***Please explain how you came up with your answer. Table 4-1 Garland Company Ba
ID: 2673975 • Letter: #
Question
***Please explain how you came up with your answer.Table 4-1
Garland Company Balance Sheet
Assets:
Cash and marketable securities $500,000
Accounts receivable 800,000
Inventories 1,350,000
Prepaid expenses 50,000
Total current assets $2,700,000
Fixed assets 5,000,000
Less: accum. depr. (2,000,000)
Net fi xed assets $3,000,000
Total assets $5,700,000
Liabilities:
Accounts payable $400,000
Notes payable 900,000
Accrued taxes 75,000
Total current liabilities $1,375,000
Long-term debt 1,200,000
Owner’s equity 3,125,000
Total liabilities and owner’s equity $5,700,000
Net sales (all credit) $8,000,000
Less: Cost of goods sold (3,500,000)
Selling and administrative expense (2,000,000)
Depreciation expense (250,000)
Interest expense (150,000)
Earnings before taxes 2,100,000
Income taxes (700,000)
Net income $1,400,000
Common stock dividends $500,000
Common Shares Outstanding 1,000,000
34) Based on the information in Table 4-1, the debt ratio is:
a. 21.1%
b. 48.8%
c. 45.2%
d. 22.6%
35) Based on the information in Table 4-1, the operating profi t margin is:
a. 32.4%
b. 28.1%
c. 17.5%
d. 44.8%
Table 4-3
Lesli Corporation
Balance Sheet Income Statement
Assets:
Cash $150,000 Sales (all credit) $6,000,000
Accounts receivable 350,000 Cost of goods sold (3,000,000)
Inventory 600,000 Operating expenses (900,000)
Net fi xed assets 1,900,000 Interest expense (750,000)
Total assets 3,000,000 Income taxes (500,000)
Net income 850,000
Liabilities and owners’ equity:
Accounts payable $150,000
Notes payable 250,000
Long-term debt 1,200,000
Owners’ Equity 1,400,000
Total L. + O.E. 3,000,000
36) Based on the information in Table 4-3, assuming that the fi rm has no preferred
stock, and paid $250,000 in common dividends, the fi rm’s return on
equity was:
a. 61%
b. 32%
c. 43%
d. 79%
55) The yield to maturity on a bond is the rate of return that equates the present
value of the bond’s future cash fl ows with the bond’s
a. book value.
b. liquidation value.
c. face value.
d. market value.
Explanation / Answer
34. c. 45.2% debt ratio = total debt/ total assets 35. b. 28.1% Profit margin = profit/ assets 36. c. 43% 55. c. face value. default concept please rate appreciated
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