Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 14, Problem 13E
Ratio of liabilities to stockholders’ equity and times interest earned
The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years:
The income before income tax expense was $480,000 and $420,000 for the current and previous years, respectively.
- A. Determine the ratio of liabilities to stockholders’ equity at the end of each year. Round to one decimal place.
- B. Determine the times interest earned ratio for both years. Round to one decimal place.
- C. What conclusions can be drawn from these data as to the company’s ability to meet its currently maturing debts?
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Ratio of liabilities to stockholders equity intrest earned
The following data were taken from the financial statements of Hunters Inc.for December 31 of two recent years:
The income before income tax was $480,000 and $420,000 for the current and previous years,respectively.
a. Determine the ratio of liabilities to stockholders equity at the end of each year.Round to one decimal place.
b. Determine the times interest earned ratio for both years.Round to one decimal place.
c. What conclusion can be drawn from these data as the company's ability to meet its currently maturing debts?
Selected income statement data follow for Harper, Inc., for the year ended December 31 (in thousands). What is the company's times interest earned ratio?
Operating income before interest
Interest expense
Operating income after interest
Income tax
Income after tax
35.6
30.6
11.2
24.4
6,617
189
6.428
1,607
4,821
Prepare a comparative common-size income statement for Jubilee Corporation. To an investor, how does the current year compare with the prior year? Explain your reasoning.
E (Click the icon to view the comparative income statement.)
Data table
Start by calculating the percentages. (Round the percentages to two decimal places, X.XX.)
Jubilee Corporation
Comparative Common-Size Income Statement
A
C
For the Years Ended December 31
1
Jubilee Corporation
Current
2
Income Statement
year
Prior year
3
For the Years Ended December 31
Sales revenues
100.00 %
100.00 %
4
(amounts in thousands)
Less: Cost of goods sold
%
%
Current
Gross profit
%
%
year
Prior year
Less: Operating expenses
%
6 Sales revenues
$
494,208 $
429,000
%
Operating income
%
7 Less: Cost of goods sold
172,640
160,000
Less: Interest expense
8 Gross profit
2$
321,568 $
269,000
0%
Income before income taxes
%
%
9 Less: Operating expenses
143,370
135,000
Less: Income tax expense
10 Operating income
2$
178,198 $
134,000
%
%
11 Less:…
Chapter 14 Solutions
Financial And Managerial Accounting
Ch. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - How would the current and quick ratios of a...Ch. 14 - Prob. 5DQCh. 14 - What do the following data, taken from a...Ch. 14 - A. How does the return on total assets differ from...Ch. 14 - The Kroger Company (KR), a grocery store chain,...Ch. 14 - The dividend yield of Suburban Propane Partners,...Ch. 14 - Prob. 10DQ
Ch. 14 - Prob. 1BECh. 14 - Income statement information for Einsworth...Ch. 14 - Prob. 3BECh. 14 - A company reports the following: Determine (a) the...Ch. 14 - Prob. 5BECh. 14 - Prob. 6BECh. 14 - A company reports the following: Determine the...Ch. 14 - A company reports the following: Determine the...Ch. 14 - Prob. 9BECh. 14 - A company reports the following: Determine (a) the...Ch. 14 - Prob. 11BECh. 14 - Vertical analysis of income statement Revenue and...Ch. 14 - The following comparative income statement (in...Ch. 14 - Common-sized income statement Revenue and expense...Ch. 14 - Prob. 4ECh. 14 - Prob. 5ECh. 14 - The following data were taken from the balance...Ch. 14 - PepsiCo, Inc. (PEP), the parent company of...Ch. 14 - Current position analysis The bond indenture for...Ch. 14 - Accounts receivable analysis The following data...Ch. 14 - Prob. 10ECh. 14 - Inventory analysis The following data were...Ch. 14 - Inventory analysis QT, Inc. and Elppa Computers,...Ch. 14 - Ratio of liabilities to stockholders equity and...Ch. 14 - Hasbro, Inc. (HAS), and Mattel, Inc. (MAT), are...Ch. 14 - Recent balance sheet information for two companies...Ch. 14 - Prob. 16ECh. 14 - The following selected data were taken from the...Ch. 14 - Ralph Lauren Corporation (RL) sells apparel...Ch. 14 - Six measures of solvency or profitability Obj. 4,...Ch. 14 - Five measures of solvency or profitability The...Ch. 14 - Prob. 21ECh. 14 - The table that follows shows the stock price,...Ch. 14 - Earnings per share, discontinued operations The...Ch. 14 - Income statement and earnings per share for...Ch. 14 - Unusual items Explain whether Colston Company...Ch. 14 - Comprehensive income Anson Industries, Inc.,...Ch. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Effect of transactions on current position...Ch. 14 - Measures of liquidity, solvency, and profitability...Ch. 14 - Solvency and profitability trend analysis Addai...Ch. 14 - Horizontal analysis of income statement For 20Y2,...Ch. 14 - Prob. 2PBCh. 14 - Effect of transactions on current position...Ch. 14 - Prob. 4PBCh. 14 - Solvency and profitability trend analysis Crosby...Ch. 14 - Prob. 1MADCh. 14 - Prob. 2MADCh. 14 - Deere Company (DE) manufactures and distributes...Ch. 14 - Marriott International, Inc. (MAR), and Hyatt...Ch. 14 - Prob. 1TIFCh. 14 - Real-world annual report The financial statements...Ch. 14 - Prob. 3TIF
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- Ratio of liabilities to stockholders equity and times interest earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: The income before income tax expense was 480,000 and 420,000 for the current and previous years, respectively. A. Determine the ratio of liabilities to stockholders equity at the end of each year. Round to one decimal place. B. Determine the times interest earned ratio for both years. Round to one decimal place. C. What conclusions can be drawn from these data as to the companys ability to meet its currently maturing debts?arrow_forwardJuroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.arrow_forwardSundahl Companys income statements for the past 2 years are as follows: Refer to the information for Sundahl Company above. Required: Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.)arrow_forward
- Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.arrow_forwardThe following data (in millions) are taken from the financial statements of Target Corporation: a. For Target Corporation, determine the amount of change in millions and the percent of change (round to one decimal place) from the prior year to the recent year for: 1. Revenue 2. Operating expenses 3. Operating income b. What conclusions can you draw from your analysis of the revenue and the total operating expenses?arrow_forwardCuneo Companys income statements for the last 3 years are as follows: Refer to the information for Cuneo Company above. Required: 1. Prepare a common-size income statement for Year 2 by expressing each line item for Year 2 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.) 2. Prepare a common-size income statement for Year 3 by expressing each line item for Year 3 as a percentage of that same line item from Year 1. (Note: Round percentages to the nearest tenth of a percent.)arrow_forward
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