Sunland Medical manufactures hospital beds and other institutional furniture. Th

Question

Sunland Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2015 and 2016 follow Sunland Medical Comparative Balance Sheet As of December 31 2016 2015 Assets Current assets Cash Accounts receivable, net Inventory Other current assets $417,400 776,450 681,050 247,050 2,121,950 8,439,995 $11,253,265 $10,561,945 $431,000 1,063,000 725,000 310,000 2,529,000 8,724,265 Total current assets Property, plant, & equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt $3,164,000 3,705,000 6,869,000 53,000 140,000 4,191,265 4,384,265 $11,253,265 $2,846, 100 3,892,700 6,738,800 58,900 103,850 3,660,395 3,823,145 $10,561,945 Total liabilities Preferred stock, $5 par value Common stock, $0.25 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

Debt ratio = Debt/Total assets = 6869000/11253265= 61.04% Debt-to-equity ratio = Total debt/Total equity = 6869000/4384265= 1.57 Times interest earned =Income before interest and tax/Interest expense = (993720+304600+425880)/304600= 5.66

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