Solved

You Have Been Asked to Evaluate the Long-Term Borrowing Position

Question 53

Essay

You have been asked to evaluate the long-term borrowing position of Client,Inc.However,you were given only the following limited information.  Bonds payable, 12% $1,000,000 Stockholders’ equity 1,800,000 Current assets 1,870,000 Tangible assets, net 1,600,000 Intangible assets 40,000 Investments 120,000 Other assets 90,000 Sales 4,000,000 Operating expenses 3,620,000\begin{array}{lr}\text { Bonds payable, 12\% } & \$ 1,000,000 \\\text { Stockholders' equity } & 1,800,000 \\\text { Current assets } & 1,870,000 \\\text { Tangible assets, net } & 1,600,000 \\\text { Intangible assets } & 40,000 \\\text { Investments } & 120,000 \\\text { Other assets } & 90,000 \\\text { Sales } & 4,000,000 \\\text { Operating expenses } & 3,620,000\end{array}

Required:
Assuming that this is the only information you will receive,estimate the following ratios:
a.Times interest earned ratio
b.Debt ratio
c.Debt/equity ratio
d.Debt to tangible net worth ratio

Correct Answer:

verifed

Verified

Computations for figures needed in the r...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents