Calculate current cash debt coverage ratio, Financial Management

Calculate Current cash debt coverage ratio:

Financial statements for Delta Company are presented below:


Delta Company

Balance Sheet

December 31, 2012

                        Assets                                                             Liabilities & Stockholders' Equity

Cash                                                        $ 40,000            Accounts payable                   $ 20,000

Accounts receivable (trade)                      35,000            Bonds payable                            50,000

Buildings and equipment                           150,000           Common stock                           65,000

Accumulated depreciation-                                            Retained earnings                         60,000

     buildings and equipment                       (50,000)                                                          $195,000

Patents                                                       20,000           




Delta Company

Statement of Cash Flows

For the Year Ended December 31, 2012

Cash flows from operating activities

         Net income                                                                                                                $60,000

         Adjustments to reconcile net income to net cash

              provided by operating activities:

                     Increase in accounts receivable (trade)                            $(16,000)

                     Increase in accounts payable                                                 8,000

                     Depreciation-buildings and equipment                               15,000

                     Gain on sale of equipment                                                     (6,000)

                     Amortization of patents                                                           2,000                  3,000

Net cash provided by operating activities                                                                             63,000

Cash flows from investing activities

         Sale of equipment                                                                             12,000

         Purchase of land                                                                              (25,000)

         Purchase of buildings and equipment                                            (48,000)

Net cash used by investing activities                                                                                   (61,000)

Cash flows from financing activities

         Payment of cash dividend                                                               (15,000)

         Sale of bonds                                                                                    30,000

Net cash provided by financing activities                                                                             15,000

Net increase in cash                                                                                                             17,000

Cash, January 1, 2012                                                                                                         23,000

Cash, December 31, 2012                                                                                                 $40,000


Additional Information:  Selected accounted balances on Jan 1, 2012 were as follows: 

         Bonds Payable on Jan 1, 2012                                                       $20,000

         Total Assets on Jan 1, 2012                                                           112,000

         Number of common shares outstanding all year                             30,000

         Net Sales for 2012                                                                        $150,000


Calculate the following for Delta Company and show your work. (You may need to compute some of the numbers you need before you could calculate some of the ratios below).

a.   Current cash debt coverage ratio

b.   Cash debt coverage ratio

c.   Free cash flow

d.   Current ratio

e.   Profit margin on sales  

f.    Payout Ratio

g.   Debt to total assets

h.   Rate of return on assets

i.    Earnings per share

j.    Asset turnover

k.   Receivables turnover

Posted Date: 2/14/2013 5:53:07 AM | Location : United States

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