Ratios Analyzing Long-Term Firm Solvency The following information is available
ID: 2397766 • Letter: R
Question
Ratios Analyzing Long-Term Firm Solvency The following information is available for Antler Company Annual Data 2013 2012 118,000 $112,000 233,500 215000 526,500 425,000 20,000 400,000 425,000 Interest expense Income tax expense Net income Capital expendtures Cash provided by operating activides 390,000 Year-End Data Dec. 31, 2013 Dec. 31, Total liabilines 2,230,000 $1,930,000 Total stockholders' equity 000,000 3,600,000 Calculate the following: (Round to two decimal points) a. 2013 debt-to-equity ratio. b. 2013 times-interest-earned ratio. c 2013 operating-cash-flow-to-capital-expenditures ratio t sc 5 6 8 9 0 backs R TYU O PExplanation / Answer
Answer a.
Debt-to-equity Ratio = Total Liabilities / Total Stockholders’ Equity
Debt-to-equity Ratio = $2,230,000 / $4,000,000
Debt-to-equity Ratio = 0.56
Answer b.
EBIT = Net Income + Interest expense + Income tax expense
EBIT = $526,500 + $118,000 + $233,500
EBIT = $878,000
Times-Interest-earned Ratio = EBIT / Interest
Times-Interest-earned Ratio = $878,000 / $118,000
Times-Interest-earned Ratio = 7.44 times
Answer c.
Operating-cash-flow-to-capital-expenditure Ratio = Cash provided by operating activities / Capital expenditure
Operating-cash-flow-to-capital-expenditure Ratio = $425,000 / $320,000
Operating-cash-flow-to-capital-expenditure Ratio = 1.33
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.