Question

Selected financial data for Bahama Bay and Caribbean Key are as follows: ($ in millions) 2.5 points Total assets Total liabil1-b. Which company has the higher ratio? 4 Bahama Bay Caribbean Key 2.5 points 2-a. Calculate the return on assets for Bahama2-b. Which company appears more profitable? Bahama Bay Caribbean Key 2.5 points 3-a. Calculate the times interest earned rati

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Answer #1
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Answer 1-a 1) Calculation of Debt Equity ratio = Total Laibilities/stockholders equity
Debt equity ratio = 8032 /1571= 5.11
Caribbean key = 7473/1330 = 5.61
debt equity ratio of Bahama = 5.11
Debt equity ratio of caribben = 5.61
Answer 1-b 1-b) Caribbean key has Higher ratio
Answer2-a 2-a) Return On assets = Net Income/average total assets
Bahama = 319/9562.5 = 0.0334 times
Average total assets = Assets at beginng+assets at the end/2
Average total assets = 9522+9603/2
average total assets = 9562.5
Caribbean key = 352 /8822.5 = 0.0399 Times
average total assets = 8842+8803/2
average total assets = 8822.5
Answer-2-b 2-b) Company caribbean key has more return on assets
company caribbean key is more profitable
Answer 3-a 3-a) Time earned Ratio = Net income+interest expenses+tax exp/interest expenses
Time earned ratio (bahama) = 319+195+71/195
Time earned ratio (bahama) = 3
Time earned ratio (caribbean key) = 352+153+345/153
Time earned ratio (caribbean key ) = 5.56
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