Homework Answers
Part 1
The long term lenders/creditors would judge the soundness of a firm on the basis of the long term financial strength measured in terms of its ability to pay the interest regularly as well as repay the instalment of the principal on due dates or in one lump sum at the time of maturity. The long term solvency of a firm can be examined by using leverage or capital structure ratios.
5. Leverage Ratio means financial leverage ratio - It is defined as the ability of a firm to use fixed financial charges to magnify the effects of changes in EBIT on the Earning per share.
Financial Leverage = EBIT / (EBIT - Interest)
Best Deal Corporation -
EBIT/Operating income = 1470(Given)
Interest = 90(Given)
Financial leverage ratio = 1470/(1470-90)
= 1470/1380
= 1.06
Just for You stores Inc.
EBIT/Operating income = 27147(Given)
Interest = 2060(Given)
Financial leverage ratio = 27147/(27147-2060)
= 27147/25087
= 1.08
6. Calculation of Total Debt -
Total Debt can be calculated in the given question as Total Assets minus Total common stockholder's equity
Best Deal Corporation -
Total Assets = 16810
common stockholder's equity = 3068
Total Debt = 16810 - 3068
= 13742
Just for You stores Inc.
Total Assets = 203120
common stockholder's equity = 72100
Total Debt = 203120 - 72100
= 131020
7. Debt Ratio - Two ratios we can calculate in debt ratio -
Debt equity Ratio = Total Debt / Shareholders equity
Best Deal Corporation -
Debt Equity Ratio = 13742(calculated in 6 part)/3068(given)
= 4.47
Just for You stores Inc.
Debt Equity Ratio = 131020(calculated in 6 part)/72100(given)
= 1.82
Debt to Total Capital Ratio
Debt to Total Assets/Capital Ratio =Total Debt / Total Assets
Best Deal Corporation -
Debt to Total Assets/Capital Ratio = 13742(Calculated in part 6)/16810(Given)
= 0.82
Just for You stores Inc.
Debt to Total Assets/Capital Ratio = 131020(Calculated in part 6)/203120(Given)
= 0.65
8. Times Interest Earned - It measures the firm's ability to make contractual interest payments.
Interest coverage/Times interest Earned = EBIT/Interest
Best Deal Corporation -
Times Interest Earned = 1470/90
= 16.33
Just for You stores Inc.
Times Interest Earned = 27147/2060
= 13.79
Part 2
As per the ratios calculated above best deal corporation's long term debt paying ability is strong however just for stores inc. long term debt paying ability is medium/or lesser compare to best deal.
Please check with your answer and let me know.
Add Answer to:
Examine the following selected financial information for Best Deal Corporation and JustFor You Stores, Inc., as...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and fi he company's income statement and balance sheet as well as the industry average data for retailers. Click the icon to view the income statement 囲(Click the icon to view the balance sheet. Read the requirements. Ambrose Department Stores, Inc Common-Size Income Statement Year Ended December 31, 2018 Ambrose Industry Average 100.01% 100.0 % 65.8 34.2 % 19.7 14.5 % 0.4...
Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented...
Selected financial data of Target Corporation and Wal-Mart Stores, Inc. for a recent year are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $61,471 $374,526 Cost of goods sold 41,895 286,515 Selling and administrative expenses 16,200 70,847 Interest expense 647 1,798 Other income (expense) 1,896 4,273 Income tax expense 1,776 6,908 Net income $ 2,849 $ 12,731 Balance Sheet Data (End of Year) Current assets $18,906 $ 47,585 Noncurrent assets 25,654 115,929...
Exercise 3-17 Calculating ratios; Bargain Deal [LO3-8 Bargain Deal, Inc., is a leading retailer specializing in...
Exercise 3-17 Calculating ratios; Bargain Deal [LO3-8 Bargain Deal, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 30, 2016, are shown below Bargain Deal, Inc. Balance Sheet At January 30, 2016 (s in millions) Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Merchandise inventories Other current assets $ 2,036 1,311 1,192 5,057 404 10,000 3,663 $13,663 Total current assets Long-term assets Total...
Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement...
Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for a recent year NORDSTORM, INC. Balance Sheet (partial) Beginning-of- Year (in millions) End-of-Year Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Other current assets Total current assets Total current liabilities $ 1,034 2,646 1,167 114 309 $5,270 $2,618 $94 2,525 1,170 121 273 $4,183 $2,081 For the year, net sales were $10,735 and cost of goods sold was $6,926 (in...
S10-14 (similar to) Assigned Media Question Help The financial statements of Mountainview Employment Services, Inc., reported...
S10-14 (similar to) Assigned Media Question Help The financial statements of Mountainview Employment Services, Inc., reported the following accounts: (Click the icon to view the list of accounts.) 3 (Click the icon to view the statement of stockholders' equity.) Read the requirements. Calculate the following for Mountainview Employment Services: A Data Table a. Net income Mountainview's net income is 352,000 58,000 Total revenues ..........$ Accounts payable ....... Paid-in capital in excess of par .........$ Notes Payable (short-term) .............. Common stock,...
Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines...
Suppose you have been presented with selected information taken
from the financial statements of Southwest Airlines
Co., shown below.
SOUTHWEST AIRLINES CO.
Balance Sheet (partial)
December 31
(in millions)
2022
2021
Total current assets
$2,795
$4,450
Noncurrent assets
10,450
12,360
Total assets
$13,245
$16,810
Current liabilities
$2,795
$4,895
Long-term liabilities
6,495
4,990
Total liabilities
9,290
9,885
Shareholders’ equity
3,955
6,925
Total liabilities and shareholders’
equity
$13,245
$16,810
Other information:
2022
2021
Net income (loss)
$ 175
$ 565
Income tax...
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for...
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2020 are presented below. End of Year Beginning of Year Cash and cash equivalents $ 1,441 $ 137 Accounts receivable (net) 3,900 3,700 Inventory 1,700 1,700 Other current assets 619 576 Total current assets $7,660 $6,113 Total current liabilities $3,830 $3,042 For the year, net credit sales were $15,580 million, cost of goods sold was $10,200 million, and net cash provided by operating activities...
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions of...
Nordstrom, Inc. operates department stores in
numerous states. Suppose selected financial statement data (in
millions of dollars) for a recent year follow.
Cash and cash equivalents Receivables (net) Merchandise inventory Other current assets Total current assets Total current liabilities End of Year $ 65 2,050 990 315 $3,420 $1,520 Beginning of Year $ 395 1,760 1,355 285 $3,795 $1,650 Compute working capital and the current ratio at the beginning of the year and at the end of the year. (Round...
Companies that operate in different industries may have very different financial ratio values. These differences may...
Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries. Review the following financial statements. (Click the icon to view the financial statements.) Read the requirement. Begin by computing the ratios. Start by selecting the formula for the current ratio. Then calculate the current ratios for Aktar, Mickel, and Rabold. (Enter amounts in millions or billions as provided to you in the problem...
Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions of...
Nordstrom, Inc. operates department stores in
numerous states. Suppose selected financial statement data (in
millions of dollars) for a recent year follow.
End of Year
Beginning of Year
Cash and cash equivalents
$ 80
$ 390
Receivables (net)
1,960
1,950
Merchandise inventory
625
886
Other current assets
375
300
Total current assets
$3,040
$3,526
Total current liabilities
$1,520
$1,720
Compute working capital and the current ratio at the beginning
of the year and at the end of the year. (Round current
ratio...
he Ambrose Department Stores, Inc. chief executive officer (CEO) has asked you to compare the company's profit performance and fi he company's income statement and balance sheet as well as the industry average data for retailers. Click the icon to view the income statement 囲(Click the icon to view the balance sheet. Read the requirements. Ambrose Department Stores, Inc Common-Size Income Statement Year Ended December 31, 2018 Ambrose Industry Average 100.01% 100.0 % 65.8 34.2 % 19.7 14.5 % 0.4...
Exercise 3-17 Calculating ratios; Bargain Deal [LO3-8 Bargain Deal, Inc., is a leading retailer specializing in consumer electronics. A condensed income statement and balance sheet for the fiscal year ended January 30, 2016, are shown below Bargain Deal, Inc. Balance Sheet At January 30, 2016 (s in millions) Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Merchandise inventories Other current assets $ 2,036 1,311 1,192 5,057 404 10,000 3,663 $13,663 Total current assets Long-term assets Total...
Suppose Nordstrom, Inc., which operates department stores in numerous states, has the following selected financial statement data for a recent year NORDSTORM, INC. Balance Sheet (partial) Beginning-of- Year (in millions) End-of-Year Cash and cash equivalents Accounts receivable (net) Inventory Prepaid expenses Other current assets Total current assets Total current liabilities $ 1,034 2,646 1,167 114 309 $5,270 $2,618 $94 2,525 1,170 121 273 $4,183 $2,081 For the year, net sales were $10,735 and cost of goods sold was $6,926 (in...
S10-14 (similar to) Assigned Media Question Help The financial statements of Mountainview Employment Services, Inc., reported the following accounts: (Click the icon to view the list of accounts.) 3 (Click the icon to view the statement of stockholders' equity.) Read the requirements. Calculate the following for Mountainview Employment Services: A Data Table a. Net income Mountainview's net income is 352,000 58,000 Total revenues ..........$ Accounts payable ....... Paid-in capital in excess of par .........$ Notes Payable (short-term) .............. Common stock,...
Suppose you have been presented with selected information taken
from the financial statements of Southwest Airlines
Co., shown below.
SOUTHWEST AIRLINES CO.
Balance Sheet (partial)
December 31
(in millions)
2022
2021
Total current assets
$2,795
$4,450
Noncurrent assets
10,450
12,360
Total assets
$13,245
$16,810
Current liabilities
$2,795
$4,895
Long-term liabilities
6,495
4,990
Total liabilities
9,290
9,885
Shareholders’ equity
3,955
6,925
Total liabilities and shareholders’
equity
$13,245
$16,810
Other information:
2022
2021
Net income (loss)
$ 175
$ 565
Income tax...
Nordstrom, Inc. operates department stores in
numerous states. Suppose selected financial statement data (in
millions of dollars) for a recent year follow.
Cash and cash equivalents Receivables (net) Merchandise inventory Other current assets Total current assets Total current liabilities End of Year $ 65 2,050 990 315 $3,420 $1,520 Beginning of Year $ 395 1,760 1,355 285 $3,795 $1,650 Compute working capital and the current ratio at the beginning of the year and at the end of the year. (Round...
Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries. Review the following financial statements. (Click the icon to view the financial statements.) Read the requirement. Begin by computing the ratios. Start by selecting the formula for the current ratio. Then calculate the current ratios for Aktar, Mickel, and Rabold. (Enter amounts in millions or billions as provided to you in the problem...
Nordstrom, Inc. operates department stores in
numerous states. Suppose selected financial statement data (in
millions of dollars) for a recent year follow.
End of Year
Beginning of Year
Cash and cash equivalents
$ 80
$ 390
Receivables (net)
1,960
1,950
Merchandise inventory
625
886
Other current assets
375
300
Total current assets
$3,040
$3,526
Total current liabilities
$1,520
$1,720
Compute working capital and the current ratio at the beginning
of the year and at the end of the year. (Round current
ratio...
Most questions answered within 3 hours.
-
Computer Programming II CS141(Java)
Mention the appropriate relationship between following
classes:
HOD–StaffMember
Car–Ferrari
Student-Address
BankAccount–FixedAccount
House-Building...
asked 6 minutes ago -
Assume one of your finals has 50 questions on it, and
lucky for you, it's all...
asked 1 hour ago -
Rice Products in Bangladesh
Business behavior is derived in large part from the basic cultural
environment...
asked 2 hours ago -
The following base sequence is found for a mRNA fragment from
wild-type E. coli: 5'- UAUCAGUAGAUAAUGUAACC-3'...
asked 3 hours ago -
For this exercise, round all regression parameters to three
decimal places.
One of the two tables...
asked 3 hours ago -
What is the 5% level of significance for mean = 3.60, standard
deviation = 0.94, and...
asked 3 hours ago -
Prior to beginning work on this discussion, please read the
article by Hayley Peterson, 15 Companies...
asked 4 hours ago -
Which pair of aqueous solutions, when mixed, will form a
precipitate?
A) NaNO3 and AgC2H3O2
B)...
asked 4 hours ago -
1-Write an algorithm to get two numbers from the user (as
inputs) and calculate the sum...
asked 7 hours ago -
Define white-collar crime. What is the difference between
offender and offense-based definitions of white-collar crime? What...
asked 8 hours ago -
Consider a reaction which is 1st order with respect to A and 1st
order with respect...
asked 8 hours ago -
c++
The length of the hypotenuse of a right-angled triangle is the
square root of the...
asked 8 hours ago