Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN: 9781305635937
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Chapter 3, Problem 2DQ
Summary Introduction
To analyze: The long term debt and source of finance for Company W.
Introduction:
Long-term Debt:
The portion of total liabilities of a firm that will not be due in the current accounting period or within 1 year is called long term debt. It is usually, borrowed on fixed cost known as interest charges that is paid on periodical intervals.
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Use the following information to answer this question.
Windswept, Inc.
2017 Income Statement
($ in millions)
Net sales
Cost of goods sold
Depreciation
Earnings before interest and taxes
Interest paid
Taxable income
Taxes
Net income:
Cash
Accounts rec.
Inventory
Total
Net fixed assets
Total assets
Windswept, Inc.
2016 and 2017 Balance Sheets
($ in millions)
2016
2017
$ 280 $ 310 Accounts payable
Long-term debt
Common stock
$3,210 $3,110 Retained earnings
3,570 4,090
$6,780 $7,200 Total liab. & equity
1,130 1,030
1,800 1,770
$10,100
8,000
415
$1,685
102
$ 1,583
554
$ 1,029
What is the cash coverage ratio for 2017?
2016
2017
$1,660 $1,857
1,080 1,393
3,380
3,040
660
910
$6,780 $7,200
At May 31, 2016, FedEx Corporation reported the following amounts (in millions) in its financial statements:
2016
2015
Total Assets
$
13,200
$
12,300
Total Liabilities
8,316
7,503
Interest Expense
300
300
Income Tax Expense
480
290
Net Income
1,080
1,000
Required:
1.Compute the debt-to-assets ratio and times interest earned ratio for 2016 and 2015. (Round your answers to 2 decimal places.)
JUST DEW IT CORPORATION2017 and 2018 Balance Sheets
Assets
Liabilities and Owners' Equity
2017
2018
2017
2018
Current assets
Current liabilities
Cash
$ 10,150
$ 10,350
Accounts payable
$ 74,500
$ 61,250
Accounts receivable
27,100
27,250
Notes payable
48,500
49,250
Inventory
62,900
63,500
Total
$ 123,000
$ 110,500
Total
$ 100,150
$ 101,100
Long-term debt
$ 59,400
$ 64,900
Owners' equity
Common stock and paid-in surplus
$ 80,000
$ 80,000
Fixed assets
Retained earnings
171,750
192,700
Net plant and equipment
$ 334,000
$ 347,000
Total
$ 251,750
$ 272,700
Total assets
$ 434,150
$ 448,100
Total liabilities and owners' equity
$ 434,150
$ 448,100
Based on the balance sheets given for Just Dew It, calculate the following…
Chapter 3 Solutions
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
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Ch. 3 - Prob. 11QCh. 3 - How does the deductibility of interest and...Ch. 3 - BALANCE SHEET The assets of Dallas Associates...Ch. 3 - INCOME STATEMENT Byron Books Inc recently reported...Ch. 3 - INCOME STATEMENT Patterson Brothers recently...Ch. 3 - STATEMENT OF STOCKHOLDERS EQUITY In its most...Ch. 3 - MVA Harper Industries has 900 million of common...Ch. 3 - Prob. 6PCh. 3 - EVA Barton Industries has operating income for the...Ch. 3 - PERSONAL TAXES Susan and Stan Britton are a...Ch. 3 - BALANCE SHEET Which of the following actions are...Ch. 3 - STATEMENT OF STOCKHOLDERS EQUITY Electronics World...Ch. 3 - EVA For 2016, Gourmet Kitchen Products reported 22...Ch. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - FREE CASH FLOW Arlington Corporations financial...Ch. 3 - INCOME STATEMENT Edmonds Industries is...Ch. 3 - FINANCIAL STATEMENTS The Davidson Corporation's...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho...Ch. 3 - Prob. 20ICCh. 3 - Prob. 1DQCh. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQ
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