Use the below information to answer the following question. Income Statement For

Question

Use the below information to answer the following question. Income Statement For the Year Net sales $827,500 COGS 611,800 Depreciation 23,100 EBIT $192,600 Interest 9,700 Taxable income $182,900 Taxes 6,200 Net income $176,700 Balance Sheet Beginning of Year End of Year Cash $ 38,200 $43,700 Accounts receivable 91,400 86,150 Inventory 203,900 214,600 Net fixed assets 516,100 537,950 Total assets $849,600 $882,400 Accounts payable $136,100 $104,300 Long-term debt 329,500 298,200 Common stock ($1 par value) 75,000 82,000 Retained earnings 309,000 397,900 Total Liab. & Equity $849,600 $882,400 What is debt-equity ratio at year-end? 1.21 1.06 .84 .27 .62

Explanation / Answer

Debt - Equity ratio = Long - term debt / Equity

= 298200 / (82,000 + 397,900 ) = 0.62

Only Year end values to be taken. ( not the average of beginning and ending )

Long term debt = 298200 ( given )

Equity = Capital + Retained Earnings = 82000 + 397900 = 479900

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