The balance sheet for Shaver Corporation reported the following: cash, $9,500; s

Question

The balance sheet for Shaver Corporation reported the following: cash, $9,500; short-term investments, $14,500; net accounts receivable, $44,000; inventory, $49,000; prepaids, $14,500; equipment, $109,000; current liabilities, $49,000; notes payable (long-term), $79,000; total stockholders' equity, $180,000; net income, $4,220; interest expense, $6,200; income before income taxes, $7,980 1. Compute Shaver's debt-to-assets ratio and times interest earned ratio. (Round your answers to 2 decimal places.) Ratio 128,000.00 Debt-to-Assets Times Interest Earned

Explanation / Answer

Debt to assets = Total debt/Total assets

                        = 128000/240500

Debt to assets = 0.53:1

Time interest earned = Earning before interest and tax/Interest expense

                                  = (7980+6200)/6200

Time interest earned = 2.29 Times

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