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Assoli18 [71]
3 years ago
9

The following information was available for the year ended December 31, 2019: Earnings before interest and taxes (operating inco

me) $ 75,000 Interest expense 15,000 Income tax expense 20,000 Net income 40,000 Total assets at year-end 250,000 Total liabilities at year-end 140,000 Required: Calculate the debt ratio at December 31, 2019. (Round your answer to 1 decimal place.) Calculate the debt/equity ratio at December 31, 2019. (Round your answer to 2 decimal places.) Calculate the times interest earned for the year ended December 31, 2019. (Round your answer to 2 decimal places.)
Business
1 answer:
Charra [1.4K]3 years ago
6 0

Answer:

Debt ratio = 56%

Times Interest earned = 5 times

Explanation:

<em>The debt ratio is the proportion of the total assets amount that is financed by debt . It is a measure of financial risk. A company with a high debt ratio (in excess of 50%) is considered financially risky. That is may not be able to meet its short term financial obligations</em>

Debt ratio = Debt/Total assets × 100

              = (140,000/250,000)× 100

              = 56%

Times interest earned is the number of times the earning before interest and taxes (EBIT) can pay the interest obligation. It is a measure of financial risk. For example, a company with a ratio of less than 3 times might be considered as potentially unable to meets its loan obligation

Times interest earned = Earnings before interest and tax (EBIT)/Interest expense

= 75,000/15,000

= 5 times.

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Merchandise inventory is Select one: a. None of the above b. Reported under the classification of Property, Plant and Equipment
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Answer:

d. Reported as a current asset on the balance sheet

Explanation:

Merchant inventory refers to st finished goods available for sale at any given time. Merchant inventory is commonly referred to as inventory. It is recorded as a current asset in the balance sheet.

Merchant inventory is acquired through purchasing by retailers, wholesalers, and distributors to be sold to customers. Merchant inventory will specifically refer to the unsold goods at the end of a period. It is recorded at its acquisition cost. i.e., the cost which the trader paid to obtain the merchandise.

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3 years ago
What is the price​ level? The price level is​ ______. A. the average level of prices paid by urban consumers for all goods exclu
8_murik_8 [283]

Answer:

Price Level is B. The average level of prices

Explanation:

Price level is the average of current prices across the entire spectrum of goods and services produced in the economy.

Price level refers to the price or cost of a good, service, or security in the economy.

Reference: Kenton, Will. “Reading Into Price Levels.” Investopedia, Investopedia, 27 Sept. 2019

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2 years ago
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you are driving lyou are driving on a two-lane highway behind a large vehicle that you want to pass to ensure you can see ahead
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Answer: You should wait until the road is straight and completely clear of cars, obstructions, animals, etc before passing.

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Explanation:

7 0
2 years ago
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this y
kakasveta [241]

Answer:

Results are below.

Explanation:

<u>Absorption vs Variable costing method</u>

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).

<u>1) First, we need to calculate the total unitary variable cost:</u>

Unitary production variable cost= 35 + 55 + 40= $130

Selling and administrative costs for the year Variable $ 725,000

Unitary total variable cost= 130 + (725,000 / 80,000)= $139.06

<u>Now, the variable income statement:</u>

Sales= 80,000*350= 28,000,000

Total variable cost= (80,000*139.06)=(11,124,800)

Total contribution margin= 16,875,200

Fixed overhead= (6,600,000)

Fixed Selling and administrative costs = (4,250,000)

Net operating income= 6,025,200

<u>2) First, we need to calculate the unitary production cost:</u>

Unitary production cost= 130 + (6,600,000/110,000)= $190

<u>Now, the absorption costing income statement:</u>

<u />

Sales= 28,000,000

COGS= 80,000*190= (15,200,000)

Gross profit= 12,800,000

Total Selling and administrative costs= (725,000 + 4,250,000)= (4,975,000)

Net operating income= 7,825,000

5 0
3 years ago
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