Question 5Jingle Ltd. and Bell Ltd. belong to the same industry. A snapshot of some of their financialinformation is given below:Jingle Ltd. | Bell Ltd.3.2 :1Current ratio| Acid-test ratioDebt-Equity ratio|Times interest earned2:11.7:11.1:130%40%5You are a loans officer and both companies have asked for an equal 2-year loan.i)If you could facilitate only one loan, which company would you refuse? Explainyour reasoning brieflyIf both companies could be facilitated, would you be willing to do so? Explainyour argument brieffly.ii)

Ratio analysis refers to the method used by the companies, shareholders, investors, and creditors in…

Answered: ingle Ltd. and Bell Ltd. belong to the…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 18PROB

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Jingle Ltd. and Bell Ltd. belong to the same industry. A snapshot of some of their financial information is given below: Jingle Ltd Bell Ltd. Current ratio 3.2:1 2:1 Acid-test ratio 1.7:1 1.1: 1 Debt-Equity ratio 30% 40% Times interest earned 6 5 You are a loans officer and both companies have asked for an equal 2-year loan. i) If you could facilitate only one loan, which company would you refuse? Explain your reasoning briefly. ii) If both companies could be facilitated, would you be willing to do so? Explain your argument briefly
For questions 17 – 20 use the following information: West Oil Company, LLC has three long term loans (interest bearing debt): loan #1 with a balance of $300,000 at 8% interest; loan #2 with a balance of $400,000 at 5% interest, and loan #3 with a balance of $100,000 at 10% interest. The company has accounts payable of $70,000 (non-interest bearing) and equity of $1,200,000. It estimates that its cost of equity is 11%. Its tax rate is 34%. What is the company’s weighted average cost of capital on total invested capital (total assets)? Include non-interest bearing debt, interest bearing debt, and equity.
Choose the correct letter of answer: The following data applies to a firm: Interest Charges P10 Million, Sales/CGS P80 Million, Tax Rate 50% and Net profit margin 10%. What is the firm's interest covered ration? a. 1.6b. 2.6c. 3.6d. 4.6e. 5.6
Mf3. : An entity took UAH 100,000 loan for 5 at 26% of annual interest rate. Interests are paid annually. A bank is using annuity due scheme. Interest revenue for a bank in period 1 is: An entity took UAH 100,000 loan for 5 at 26% of annual interest rate. Interests are paid annually. A bank is using annuity due scheme. Principal, paid in the fourth period, is: Outstanding loan amount is USD 17,000.00. Annuity is USD 4,315.27, interest rate is 18%. The amount of principal, paid in the given period is: Outstanding loan amount is USD 22,000.00. Annual interest rate is 11%. Interest is paid at the end of each year. In the given period bank received USD 4,300.00 of principal payment. The annuity amount is:
Q. 1 Y3K, Inc. has sales of $7425, total assets of $3,500, and a debt-equity ratio of 0.29. Assume the return on equity is 20% What is the net income? (DO NOT round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16) Step 1 Given information, Sales =$6,209 Total assets=$2,825 Debt-equity ratio(D/E)=1.10 Return on equity =11% arrow_forward Step 2 Return on equity(ROE) = (Profit margin)(Total asset turnover)(Equity multiplier) = (Profit margin)(Sales / Total assets)(1 + D/E) Therefore, Profit margin = [(Return on equity)(Total assets)] / [(1 + D/E)(Sales)] =[0.11*2,825]/[( 1 + 1.1)*6,209] =310.75/13,038.9 =0.0238325 Hence, Net income = Sales *profit margin =$6,209* 0.0238 =$147.98 But I am getting an error saying this answer is complete but not entirely correct?
Current ratio = 2.4 times Profit margin = 10% Sales = $1,220 million ROE = 10% Long-term debt to Long-term debt and equity = 60% Use the above information to complete the balance sheet below. Note: Enter your answers in millions. there is no asset turn over. this is the whole question current assets=______million fixed assets=_____million Total assets______million Current liabilities 230 million long term debt_____ million stockholders equity______million Total liabilities and equity_______ million
Choose the correct letter of answer and provide solution The following data applies to a firm: Interest charges=P50,000.00; Sales = P300,000.00; Tax Rate=P25%; Net Profit Margin=3%. What is the firm's time interest covered ratio? a. 0.24b. 0.54c. 1.04d. 1.24e. 1.44
a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? Question content area bottom Part 1 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is 27.827.8%. (Round to one decimal place.) Part 2 b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? The new debt ratio will be enter your response here%. (Round to one decimal place.)

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