Question

can you help me with 1d and proper explanation of 2b

CARP: CH14 Long-Term Debt (Part III of the Corporate Annual Report Project) NOTE: ALL DOCUMENTATION TO SUPPORT YOUR ANSWERS MUST COME FROM THE FINANCIAL STATEMENTS AND/OR THE NOTES TO THE FINANCIAL STATEMENTS. 1. Locate the financial statement that reveals to the reader the debt balances at fiscal year end February 2, 2019. a. On what page of the annual report does that statement appear? F-7 b. What dollar amount does Macy's specifically report (i.e. label) as long-term debt on that statement (for fiscal year end February 2, 2019)? $4,708 c. What total dollar amount does Macy's report as long-term debt for the fiscal year ending February 2, 2019? (Hint: This number will differ from your answer to question "1b". Remember that liabilities have only two possible classifications: short-term or long-term - anything that appears after total current liabilities and before stockholders' equity has to be long-term debt. $7,526 d. What percent of Macy's total assets are financed with debt and what percent of Macy's total assets are financed with equity? Show your calculations on your documentation page. (Hint: Assets are either financed with debt or they are financed with equity, so the sum of the Two percentages you calculated to answer this question must equal 100%) 2. Locate the note entitled "Financing" a. On what pages of the annual report does that note appear? F-22-F-24 b. What is the total dollar amount of the bonds component of long-term debt? (Hint: Review bond terminology covered at the top of page 3 of the CH14 lecture notes.) c. What dollar amount of interest expense did Macy's recognize for the fiscal year ending! February 2, 2019 (which is fiscal year-end 2018)? $261 d. What dollar amount of the long-term debt will mature in fiscal year 2021? $553 million

Answer 1

1(d)
The percent of total assets financed by debt can be computed by finding the Debt-Asset ratio (DAR).
DAR = (Total Liabilities / Total Assets)
Total Liabilities = Total Current Liabilities + Long term debt + Deferred income taxes + Other liabilities = 5232 + 4708 + 1238 + 1580 = 12,758
Total Assets = 19,194
Therefore, DAR = 12758 / 19194 = 0.6647 or 66.47%

The percent of total assets financed by Equity can be computed as = 1 - DAR
Therefore, 1 - 0.6647 = 0.3353 or 33.53%
Or by computing Equity Ratio (ER)
ER = (Shareholders equity / Total Assets)
Shareholders equity = 6,436
Total Assets = 19,194
Therefore ER = 6436 / 19194 = 0.3353 or 33.53%

2(b) The bond component of Long term debt includes only the 'notes' component and not the debenture or other components.
Debentures differ from bonds. However, due to their long term nature, they are together classified under long term debt. Debentures are normally not secured against any assets of the company. Bonds are normally secured. A note is a type of loan that is backed by the asset of the issuer. Therefore, it falls under classification of bond.

Therefore, the total value is:

2.875% Senior notes due 2023	750
3.875% Senior notes due 2022	550
4.5% Senior notes due 2024	367
3.45% Senior notes due 2021	500
3.625% Senior notes due 2024	500
4.375% Senior notes due 2023	400
4.3% Senior notes due 2043	250
6.375% Senior notes due 2037	192
Total	3509