Homework Answers
a. Debt equity ratio represents proportion of a Company's debt over its equity. The ratio is used to measure and evaluate a Company's financial leverage. It is always better to have a lower debt over equity to ensure the risk of interest payment to lenders in case of business closure. Compared to the Industry average of 0.70, the debt to equity of Gray Night Company is unfavorable at 0.75 with a slightly higher debt over its equity. A lower debt to equity ratio usually implies a more financially stable business, with no risk of higher interest payment.
Time interest earned ratio indicates the number of times of EBIT (Earnings Before Interest & Taxes) over interest payable on debts/ debentures/ bonds/ loans. The Times interest earned ratio is a measure of a company's ability to meet its debt obligations based on its current income (EBIT). Higher the ratio is better for the Company. Hence the ratio of 1.4 is slightly better/ favorable as compared to the industry standards.
b. Debt equity ratio represents proportion of a Company's debt over its equity. The ratio is used to measure and evaluate a Company's financial leverage. It is always better to have a lower debt over equity to ensure the risk of interest payment to lenders in case of business closure.
c. Time interest earned ratio indicates the number of times of EBIT (Earnings Before Interest & Taxes) over interest payable on debts/ debentures/ bonds/ loans. The Times interest earned ratio is a measure of a company's ability to meet its debt obligations based on its current income (EBIT).
d. To improve Time interest earned: The Company should try to improve its margins (EBIT) to generate more profits to ensure sufficient funds to repay its interest obligations. At the same time, it should also try to repay certain high interest carrying loans/ debts to reduce the interest obligations.
To improve Debt Equity Ratio: The Company should try to reduce the debt obligations with prepayment or closure of debts to improvise on the ratio,
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Question 3. Debt Utilization Ratio Below are the ratios of Gray Night Company in 2018 2018...
2. Calculating Financial Ratios [LO2] Find the following financial ratios for Smolira Golf Corp. for 2018...
2. Calculating Financial Ratios [LO2] Find the following financial ratios for Smolira Golf Corp. for 2018 (year-end figures reflect average values where appropriate): Assets Current assets Cash Accounts receivable Inventory Total SMOLIRA GOLF CORP. 2018 Balance Sheets Liabilities and Owners' Equity 2018 2018 Current liabilities $ 37,837 Accounts payable $ 42,582 27,766 Notes payable 16,200 42.632 Other 24 634 108,235 Total 83,416 145,000 Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Equity Total liabilities and owners'...
1.What do the ratios calculated below communicate about the financial strengths and weaknesses of this company?...
1.What do the ratios calculated below communicate about the
financial strengths and weaknesses of this company?
2.Based on your calculations, would you invest in this Company,
why or why not
Hlstorical Ratios Projected Ratlo 12/31/17 0.96 0.60 1.20 12/31/18 1.01 0.69 1.19 3.81 16 8.50 3.70 1.10 12/31/19 1.06 0.75 1.21 3.94 17 9.90 3.60 1.34 15 Current Ratio Quick Ratio Debt-to-Total-Assets Ratio Current Ratio Quick Ratic Total Debt-to-Total-Assets Ratio Total Debt-to-Equity Ratio Times-Interest-Earned Ratio Inventory Turnover Fixed Assets Turnover...
can someone please tell me Market Debt Ratio is in Question #2. Thanks. B E С...
can someone please tell me Market Debt Ratio is in
Question #2. Thanks.
B E С b. Calculate Times Interest Earned Ratio EBIT/ Interest 7.249368302 Leverage Ratios 2 Market Debt Ratio a. Find Market Value of Equity from "Market Cap" in Yahoo Finance 2018 4,446,000 b. Calculate Total Debt + Market Value of Equity Add: Total Debt Market Value of Equity Total: Total Debt + Market Value of Equity 754,611 4,446,000 5,200,611 c. Calculate Market Debt Ratio Profitability Ratios 3...
Urban Outfitters (URBN) Ratios Industry Average Ratio Three Year Company Ratio Results 2018 2017 2016 Year(s)...
Urban Outfitters (URBN) Ratios Industry Average Ratio Three Year Company Ratio Results 2018 2017 2016 Year(s) Year Year Year 1. Working Capital $ 550,714.00 $ 618,543.00 $ 528,469.00 $ 505,130.00 2. Current Ratio 2.58091217 2.717154247 2.497384736 2.528197527 3. Acid Test 1.923964277 3.378452809 1.172230597 1.221209424 4. Fixed Assets to Long-term Liabilities 2.936774112 2.79009679 3.667347068 2.352878479 5. Debt to Equity Ratio 2.006723868 0.498760705 0.448983462 5.072427438 6. Return on Equity 15% 8% 19% 18% 1. Discuss what each ratio reveals about the company?...
Gap, Inc Ratios Industry Average Ratio Three Year Company Ratio Results 2018 2017 2016 Year(s) Year...
Gap, Inc Ratios Industry Average Ratio Three Year Company Ratio Results 2018 2017 2016 Year(s) Year Year Year 1. Working Capital $ 1,806,333.33 $ 2,107,000.00 $ 1,862,000.00 $ 1,450,000.00 2. Current Ratio 1.72907289 1.856156034 1.759070526 1.57199211 3. Acid Test 0.784732954 0.839089801 0.863432532 0.651676529 4. Fixed Assets to Long-term Liabilities 1.176228714 1.17659396 1.161118509 1.190973673 5. Debt to Equity Ratio 1.699299909 1.541030534 1.620523416 1.936345776 6. Return on Equity 0.287131047 0.28042328 0.248118921 0.332850941 Discuss what each ratio reveals about the company? Discuss how...
Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of 210 times...
Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of 210 times at the end of 2018. If the firm's total assets at year-end are $49.5 million, how much of their assets is financed with equity? Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2018: net income = $680,000, total debt = $13.8 million, debt ratio = 43%. What...
please help me find ratio analysis for chipotle and mcdonalds for fiscal years 2018 and 2017,...
please help me find ratio analysis for chipotle and mcdonalds for fiscal years 2018 and 2017, Liquidity: current ratio and quick ratio, Asset Management : total asset turnover, what is the average collection period,Debt Management: total debt to total assets, and times interest earned, :Profitablity net profit margin, returned on assets, returned on equity, modified du pont equation, Market Value Ratios: PE ratio, Market to book ratio.
What is the debt ratio in the below problem? 4.0 Liquidity, acid test and debt ratios...
What is the debt ratio in the below problem? 4.0 Liquidity, acid test and debt ratios The person in charge of the finances of the company MGT, S.A. wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: General liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25....
Calculate the Following Ratios Net Interest Margin Profit Margin ROE ROA Spread Ratio Asset Utilization Ratio...
Calculate the Following Ratios
Net
Interest Margin
Profit
Margin
ROE
ROA
Spread
Ratio
Asset
Utilization Ratio
Equity
Multiplier
Provision for loan loss ratio
Boca State Bank Income Statement Month Ending July 31, 2020 Boca State Bank Balance Sheet July 31, 2020 Income Amount($) $9,000 $4,000 Interest on fees and loans Interest on investment securities interest on reverse repos interest on deposits in other banks Total Income Assets Cash and due from banks Investment securities Reverse Repos Loans Fixed asset other...
Debt (orLeverage) management ratios
3. Debt (or leverage) management ratiosCompanies have the opportunity to use varying amounts of different sources of financing, including internal and external sources, to acquire their assets, debt (borrowed) funds, and equity funds.Company A uses long-term debt to finance its assets, and company B uses capital generated from shareholders to finance its assets. Which company would be considered a financially leveraged firm?Company ACompany BWhich of the following is true about the leveraging effect?Under economic growth conditions, firms with relatively more leverage...
2. Calculating Financial Ratios [LO2] Find the following financial ratios for Smolira Golf Corp. for 2018 (year-end figures reflect average values where appropriate): Assets Current assets Cash Accounts receivable Inventory Total SMOLIRA GOLF CORP. 2018 Balance Sheets Liabilities and Owners' Equity 2018 2018 Current liabilities $ 37,837 Accounts payable $ 42,582 27,766 Notes payable 16,200 42.632 Other 24 634 108,235 Total 83,416 145,000 Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Total Equity Total liabilities and owners'...
1.What do the ratios calculated below communicate about the
financial strengths and weaknesses of this company?
2.Based on your calculations, would you invest in this Company,
why or why not
Hlstorical Ratios Projected Ratlo 12/31/17 0.96 0.60 1.20 12/31/18 1.01 0.69 1.19 3.81 16 8.50 3.70 1.10 12/31/19 1.06 0.75 1.21 3.94 17 9.90 3.60 1.34 15 Current Ratio Quick Ratio Debt-to-Total-Assets Ratio Current Ratio Quick Ratic Total Debt-to-Total-Assets Ratio Total Debt-to-Equity Ratio Times-Interest-Earned Ratio Inventory Turnover Fixed Assets Turnover...
can someone please tell me Market Debt Ratio is in
Question #2. Thanks.
B E С b. Calculate Times Interest Earned Ratio EBIT/ Interest 7.249368302 Leverage Ratios 2 Market Debt Ratio a. Find Market Value of Equity from "Market Cap" in Yahoo Finance 2018 4,446,000 b. Calculate Total Debt + Market Value of Equity Add: Total Debt Market Value of Equity Total: Total Debt + Market Value of Equity 754,611 4,446,000 5,200,611 c. Calculate Market Debt Ratio Profitability Ratios 3...
Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of 210 times at the end of 2018. If the firm's total assets at year-end are $49.5 million, how much of their assets is financed with equity? Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2018: net income = $680,000, total debt = $13.8 million, debt ratio = 43%. What...
Calculate the Following Ratios
Net
Interest Margin
Profit
Margin
ROE
ROA
Spread
Ratio
Asset
Utilization Ratio
Equity
Multiplier
Provision for loan loss ratio
Boca State Bank Income Statement Month Ending July 31, 2020 Boca State Bank Balance Sheet July 31, 2020 Income Amount($) $9,000 $4,000 Interest on fees and loans Interest on investment securities interest on reverse repos interest on deposits in other banks Total Income Assets Cash and due from banks Investment securities Reverse Repos Loans Fixed asset other...
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