Question

Bargain Deal, Inc., is a leading retailer specializing in consumer electronics A condensed income statement and balance sheet for 1 fiscal year ended January 28, 2017. are shown below Bargain Deal, Inc. Balance Sheet At January 28, 2017 5 in milions) Assets Current assets: Cash and cash equivalents Short tern investments Accounts receivable (not) Inventory Other current assets Total current assets Long term assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Dther current liabilities Total current liabilities Long-tern liabilities Shareholders' equity Total 1 abilities and h olders cousty $11, 451 2,252 Bargain Deal, Inc. Income Statement For the Year Ended January 28, 2017 ($ in millions) $39,618 Costs and expenses 38,171 Operating income Incone before income taxes < Prey 2 or 3 !!! Next >

can some one help me with 1-d It keep saying it wrong

Answer 1

Solution 1 – d :

The formula for calculating the times interest earned ratio is

= Income before Interest and income taxes / Interest Expense

Calculation of other income excluding interest expense :

As per the information given in the question

Interest expense = $ 242 ;

Other Income including Interest expense = $ (83)

Thus other income excluding interest expense = Other Income including Interest expense + Interest expense

= $ (83) + $ 242

= $ 159

Thus other income excluding interest expense = $ 159

Calculation of Income before Interest expense and Income taxes:

Income before Interest expense and Income taxes = Operating Income + other income excluding interest expense

= $ 1,447 + $ 159

= $ 1,606

Thus the Income before Interest expense and Income taxes = $ 1,606

Calculation of times interest earned ratio:

The formula for calculating the times interest earned ratio is

= Income before Interest expense and income taxes / Interest Expense

Applying the available information in the times interest earned ratio formula we have

= $ 1,606 / $ 242

= 6.636364

= 6.64 times ( rounded off to two decimal places )

Thus the times interest earned ratio = 6.64 times

Thus the times interest earned ratio for Bargain Deal for its fiscal year ended January 28, 2017 is = 1.06

Solution 1 – a :

Calculation of Current ratio :

The formula for calculating the Current ratio is

= Total Current Assets / Total Current Liabilities

As per the information available we have

Total Current Assets = $ 10,228   ;     Total Current Liabilities = $ 9,625

Applying the above information in the formula for Current ratio we have

= $ 10,228 / $ 9,625

= 1.062649

= 1.06 ( when rounded off to two decimal places )

Thus the Current Ratio for Bargain Deal for its fiscal year ended January 28, 2017 is = 1.06

Solution 1 – b :

Calculation of Acid Test Ratio :

The formula for calculating the Acid Test Ratio is

= [ Cash & Cash equivalents + Short term Investments + Accounts Receivable ( Net ) ] / Total current liabilities

As per the information available in the question we have

Cash & Cash equivalents = $ 2,156 ; Short term Investments = $ 1,323 ;

Accounts Receivable ( Net ) = $ 1,252 ; Total current liabilities = $ 9,625

Applying the above information in the formula for Acid Test Ratio we have

= [ $ 2,156 + $ 1,323 + $ 1,252 ] / $ 9,625

= $ 4,731 / $ 9,625

= 0.491532

= 0.49 ( when rounded off to two decimal places )

Thus the Acid Test Ratio for Bargain Deal for its fiscal year ended January 28, 2017 is = 0.49

Solution 1 – c:

The formula for calculating the Debt Equity Ratio is

= Total Debt / Total Equity

As per the information given in the question we have

Total debt = Total Current Liabilities + Long term liabilities

= $ 9,625 + $ 2,252

= $ 11,877

Total Equity = Shareholder’s equity = $ 2,074

Applying the above information in the formula for debt equity ratio we have

= $ 11,877 / $ 2,074

= 5.726615

= 5.73 ( when rounded off to two decimal places )

Thus the Debt Equity Ratio for Bargain Deal for its fiscal year ended January 28, 2017 is = 5.73