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Business Accounting Financial Accounting: Information for Decisions

1. To identify: The current liabilities on Mc Corporation's balance sheet as of December 31, 2014 Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. The amount of total current liabilities on Mc Corporation's balance sheet as of December 31, 2014 = $2747.9 million Current Liabilities: In terms of U.S. GAAP, liabilities are considered as current or non-current liabilities or short-term or long-term liabilities. They totally depend upon the duration of time a company gets to repay their debts. If the company is expected to repay the debt within the next 12 months, the liability is reported as a current liability and when the company is expected to repay the debt in the duration which is more than 12 months, the liability is reported as a non-current liability. The current liabilities on McCorporation's balance sheet as of December 31, 2014are as follows: Current liabilities Amount as of December 31, 2014(in $ million) Accounts payable 860.1 Income taxes 166.8 Other taxes 330.0 Accrued interest 233.7 Accrued payroll and other liabilities 1157.3 The amount of total current liabilities on Mc Corporation's balance sheet as of December 31, 2014 = $2747.9 million 2. To determine: The portion (in percent) of Mc Corporation's long-term debt which matures within the next 12 months Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. As per the 10-K report, MC Corporation’s debt that will be maturing in 2015 is approximately $1.1 billion or 7.34% of the long-term corporate debt. As per the 10-K report, MC Corporation’s debt that will be maturing in 2015 is approximately $1.1 billion of the long-term corporate debt. Total long-term debt as on December 31, 2014 = $14.9897 billion Portion (in percent) = ($1.1 billion / $14.9897 billion) × 100 = 7.34% 3. To compute: MC Corporation’s times interest earned ratio and commenting on the result while assuming an industry average of 15.0 Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. Times interest earned: It is also called by the name as coverage ration which measures the ability of a company to make or fulfill the payments towards its debt. It is computed by dividing the earnings before interest and taxes (EBIT) by net interest expenses. Formula used: Times interest earned = EBIT / net interest expenses EBIT = Net income + interest expense + income taxes Times interest earned for the year 2014: Interest expense for 2014 = $570.5 million Net income for 2014 = $4,757.8 million Income taxes for 2014 = $2,614.2 million Therefore, EBIT = Net income + interest expense + income taxes = $4,757.8 million+ $570.5 million + $2,614.2 million = $7,942.5 million Times interest earned = EBIT / net interest expenses = $7,942.5 million / $570.5 million = 13.92 MC Corporation’s times interest earned ratio is 13.92 which is slightly less than the industry average which is 15.0. Therefore, the company does not hold a strong position in paying their interest obligations on the basis of times interest earned.

1. To identify: The current liabilities on Mc Corporation's balance sheet as of December 31, 2014 Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. The amount of total current liabilities on Mc Corporation's balance sheet as of December 31, 2014 = $2747.9 million Current Liabilities: In terms of U.S. GAAP, liabilities are considered as current or non-current liabilities or short-term or long-term liabilities. They totally depend upon the duration of time a company gets to repay their debts. If the company is expected to repay the debt within the next 12 months, the liability is reported as a current liability and when the company is expected to repay the debt in the duration which is more than 12 months, the liability is reported as a non-current liability. The current liabilities on McCorporation's balance sheet as of December 31, 2014are as follows: Current liabilities Amount as of December 31, 2014(in $ million) Accounts payable 860.1 Income taxes 166.8 Other taxes 330.0 Accrued interest 233.7 Accrued payroll and other liabilities 1157.3 The amount of total current liabilities on Mc Corporation's balance sheet as of December 31, 2014 = $2747.9 million 2. To determine: The portion (in percent) of Mc Corporation's long-term debt which matures within the next 12 months Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. As per the 10-K report, MC Corporation’s debt that will be maturing in 2015 is approximately $1.1 billion or 7.34% of the long-term corporate debt. As per the 10-K report, MC Corporation’s debt that will be maturing in 2015 is approximately $1.1 billion of the long-term corporate debt. Total long-term debt as on December 31, 2014 = $14.9897 billion Portion (in percent) = ($1.1 billion / $14.9897 billion) × 100 = 7.34% 3. To compute: MC Corporation’s times interest earned ratio and commenting on the result while assuming an industry average of 15.0 Given info: Assessing the February 24, 2015, filing of the December 31, 2014, annual 10-K report of Mc Corporation, from the website SEC.gov. Times interest earned: It is also called by the name as coverage ration which measures the ability of a company to make or fulfill the payments towards its debt. It is computed by dividing the earnings before interest and taxes (EBIT) by net interest expenses. Formula used: Times interest earned = EBIT / net interest expenses EBIT = Net income + interest expense + income taxes Times interest earned for the year 2014: Interest expense for 2014 = $570.5 million Net income for 2014 = $4,757.8 million Income taxes for 2014 = $2,614.2 million Therefore, EBIT = Net income + interest expense + income taxes = $4,757.8 million+ $570.5 million + $2,614.2 million = $7,942.5 million Times interest earned = EBIT / net interest expenses = $7,942.5 million / $570.5 million = 13.92 MC Corporation’s times interest earned ratio is 13.92 which is slightly less than the industry average which is 15.0. Therefore, the company does not hold a strong position in paying their interest obligations on the basis of times interest earned.

Solution Summary: The author identifies the current liabilities on Mc Corporation's balance sheet as of December 31, 2014 based on U.S. GAAP.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

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Financial Accounting: Information for Decisions

Ch. 9 - Prob. 1DQ Ch. 9 - Prob. 2DQ Ch. 9 - Prob. 3DQ Ch. 9 - Prob. 4DQ Ch. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 7DQ Ch. 9 - Prob. 8DQ Ch. 9 - Prob. 9DQ Ch. 9 - Why are warranty liabilities usually recognized on...

Ch. 9 - Prob. 11DQ Ch. 9 - Prob. 12DQ Ch. 9 - Prob. 13DQ Ch. 9 - Prob. 14DQ Ch. 9 - Prob. 15DQ Ch. 9 - Prob. 16DQ Ch. 9 - Prob. 17DQ Ch. 9 - Prob. 1QS Ch. 9 - Prob. 2QS Ch. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QS Ch. 9 - Prob. 5QS Ch. 9 - Prob. 6QS Ch. 9 - Prob. 7QS Ch. 9 - Prob. 8QS Ch. 9 - Prob. 9QS Ch. 9 - Prob. 10QS Ch. 9 - Prob. 11QS Ch. 9 - Prob. 12QS Ch. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 1E Ch. 9 - Prob. 2E Ch. 9 - Prob. 3E Ch. 9 - Interest-bearing notes payable with year-end...Ch. 9 - Prob. 5E Ch. 9 - Prob. 6E Ch. 9 - Prob. 7E Ch. 9 - Prob. 8E Ch. 9 - Prob. 9E Ch. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11E Ch. 9 - Prob. 12E Ch. 9 - Accounting for contingent liabilities C3 Prepare...Ch. 9 - Prob. 14E Ch. 9 - Prob. 15E Ch. 9 - Prob. 16E Ch. 9 - Prob. 18E Ch. 9 - Prob. 1PSA Ch. 9 - Prob. 2PSA Ch. 9 - Prob. 3PSA Ch. 9 - Prob. 4PSA Ch. 9 - Prob. 5PSA Ch. 9 - Entries for payroll transactions P2 P3 P5...Ch. 9 - Prob. 1PSB Ch. 9 - Prob. 2PSB Ch. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSB Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSB Ch. 9 - Prob. 9SP Ch. 9 - Refer to the financial statements of Apple in...Ch. 9 - Key figures for Apple and Google follow. *Apple...Ch. 9 - Prob. 3BTN Ch. 9 - Prob. 5BTN Ch. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 7BTN Ch. 9 - Prob. 8BTN Ch. 9 - Prob. 9BTN

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