Exercise 10-16 (Part Level Submission) Suppose McDonald\'s 2017 financial statem

Question

Exercise 10-16 (Part Level Submission) Suppose McDonald's 2017 financial statements contain the following selected data (in millions) Current assets Total assets Current liabilities Total liabilities $3,425.0 Interest expense 29,0 $470.0 1,879.0 4,508.0 75.0 Income taxes 2,979.0 Net income 16,718.0 (a1) ompute 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, eg, 62%.) 4. Times interest earned. (Round to 2 decimal places, e.g.6.25.) Collapse question part millions times

Explanation / Answer

1. Working capital = current assets-current liabilities

= 3425-2979

Working capital = 446 Millions

2. Current ratio = current assets/current liabilities

= 3425/2979

Current ratio = 1.15 :1

3. Debt to assets ratio = Total Liabilities/Total Assets

= 16718/29075

Debt to assets ratio = 57%

4. Time interest earned = Earning before interest and tax/Interest expenses

= (4508+1879+470)/470

Time interest earned = 14.59 Times

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