File Edit iew History Bookmarks Tools Window Help Homework,12 Help Save&Exit; Su

Question

File Edit iew History Bookmarks Tools Window Help Homework,12 Help Save&Exit; Submit Exercise 15-4 Financial Ratios for Debt Management [L015-4) Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 3t appear below The company did not issue any new common stock during the year. A total of 600,000 shares of common stock were outstanding. The interest rate on the bond payable was the income tax rate was 40%, and the dvidend per share of common stock was SO 7Sst year and $0.40 this yea The market value of the company's common stock at the end of this year was $29. All of the company's sales are on account. Comparative Ba1a ance sheet (dollars in this Year Last Year S,2001,290 .500 Ld expenses 25,94521790 Daiidings and equiment net Total property and eqaipeent Total asset Liabililees 18,900 18,90 Toral eurrent 15abilities 5 9

Explanation / Answer

Answer 1.

Times Interest Earned Ratio = Net Operating Income / Interest Expense
Times Interest Earned Ratio = $9,300 / $970
Times Interest Earned Ratio = 9.59 times

Answer 2.

Debt-to-Equity Ratio = Total Liabilities / Total Stockholders’ Equity
Debt-to-Equity Ratio = $29,520 / $46,676
Debt-to-Equity Ratio = 0.63

Answer 3.

Equity Multiplies = Total Assets / Total Stockholders’ Equity
Equity Multiplies = $76,196 / $46,676
Equity Multiplies = 1.63

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.