Exercise 9-89 Ratio Analysis Rising Stars Academy provided the following information on its 2019 balance sheet...
Exercise 9-89
Ratio Analysis
Rising Stars Academy provided the following information on its 2019 balance sheet and statement of cash flows:
| Long-term debt | $ 4,400 | Interest expense | $ 398 | |
| Total liabilities | 8,972 | Net income | 559 | |
| Total assets | 38,775 | Interest payments | 432 | |
| Total equity | 29,803 | Cash flows from operations | 1,015 | |
| Operating income | 1,223 | Income tax expenses | 266 | |
| Income taxes paid | 150 |
Required:
Calculate the following ratios for Rising Stars. Round your answers to three decimal places.
a. Debt to equity
b. Debt to total assets
c. Long-term debt to equity
d. Times interest earned (accrual basis)
e. Times interest earned (cash basis)
Homework Answers
| a) | Debt to Equity | = | Total Debt / Total Equity | ||||
| = | $ 8972 / $ 29803 | ||||||
| = | 0.301 | ||||||
| b) | Debt to Total Assets | = | Total Debt / Total Assets | ||||
| = | $ 8972 / $ 38775 | ||||||
| = | 0.231 | ||||||
| c) | Long term debt to Equity | = | Long term debt / Total Equity | ||||
| = | $ 4400 / $ 29803 | ||||||
| = | 0.148 | ||||||
| d) | Times interest earned (accrual basis) | = | Earnings before interest and taxes / Interest expense | ||||||
| = | ($ 559 + $ 398 + $ 266) / $ 395 | ||||||||
| = | 3.073 | ||||||||
| e) | Times interest earned (cash basis) | = | Earnings before interest paid and taxes paid / Interest paid | ||||||
| = | ($ 559 + $ 432 + $ 150) / $ 432 | ||||||||
| = | 2.641 | ||||||||
Please let me know if you find anything incorrect. Thank you
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Exercise 9-89
Ratio Analysis
Rising Stars Academy provided the following information on its
2019 balance sheet...
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