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please anser and explain Including the new proposed term loan, what is Nuts n' Seeds Incorporated's 20Y0 total liabilities to equity ratio if you: 1) treated the shareholder loan as equity rather than as a liability, and 2) tested the operating line as fully drawn? (see attached balance sheet)   A. 1.10 B. 1.25 C. 1.15 D. 1.20

please anser and explain Including the new proposed term loan, what is Nuts n' Seeds Incorporated's 20Y0 total liabilities to equity ratio if you: 1) treated the shareholder loan as equity rather than as a liability, and 2) tested the operating line as fully drawn? (see attached balance sheet)   A. 1.10 B. 1.25 C. 1.15 D. 1.20

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 32BEB
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please anser and explain

Including the new proposed term loan, what is Nuts n' Seeds Incorporated's 20Y0 total liabilities to equity ratio if you: 1) treated the shareholder loan as equity rather than as a liability, and 2) tested the operating line as fully drawn? (see attached balance sheet)

 
A. 1.10
B. 1.25
C. 1.15
D. 1.20
P13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 A ASSETS CURRENT X Cash Sales tax receivable Inventory Accounts receivable EQUIPMENT (Aora 3) Total Assets B LIABILITIES CURRENT Accounts payable and accrued liabilitie Bank line of credit Current portion of long-term debt Salaries payable DUE TO SHAREHOLDERS LONG-TERM DEBT Total Equity fx SHAREHOLDERS' EQUITY Share capital Wote 4) Retained earnings Current Assets: Current Liabilities: Current Ratio: Total Liabilities: Total Equity: Total Liabilities to Equity: Cover Page с 20Y0 $275,879 15.127 790,535 387,517 1,469,058 803,658 $2,272,716 $325,514 500,000 33,333 15,430 874,278 914,412 166,667 1,955,357 Total Liabilities and Shareholder: $2,272,716 100 317,259 317,359 D E 20X9 Nuts n' Seeds Incorporated $72.517 15,959 796.513 362.885 1,247,874 692,554 $1,940,428 $324,554 441,589 13,955 780,098 914,412 1,694,510 100 245,818 245.918 $1,940,428 F REVENUES COST OF SALES GROSS MARGIN EXPENSES Advertising and promotion Bank charges Business taxes, licenses and memberships Courier and postage Depreciation Insurance G Interest Office and administration Repairs and maintenance Rent and occupancy Salaries and wages Software and computers Telephone Warehouse NET INCOME BEFORE INCOME TAXI INCOME TAXES NET INCOME Total Funded Debt Funded Debt to EBITDA H EBITDA: Credit Line Interest: Existing Annual Term Loan Blended Payments: New Annual Term Loan Blended Payments: Debt Service Coverage Ratio: 20Y0 $2,571,705 1,697,325 874,380 23,541 11,648 13,297 10,271 115,727 3,941 68,495 6,132 12,861 81,372 365,182 6,137 1,507 64,968 785,079 89,301 17,860 $71,441 I J 20X9 $2,296,165 1,554,917 741,248 17,185 9,886 9,147 6,238 94,722 3,516 29,638 5,286 9.214 81,178 315,950 4,288 958 56,255 643,461 97,787 18,761 $79,026 K L Credit Line: Spread: Prime: Total Rate: Existing Term Loan: Amortization (months): Rate: Rate Monthly: Monthly Payment: Total Annual Payments: New Term Loan: Amortization (months): Rate: Rate Monthly: Monthly Payment: Total Annual Payments: M 500,000 3.00% 500,000 84 5.50% N 0 P Q R S X EL
Transcribed Image Text:P13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 A ASSETS CURRENT X Cash Sales tax receivable Inventory Accounts receivable EQUIPMENT (Aora 3) Total Assets B LIABILITIES CURRENT Accounts payable and accrued liabilitie Bank line of credit Current portion of long-term debt Salaries payable DUE TO SHAREHOLDERS LONG-TERM DEBT Total Equity fx SHAREHOLDERS' EQUITY Share capital Wote 4) Retained earnings Current Assets: Current Liabilities: Current Ratio: Total Liabilities: Total Equity: Total Liabilities to Equity: Cover Page с 20Y0 $275,879 15.127 790,535 387,517 1,469,058 803,658 $2,272,716 $325,514 500,000 33,333 15,430 874,278 914,412 166,667 1,955,357 Total Liabilities and Shareholder: $2,272,716 100 317,259 317,359 D E 20X9 Nuts n' Seeds Incorporated $72.517 15,959 796.513 362.885 1,247,874 692,554 $1,940,428 $324,554 441,589 13,955 780,098 914,412 1,694,510 100 245,818 245.918 $1,940,428 F REVENUES COST OF SALES GROSS MARGIN EXPENSES Advertising and promotion Bank charges Business taxes, licenses and memberships Courier and postage Depreciation Insurance G Interest Office and administration Repairs and maintenance Rent and occupancy Salaries and wages Software and computers Telephone Warehouse NET INCOME BEFORE INCOME TAXI INCOME TAXES NET INCOME Total Funded Debt Funded Debt to EBITDA H EBITDA: Credit Line Interest: Existing Annual Term Loan Blended Payments: New Annual Term Loan Blended Payments: Debt Service Coverage Ratio: 20Y0 $2,571,705 1,697,325 874,380 23,541 11,648 13,297 10,271 115,727 3,941 68,495 6,132 12,861 81,372 365,182 6,137 1,507 64,968 785,079 89,301 17,860 $71,441 I J 20X9 $2,296,165 1,554,917 741,248 17,185 9,886 9,147 6,238 94,722 3,516 29,638 5,286 9.214 81,178 315,950 4,288 958 56,255 643,461 97,787 18,761 $79,026 K L Credit Line: Spread: Prime: Total Rate: Existing Term Loan: Amortization (months): Rate: Rate Monthly: Monthly Payment: Total Annual Payments: New Term Loan: Amortization (months): Rate: Rate Monthly: Monthly Payment: Total Annual Payments: M 500,000 3.00% 500,000 84 5.50% N 0 P Q R S X EL
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