Question

Brief Exercise 9-21 Calculate ratios (LO9-8) Surf's Up, a manufacturer of surfing supplies and training equipment, has the following selected data ($ in millions): Surf's Up Selected balance sheet data 2021 Total assets $ 739 Total liabilities 622 Total stockholders' equity 117 2020 $ 730 524 206 Surf's Up Selected income statement data 2021 Sales revenue $807 Interest expense Tax expense 39 Net income Based on these amounts, calculate the following ratios for 2021: (Do not round intermediate calculations. Round all final answers to 1 decimal place. Enter your answers in millions (.e. 5,500,000 should be entered as 5.5).) Debt to Equity Ratio Return on Assets Ratio Times Interest Earned Ratio

Answer 1

1. Debt to equitu = total liabilities / average total stockholders equity

= 622 /(117+206)/2

= 4.9

2. Return on assets = net income / average total assets

= 60/(117+206)/2

= 37.2%

3. Time interest earned ratio = income before interest and taxes /interestexpense

= (60+38+16)/16

= 7.1