Exercise 10-16 CALCULATOR MESSAGE MY INSTRUCTOR Suppose McDonald\'s 2017 financi

Question

Exercise 10-16 CALCULATOR MESSAGE MY INSTRUCTOR Suppose McDonald's 2017 financial statements contain the following selected data (in millions). Current assets Total assets Current liabilities Total liabilities s3,35o.0 Interest expense$450. 29,000.0 Income taxes 2,950.0 Net income 14,500.0 1,800.0 4,300.0 Your answer is correct. Compute the following values. 1. Working capital. 2. Current ratio. (Round to 2 decimal places, e.g. 6.25:1.) 3. Debt to assets ratio. (Round to 0 decimal places, e.g. 6296. 4. Times interest earned. (Round to 2 400 millions 1.13 :1 9% 14.55 times e. 5.25) Times interest earned. (Round to 2 decimal plac SHOW SOLUTION 8

Explanation / Answer

Total asset :29000 + 8000=   37000

Total liabilities = 14500+8000=22500

debt to asset ratio = 22500/37000

            = .6081 [rounded to 61%]

By including these off balance sheet item ,total debt to asset ration increases from 50% to 61%

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