The Simmons Corporation's Income statement is given below. SIMMONS CORPORATION Sales Cost of goods sold Gross profit Fixed charges (other than interest) Income before interest and taxes Interest Income before taxes Taxes Income after taxes $259,000 209,000 X 50,000 24,500 25,500 19,000 6,500 2,275 $4,225 a. What is the times interest earned ratio? (Round the final answer to 2 decimal places.) Times Interest earned |x b. What would be the fixed charge coverage ratio? (Round the final answer to 2 decimal places.) Fixed charge coverage

The Simmons Corporation's Income statement is given below. SIMMONS CORPORATION Sales Cost of goods sold Gross profit Fixed charges (other than interest) Income before interest and taxes Interest Income before taxes Taxes Income after taxes $259,000 209,000 X 50,000 24,500 25,500 19,000 6,500 2,275 $4,225 a. What is the times interest earned ratio? (Round the final answer to 2 decimal places.) Times Interest earned |x b. What would be the fixed charge coverage ratio? (Round the final answer to 2 decimal places.) Fixed charge coverage

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.1E

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The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: Includes both state and federal taxes. Refer to the information for Somerville Company on the previous pages. Also, assume that the price per common share for Somerville is 8.10. Required: Compute the price-earnings ratio. (Note: Round the answer to two decimal places.)
The following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000
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Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of goods sold was 240,000, its operating expenses were 50,000, its interest revenue was 2,000, and its interest expense was 12,000. Brandts income tax rate is 30%. Prepare Brandts multiple-step income statement for the current year.
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Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
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