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aksik [14]
3 years ago
15

A new firm is developing its business plan. It will require $565,000 of assets, and it projects $452,800 of sales and $354,300 o

f operating costs for the first year. Management is quite sure of these numbers because of contracts with its customers and suppliers. It can borrow at a rate of 7.5%, but the bank requires it to have a TIE of at least 4.0, and if the TIE falls below this level the bank will call in the loan and the firm will go bankrupt. What is the maximum debt-to-assets ratio the firm can use
Business
1 answer:
lbvjy [14]3 years ago
6 0

Answer:

58.11%

Explanation:

Sales = $452,800

Operating costs= 354,300

Operating Income (EBIT) = $98,500

TIE= 4.00

Maximum interest expense= EBIT/TIE= $24,625

Interest rate= 7.50%

Max. debt =Max interest/Interest rate = $328,333

Maximum debt ratio=Debt/ Assets= 58.11%

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On January 1, 2020, Cheyenne Company purchased 40% of Santos Corporation 465,000 outstanding shares of common stock at a total c
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Solution :

The following journal entry will be prepared to record the transactions

Date          General Journal                                 Debt($)                  Credit($)

Jan 1    Investment in Cheyenne Co.               2,418,000

             (465,000 x 40% x $13)

           Cash                                                                                         2,418,000

Oct. 25  Cash (465,000 x 40% x $0.4)             74,400    

             Investment in Cheyenne Co.                                                 74,400

Dec 31   Investment in Cheyenne Co.               373,600

               ($934,000 x 40%)  

              Equity income in Cheyenne Co.                                           373,600

4 0
3 years ago
What is a market supply schedule?
pantera1 [17]

A market supply schedule is a chart that lists the quantity supplied for a good or service that suppliers throughout the whole economy are willing and able to supply at all possible prices, so in this case:

a chart that lists how much of a good all suppliers will offer at different prices

3 0
3 years ago
Read 2 more answers
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anygoal [31]
It might be the Employees. Lol, not sure.
3 0
3 years ago
Toyota, the giant global automaker, paid a heavy price for its ___________ emphasis on cost control. The resulting problems with
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Answer:

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A. Minimal

B. Superficial

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Explanation:

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Answer:

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