow_forwardCompare Delta to two of its competitors, JetBlue and Southwest, by answering the following questions. You do not need to calculate all of the ratios for JetBlue and Southwest, only the ones required to answer the questions below: How much bigger is Delta from each of its competitors, by Revenue, in each year from 2018-2022? Plot the Revenue number for each company for these years on a single line graph. Which company has the highest Net Income in each year from 2018-2022? Which company has the highest Net Profit Margin in 2018? In 2022? Which company is the most profitable based on Gross Profit percentage each year from 2018-2022? (This is a trick question.) Which company is best at using its short-term assets to pay off its short-term liabilities in 2019? Which company has the best cash ratio in 2019? Is it the same company that is best at using its short-term assets to pay short-term liabilities? If not, why do you think it's different? Which company is the most leveraged in 2022?arrow_forward
- Please answer the question below and show all work. Thank you!arrow_forwardGood day dear tutor, please provide all the following requirements, i deeply appreciate it, thank you so much! For questions 114 to 117, math the ratios at the left with the definition at theright. 114. Price-earnings ratio.115. Days’ sales in receivables 116. Days’ sales in inventory 117. Times interest earned a) Ratio of pretax operating incometo annual interest expense.b) Market price of a share of stockdivided by earnings per share.c) A measure of age or adequacy ofinventory, each calculated by theratio of ending inventory balanceto average daily cost of sales forthe preceding period.d) A measure of the receivables’ agecalculated by the ratio of endingreceivable balance to averagedaily sales for the precedingperiod.arrow_forwardFind the monthly revenue 1 month and 4 months after the online store opened. Record the value in the table. Round to the nearest whole dollar.arrow_forward
- Using the following select financial statement information from Black Water Industries, compute the number of days sales in receivables ratios for 2018 and 2019 (round answers to two decimal places). What do the outcomes tell a potential investor about Black Water Industries?arrow_forwardStarborn Company has just been established as a new company to manufacture furniture. The company expects to earn $1 million after-taxes during its first year. The company president has asked for a projected balance sheet based on ratios similar to the industry average. Assuming all sales are made on credit, calculations utilize a 365-day year, and final numbers are rounded to the nearest thousand, prepare a projected balance sheet for Starborn based on the following industry ratios: Current Ratio: 2:1 Quick Ratio: 1:1 Net Profit Margin: 10% Average Collection Period: 20 days Debt Ratio: 40% Total Asset Turnover Ratio: 2 times Current Liabilities/Stockholder's Equity: 20% Create your balance sheet based on the following format: Cash Total Current Liabilities Accounts Receivable Long-term Debt Inventory Total Debt Total Current Assets Stockholder's Equity Net Fixed Assets Total Liabilities and…arrow_forwardYou are reviewing major competitors' net income over the last 5 year period, with a view to understanding and predicting trends in graphic design companies. Company 1 and company 4 are closest geographically to your graphic design company. You want to know if there is a trend over the past five years in the total net income. By dragging and dropping, please RANK the 5 years from LOWEST total net income of companies 1 and 4 combined, to HIGHEST total net income. 1 2 3 4 5 A B C 2016 2017 2018 D 2019 E 2020 ●●● ●●●arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College