Question

Consider the following information:


Gil's Fish and Tackle, Inc. Balance Sheet At December 31, 2016
Assets
Cash $ 22,200
Accounts Receivable (less allowance) 169,100
Inventories 68,300
Property, Plant and Equipment 102,800
Long-term Investments 30,000
Total Assets $392,400
Liabilities
Accounts Payable $ 49,200
Current Portion of Long-Term Debt 68,800
Long-Term Notes Payable _100,000
Total Liabilities _218,000
Stockholders' Equity
Contributed Capital 100,000
Retained Earnings _ 74,400
Total Stockholders Equity _174,400
Total Liabilities and Stockholders Equity $392,400

Gil's Fish and Tackle, Inc. Income Statement For the year ending December 31, 2016
Sales Revenue $2,765,000
Operating Expenses
Salaries and Wages Expense 1,850,500
Operating and Admin. Expenses 286,700
Depreciation Expense 335,400
Operating Expenses 2,472,600
Operating Income 292,400
Other Expenses
Interest Expense _ _ 17,000
Income Before Income Tax Expense 275,400
Income Tax Expense 103,800
Net Income $ 171,600

Required:

Part a. Calculate the debt-to-assets ratio.

Part b. Describe what the debt-to-assets ratio tells you and how to interpret it.

Part c. Calculate the times interest earned.

Part d. Comment on the results of your times interest earned analysis.

Answer

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