Ask question

Ask question

All categories

3 years ago

14

A times interest earned (TIE) ratio of 3.5 times means a firm has _____ that is(are) 3.5 times greater than the firm's interest

expense.

1 answer:

joja [24]3 years ago

8 0

Answer:

EBIT

Explanation:

TIE = EBIT/ Interest expense

So, TIE = EBIT/ Interest expense = 3.5 ⇒ EBIT = 3.5 * Interest expense

You might be interested in

You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end

kkurt [141]

Answer:

44.35

Explanation:

The stock will increase the grow rate of the company. We need to solve this.

The grow rate will be determinate using the Gordon dividend grow model

$\frac{divends}{return-growth} = Intrinsic \: Value$

we clear for g

$return - \frac{divends}{stock} = grow$

to find the return we use CAPM

$Ke= r_f + \beta (r_m-r_f)$

risk free 0.032

market rate

premium market = (market rate - risk free) = 0.045

beta(non diversifiable risk) = 0.9

$Ke= 0.032 + 0.9 (0.045)$

Ke 0.07250

this will be the return we use in the formula for grow

g = 0.0725 - 1.5/40 = 0.03500

At this rate our dividends will grow and also our share price

the stock in 3 years will be the current price capitalized with the grow rate

$Stock \: (1+ grow)^{time} = Stock_{3years}$

Stock 40.00

time 3.00

rate 0.035

$40 \: (1+ 0.035)^{3} = Stock_{3years}$

Futue value in 3 years = 44.35

5 0

3 years ago

Now that you are successful in your new position, you have decided to reward yourself with a new (or new to you) vehicle. Source

Serhud [2]

Answer:

Range is : (0, 0.1x)

Explanation:

Problem has no information about amount of salary, so I will just use 'x' and 'y'.

Problem says that vehicle payment should be no more than 10% of gross monthly salary. This means that vehicle payment (Y) equals to 0.1 (10%) multiplied by gross monthly salary, which is stated as 'X'.

From this y = 0.1 X;

Next, if we want to identify range of payments: (0; 0.1X).

This means that any amount of money between 0 and 0.1X is acceptable.

5 0

3 years ago

Read 2 more answers

The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statemen

babunello [35]

Required:

Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)

Answer:

LOS GATOS CORPORATION Balance Sheet At December 31, 2018

Assets:

Current Assets:

Cash $ 25,000

Bond Sinking Fund 25,000

Accounts receivable 70,000

Allowance for

uncollectible accounts -10,000 60,000

Inventories 60,000

Total Current Assets $170,000

Non-current Assets:

Machinery 200,000

less accumulated

depreciation -75,000 125,000

Franchise (net) 35,000

Notes Receivable 25,000

Total Non-current assets $185,000

Total assets $355,000

Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable $ 60,000

Note payable 55,000

Interest on Notes Payable 10,000 $125,000

Bonds payable 115,000

Shareholders’ equity:

Authorized 200,000 share

Issued at no par 75,000

Retained Earnings 40,000 115,000

Total liabilities & shareholders’ equity $355,000

Explanation:

a) Adjustments:

1. Cash Balance:

As per question $50,000

Bonds Sinking Fund 25,000

Balance $25,000

2. Accounts Receivable:

As per question $95,000

Notes Receivable 25,000

Balance $70,000

3. Notes Payable:

As per question $65,000

Accrued interest 10,000

Balance $55,000

4. Retained Earnings = $40,000

5. The corrected and reclassified balance sheet shows the total current assets, liabilities, and the Retained Earnings.

8 0

3 years ago

At the beginning of the current period, Bramble Corp. had balances in Accounts Receivable of $196,800 and in Allowance for Doubt

olasank [31]

Answer and Explanation:

The journal entries are shown below:

a. Account receivable Dr $864,300

To Sales revenue $864,300

(Being the sales revenue is recorded)

Cash Dr $687,610

To Account receivable $687,610

(Being the collections is recorded)

2. Allowance for doubtful debts $6,804

To Account receivable $6,804

(Being the written off amount is recorded)

3. Account receivable Dr $3,219

To Allowance for doubtful debts $3,219

(Being the previous written off amount is recorded)

Cash Dr $3,219

To Account receivable $3,219

(Being the recovery is recorded)

4. Bad debt expense $18,075

To Allowance for doubtful debts $18,075

(Being the bad debt expense is recorded)

The computation is shown below:

= $24,000 - $9,510 + $6,804 - $3,219

= $18,075

Only these entries are recorded

3 0

3 years ago

When regulators engage in microprudential regulation, they focus on

Kay [80]

Answer:

A.

Explanation:

Microprudential regulations refers to making sure that the balance sheets or "books" of individual institutions are robust to shocks. Meaning that the regulators that usually engage in this are focusing on the safety and soundness of each customer of a financial institution, by making sure the institutions do not close and the customers lose their money.

3 0

3 years ago