Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

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Answer 1

Question

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Answer 6

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

Answer 7

Chapter 9, Problem 51BP

1.

To determine

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

Answer 8

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

Answer 9

2.

To determine

Calculate the percentage of Incorporation A’s assets belong to stockholders.

Answer 10

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Answer 11

3.

To determine

Specify whether it would be willing to extend credit to Incorporation A.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 9.A - Calculate employee payroll (Learning Objective 8)...Ch. 9.A - Calculate net pay (Learning Objective 8) 5-10 min....Ch. 9.A - Employer payroll costs (Learning Objective 8) 5-10...Ch. 9.A - Prob. 4AE Ch. 9.A - Prob. 5AE Ch. 9.A - Prob. 6AE Ch. 9.A - Prob. 7BE Ch. 9.A - Prob. 8BE Ch. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9.A - Calculating gross and net pay (Learning Objective...

Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

Solution Summary: The author calculates Incorporation A's debt ratio as of December 31, 2018 and its interest coverage ratio for 2018.

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Compute Incorporation A’s debt ratio as of December 31, 2018 and also calculate Incorporation A’s interest coverage ratio for 2018.

Calculate the percentage of Incorporation A’s assets belong to stockholders.

Specify whether it would be willing to extend credit to Incorporation A.

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Chapter 9 Solutions