Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Exercise - Financial Ratios for Debt Management
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 800,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of the year was $18. All of the company's sales are on account.
Weller Corporation Comparative Balance Sheet (dollars in thousands)
This Year
Last Year
Assets
Current assets:
Cash
$1,280
$1,560
Accounts receivable, net
12,300
9,100
Inventory
9,700
8,200
Prepaid expenses
1,800
2,100
Total current assets
25,080
20,960
Property and equipment:
Land
6,000
Buildings and equipment, net
19,200
19,000
Total property and equipment
25,200
25,000
Total assets
$50,280
$45,960
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$9,500
$8,300
Accrued liabilities
600
700
Notes payable, short term
300
Total current liabilities
10,400
9,300
Long-term liabilities:
Bonds payable
5,000
Total liabilities
15,400
14,300
Stockholders' equity:
Common stock
800
Additional paid-in capital
4,200
Total paid-in capital
Retained earnings
29,880
26,660
Total stockholders' equity
34,880
31,660
Total liabilities and stockholders' equity
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
Sales
$79,000
$74,000
Cost of goods sold
52,000
48,000
Gross margin
27,000
26,000
Selling and administrative expenses:
Selling expenses
8,500
8,000
Administrative expenses
12,000
11,000
Total selling and administrative expenses
20,500
Net operating income
6,500
7,000
Interest expense
Net income before taxes
5,900
6,400
Income taxes
2,360
2,560
Net income
3,540
3,840
Dividends to common stockholders
320
Net income added to retained earnings
3,220
3,240
Beginning retained earnings
23,420
Ending retained earnings
$29,880
$26,660
Required: Compute the following financial ratios for this year:
1. Times interest earned ratio. (Round your answer to 1 decimal place. )
2. Debt-to-equity ratio. (Round your answer to 2 decimal places.)
3. Equity multiplier. (Round your answer to 2 decimal places.)
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd