Question

P 7-4 Kaufman Company's balance sheet follows. Assets Current assets Cash Short-term investments at cost (approximate market) Trade accounts receivable, less allowance of $1,590 Inventories at lower of cost (average method) or market: Finished merchandise Work in process, raw materials, and supplies $ 13,445 5,239 88,337 113.879 47,036 160,915 8,221 276,157 Prepaid expenses Total current assets Other assets: Receivables, advances, and other assets Intangibles Total other assets Property, plant, and equipment: Land Buildings Machinery and equipment 4,473 2,324 6,797 5,981 78,908 162,425 247,314 106,067 141,247 $424,201 Less allowances for depreciation Net property, plant, and equipment Total assets

Answer 1

a computation of debt ratio Debt ratio = Total debt x 100 Total assets $ 4979_X100 $424201 2 41.25% of debt - equity ratio computation - = debt x 100 Equity $174979 x 100 $249222 70.21% 2u9232 = c) Debt-tongabule net worth ratio Tangible net worth = Total tangible assets o total liabilities = $421877 - $174979 = $ 246898 Debt x 100 = $174079 x 100 Tangible networth $246898 - 7 70.87- d) Generally z il. In less debt better to debt - equity ratio should be the given case company has and more aconed funds. It is have less debt.