269. Babbitt Corporation has provided the following data from its most recent income
statement:
Net operating income $94,000
Interest expense $62,000
Net income before taxes $32,000
Income taxes $10,000
Net income $22,000
Required:
Compute the times interest earned ratio. Show your work!
13-322
270. Gambino Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $139,000 $190,000
Accounts receivable 206,000 180,000
Inventory 103,000 100,000
Prepaid expenses 95,000 90,000
Total current assets 543,000 560,000
Plant and equipment, net 999,000 970,000
Total assets $1,542,000 $1,530,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $109,000 $120,000
Accrued liabilities 44,000 50,000
Notes payable, short term 65,000 60,000
Total current liabilities 218,000 230,000
Bonds payable 220,000 220,000
Total liabilities 438,000 450,000
Stockholders’ equity:
Common stock, $5 par value 350,000 350,000
Additional paid-in capital—common stock 60,000 60,000
Retained earnings 694,000 670,000
Total stockholders’ equity 1,104,000 1,080,000
Total liabilities & stockholders’ equity $1,542,000 $1,530,0000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,370,000
Cost of goods sold 860,000
Gross margin 510,000
Operating expenses 445,308
Net operating income 64,692
Interest expense 17,000
Net income before taxes 47,692
Income taxes (35%) 16,692
Net income $31,000
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
13-324
271. Sidell Corporation’s most recent balance sheet and income statement appear below:
Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets Year 2 Year 1
Current assets:
Cash $180 $100
Accounts receivable 220 200
Inventory 180 200
Prepaid expenses 20 20
Total current assets 600 520
Plant and equipment, net 660 720
Total assets $1,260 $1,240
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $130 $130
Accrued liabilities 20 20
Notes payable, short term 100 90
Total current liabilities 250 240
Bonds payable 180 200
Total liabilities 430 440
Stockholders’ equity:
Common stock, $1 par value 200 200
Additional paid-in capital—common stock 300 300
Retained earnings 330 300
Total stockholders’ equity 830 800
Total liabilities & stockholders’ equity $1,260 $1,240
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
Sales (all on account) $1,230
Cost of goods sold 780
Gross margin 450
Selling and administrative expense 235
Net operating income 215
Interest expense 29
Net income before taxes 186
Income taxes (30%) 56
Net income $130
Required:
Compute the following for Year 2:
a. Times interest earned.
b. Debt-to-equity ratio.
13-326
272. Lindboe Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $190,000 $190,000
Accounts receivable 225,000 210,000
Inventory 172,000 190,000
Prepaid expenses 83,000 70,000
Total current assets 670,000 660,000
Plant and equipment, net 877,000 870,000
Total assets $1,547,000 $1,530,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $176,000 $180,000
Accrued liabilities 25,000 30,000
Notes payable, short term 36,000 40,000
Total current liabilities 237,000 250,000
Bonds payable 160,000 160,000
Total liabilities 397,000 410,000
Stockholders’ equity:
Common stock, $2 par value 160,000 160,000
Additional paid-in capital—common stock 100,000 100,000
Retained earnings 890,000 860,000
Total stockholders’ equity 1,150,000 1,120,000
Total liabilities & stockholders’ equity $1,547,000 $1,530,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,220,000
Cost of goods sold 700,000
Gross margin 520,000
Operating expenses 458,286
13-327
Net operating income 61,714
Interest expense 12,000
Net income before taxes 49,714
Income taxes (30%) 14,914
Net income $34,800
Dividends on common stock during Year 2 totaled $4,800. The market price of common stock at
the end of Year 2 was $5.46 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
13-329
273. Schepp Corporation has provided the following financial data:
Year 2 Year 1
Total assets $1,320,000 $1,290,000
Total liabilities $468,000 $450,000
Total stockholders’ equity $852,000 $840,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,440,000
Cost of goods sold 880,000
Gross margin 560,000
Operating expenses 527,857
Net operating income 32,143
Interest expense 10,000
Net income before taxes 22,143
Income taxes (30%) 6,643
Net income $15,500
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
13-331
274. Brill Corporation has provided the following financial data:
Year 2 Year 1
Total assets $1,360,000 $1,320,000
Total liabilities $601,000 $570,000
Common stock, $2 par value $140,000 $140,000
Total common stockholders’ equity $759,000 $750,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,300,000
Cost of goods sold 900,000
Gross margin 400,000
Operating expenses 364,143
Net operating income 35,857
Interest expense 20,000
Net income before taxes 15,857
Income taxes (30%) 4,757
Net income $11,100
13-332
Dividends on common stock during Year 2 totaled $2,100. The market price of common stock at
the end of Year 2 was $2.32 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?
13-335
275. Jaquez Corporation has provided the following financial data:
Year 2 Year 1
Total assets $1,466,000 $1,460,000
Total liabilities $573,000 $590,000
Stockholders’ equity:
Common stock, $3 par value $300,000 $300,000
Additional paid-in capital—common stock 60,000 60,000
Retained earnings 533,000 510,000
Total stockholders’ equity $893,000 $870,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,450,000
Cost of goods sold 850,000
Gross margin 600,000
Operating expenses 530,231
Net operating income 69,769
Interest expense 19,000
Net income before taxes 50,769
Income taxes (35%) 17,769
Net income $33,000
13-336
Dividends on common stock during Year 2 totaled $10,000. The market price of common stock at
the end of Year 2 was $5.45 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?
13-339
276. Medina Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $271,000 $190,000
Accounts receivable 215,000 190,000
Inventory 117,000 100,000
Prepaid expenses 25,000 30,000
Total current assets 628,000 510,000
Plant and equipment, net 726,000 800,000
Total assets $1,354,000 $1,310,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $198,000 $170,000
Accrued liabilities 58,000 60,000
Notes payable, short term 102,000 90,000
Total current liabilities 358,000 320,000
Bonds payable 140,000 140,000
Total liabilities 498,000 460,000
Stockholders’ equity:
Common stock, $5 par value 500,000 500,000
Additional paid-in capital—common stock 80,000 80,000
Retained earnings 276,000 270,000
Total stockholders’ equity 856,000 850,000
Total liabilities & stockholders’ equity $1,354,000 $1,310,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account) $1,280,000
Cost of goods sold 840,000
Gross margin 440,000
Operating expenses 413,692
Net operating income 26,308
Interest expense 14,000
Net income before taxes 12,308
Income taxes (35%) 4,308
Net income $8,000
13-340
Dividends on common stock during Year 2 totaled $2,000. The market price of common stock at
the end of Year 2 was $1.49 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt–to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?