Homework Answers
1. Total assets = Cash + Short term investment + Net accounts receivable + Inventory + Prepaids + Equipment
= 16,000+21,000+57,000+62,000+21,000
= $177,000
Debit = Current liabilities + Note payable
= 62,000+92,000
= $154,000
Debt to assets = Debt/ Assets
= 154,000/177,000
= 0.87 times
Time interest earned = ( Net income before income tax + Interest expense)/ Interest expense
= ( 11,880+8,800)/8,800
= 2.35 times
2.a Shaver relies mainly on equity to finance its assets.
b. No it is not probable that shaver will be able to meet its future interest obligations.
Kindly comment if you need further assistance. Thanks‼!
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The balance sheet for Shaver Corporation reported the...
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