dont give answer in image format 10. Debt RatioDave's Guitar Shop is thinking about adding an addition onto their building for more storage. Daveconsults with a banker about applying for a loan. The loan officer asks for Dave's balance sheet toexamine his overall debt levels. The financial statements show total assets of $100,000 and totalliabilities of $25,000. Calculate the debt ratio:11. Debt to Equity RatioA company has $100,000 on a line of credit and a $500,000 mortgage on it's real estate. Shareholdershave invested $1,200,000 into the company for stock. Calculate the debt to equity ratio.12. Times-Interest Earned RatioTim's Tile Service is a construction company that is currently applying for a new loan to buy newequipment. The bank asks Tim for his financial statements as they consider lending to him. The incomestatement shows that he made $500,000 of income before interest expense. Tim's overall interestexpense was $50,000. Calculate Tim's times-interest earned ratio:

"Since you have asked multiple questions, we will solve first question for you. If you want any…

10. Debt Ratio Dave's Guitar Shop is thinking about adding an addition onto their building for more storage. Dave consults with a banker about applying for a loan. The loan officer asks for Dave's balance sheet to examine his overall debt levels. The financial statements show total assets of $100,000 and total liabilities of $25,000. Calculate the debt ratio:

10. Debt Ratio Dave's Guitar Shop is thinking about adding an addition onto their building for more storage. Dave consults with a banker about applying for a loan. The loan officer asks for Dave's balance sheet to examine his overall debt levels. The financial statements show total assets of $100,000 and total liabilities of $25,000. Calculate the debt ratio:

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter6: Using Credit

Section: Chapter Questions

Problem 3FPE

See similar textbooks

Similar questions

6) Jim is trying to calculate his available credit. The following information was recorded by him. His total credit line is $5,000. Previous Payments/ Balance Credits $4,421.27 $2,100 New Late Purchases Charge $889.10 $15 a) What is his new balance? b) What is his available credit? Finance Charge $12.43 New Balance Minimum Payment $25
RENT Connors Construction requires a large number of leased equipment to be purchased. The equipment costs $ 100. One option is to borrow $ 100 from a local bank and use it to purchase the equipment. Another option is a statement of the company's financial position before buying or renting equipment is shown as follows: Current assets Fixed assets Total assets $ 300 Debt 500 Equity $ 800 Liabilities and total equity $ 400 400 $ 800 What is the company's debt ratio if you decide to buy equipment? What if the lease and lease are not stipulated in the report's financial position? Is the financial risk of pecusalom different if you buy it rented? Explain.
10) Furniture Co. owed $880.00 for merchandise plus $20.00 for insurance. The bill was due on May 6 and the owner found he was unable to pay it. To keep a good credit rating, he decided to borrow the necessary amount from a bank that charged 9% discount. The maturity date for the loan was July 5. a) How much must he repay the bank? b) What was the cost of borrowing?
4. What is the purpose of a bridge loan? 5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.
Assume that your team is in business and you must borrow $6,000 cash for short-term needs. You have been shopping banks for a loan, and you have the following two options. A. Sign a $6,000, 90-day, 10% interest-bearing note dated June 1. B. Sign a $6,000, 120-day, 8% interest-bearing note dated June 1. Required 1. Discuss these two options and determine the better choice. Ensure that all teammates concur with the decision and understand the rationale. 2. Each member of the team is to prepare one of the following journal entries. a. Option A—at date of issuance. b. Option B—at date of issuance. c. Option A—at maturity date. d. Option B—at maturity date. 3. In rotation, each member is to explain to the team the entry he or she prepared in part 2. Ensure that all team members concur with and understand the entries. 4. Assume that the funds are borrowed on December 1 (instead of June 1) and your business operates on a calendar-year reporting period. Each member of the team is to prepare…
AIX corporation wants to take a loan to finance their expanding project. They approached the bank to request 5 million for that purpese. Vou are a loan officer at a bank that uses the Altman Z score to take the final decision whether to accept the loan application or reject it. Using the below information, find the missing ratios. Based on your results, choose the right decision related to AX loan request. tround to three decimal places) Cash 1,500,000 Inventory 345,000 Account Receivables 10,000 Property, plant and equipment 300,950 Other non-current assets 175,000 Total assets 2,330,950 Account payable 151,000 Current portion of LT debt 110,500 Long-term debt 1,269,500 Other non-current liabilities 365,000 Total liabilities 1,896,000 Common stock 178,500 Retained earnings 256,450 Total liabilities and equities 2,330,950 Additional information: Sales 1,501,400 Earning before interest & 1,033,300 tax 348,500 Equity market value 126 PM 21°C A D 40 ENG 12/28/202
A borrower has two alternatives for a loan: (1) issue a $630,000, 75-day, 6% note or (2) issue a $630,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet a. Compute the amount of the interest expense for each option. Round your answer to the nearest dollar. for each alternative. b. Determine the proceeds received by the borrower in each situation. Round your answers to the nearest dollar. < (1) $630,000, 75-day, 6% interest-bearing note: $ (2) $630,000, 75-day note discounted at 6%: $ c. Alternative is more favorable to the borrower because the borrower
You have 3 accounts: Account A has a $100 balance and a $300 credit limit. Account B has a $100 balance and a $500 credit limit. Account C has a $600 balance and a $1000 credit limit. Considering the debt-to-credit ratio for each account, if you have extra money to pay towards an account, which order should you pay the extra towards to increase your credit score?
u are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,720,000 for 80 days in order to purchase a large quantity of material at "close ces. The interest rate for such loans at your bank, Rimrock Bank, is 9% using ordinary interest. What is the amount of interest on this loan? Round your answer to the nearest cent. After making a few "shopping" calls, you find that Southside National Bank will lend at 9% using exact interest. What is the amount of interest on this offer? Round your answer to the nearest cent. So that you can keep your business, Rimrock Bank has offered a loan at 8.3% using ordinary interest. What is the amount of interest on this offer? Round your answer to the nearest cent. (Challenge) If Southside National wants to beat Rimrock's last offer (part c) by charging $1,100 less interest, what rate, rounded to the nearest hundredths of a percent, must it quote using exact interest? not enter the percent…
Give typing answer with explanation and conclusion Dave borrowed $700 for one year and paid $49 in interest. The bank charged him a $9 service charge. What is the finance charge on this loan?
You are a credit analyst of a growing commercial bank and have recently received loan applications from two companies of relatively similar size. Show below are selected financial data for these two applicants at the end of the current year: RED CO BLUE CO. Net credit sales P700,000.00 P650,000.00 Cost of goods sold P500,000.00 P490,000.00 Cash P60,000.00 P20,000.00 Accounts receivable (net) P77,000.00 P60,000.00 Inventory P94,000.00 P180,000.00 Current liabilities P110,p00.00 P105,000.00 Assume that the year-end balances for accounts receivable and for inventory approximate the average balances of these items throughout the year. A. Compute the following on BLUE 1. Inventory turnover 2. Days sales in inventory 3. Operating cycle
You are a credit analyst of a growing commercial bank and have recently received loan applications from two companies of relatively similar size. Show below are selected financial data for these two applicants at the end of the current year: RED CO BLUE CO. Net credit sales P700.000.00 P650,000.00 Cost of goods sold P500,000.00 P490,000.00 Cash P60,000.00 P20,000.00 Accounts receivable (net) P77,000.00 P60,000.00 Inventory P94,000.00 P180,000.00 Current liabilities P11000.00 P105,000.00 Assume that the year-end balances for accounts receivable and for inventory approximate the average balances of these items throughout the year. A. Compute the following on BLUE 1. Working capital 2. Current ratio 3. Acid test ratio