Question

Markus Company's common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this year's financial statements: Ending Beginning Balance Balance Cash $ 35,000 $ 30,000 Accounts receivable $ 60,000 $ 50,000 Inventory $ 55,000 $ 60,000 Current assets $ 150,000 $ 140,000 Total assets $ 450,000 $ 460,000 Current liabilities $ 60,000 $ 40,000 Total liabilities $ 130,000 $ 120,000 Common stock, $1 par value $ 120,000 $ 120,000 Total stockholders' equity $ 320,000 $340,000 Total liabilities and stockholders' equity $ 450,000 $ 460,000 Sales (all on account) Cost of goods sold Gross margin Net operating income Interest expense Net income This Year $ 700,000 $ 400,000 $ 300,000 $ 140,000 $ 8,000 $ 92,400

Answer 1

Answer

13.) Times interest earned ratio = earnings before interest expense and income taxes / interest expenses

= $ 140000/ $ 8000 = 17.5

14.) Debt equity ratio = Total liabilities /stakeholders equity

= $ 130000/ $ 320000 = 0.41

15.) Equity multiplier = Average total assets /average stockholders equity

Average total assets =($ 450000+ $ 460000) /2 = $ 455000

average stockholders equity =( $ 320000+ $ 340000)/2= $ 330000

Equity multiplier = $ 455000/$ 330000 = 1.38