Lundberg Corporation\'s most recent balance sheet and income statement appear be
ID: 2500939 • Letter: L
Question
Lundberg Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $30 thousand. The market price of common stock at the end of Year 2 was $9.37 per share.
Compute the inventory turnover for Year 2. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Compute the average sale period for Year 2. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 1 decimal place.)
Compute the times interest earned for Year 2. (Round your answer to 2 decimal places.)
Compute the debt-to-equity ratio for Year 2. (Round your answer to 2 decimal places.)
Lundberg Corporation's most recent balance sheet and income statement appear below:
Explanation / Answer
(n) Inventory turnover for Year 2 = cost of goods sold during the year / average inventory
= $851 / (120+110) /2 = 7.4 times
(o) Average sale period for Year 2 = Sales (Revenue) / Number of days in Year 2
=$1340 / 365 = 3.67 days
(p) Times interest earned for Year 2 = Earning before interest, tax and depreciation / Interest incidence for the year
= (171 + 32) / 32 = 6.34 times
(q) Debt-to-equity ratio for Year 2 = External Equities / Internal Equities
= Bonds Payable / Total Equity capital with preferred and retained earnings
= 195 / 834 = 0.24 (<1) good
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