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3 years ago

Using the income statement for Times Mirror and Glass Co., compute the following ratios:

Business

1 answer:

jarptica [38.1K]3 years ago

4 0

Answer:

a. 9.15 times

b. 4.61 times

c. 31.52%

d. 1.08 times

e. 20.88 %

Explanation:

Note : I have attached the full question as image below.

Interest Coverage = Earnings Before Interest and tax ÷ Interest expense

= $85,100 ÷ $9,300

= 9.15 times

Fixed Charge Coverage = EBIT + Lease Payments ÷ Interest Payments + Lease Payments

= $85,100 + $11,700 ÷ $9,300 + $11,700

= 4.61 times

Profit margin = Operating Profit / Sales x 100

= $85,100 / $270,000 x 100

= 31.52%

Total asset turnover = Sales ÷ Total Assets

= $270,000 ÷ $249,000

= 1.08 times

Return on assets (investment) = Earning Before Interest after Tax / Total Assets x 100

= ($45,480 + $9,300 x 70%) / $249,000 x 100

= 20.88 %

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