FINANCIAL ACCOUNTING: TOOLS LL W/ ACCES
9th Edition
ISBN: 9781119493648
Author: Kimmel
Publisher: WILEY
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Use the following information for the Quick Study below. (Algo)
[The following information applies to the questions displayed below.]
A comparative balance sheet and income statement is shown for Cruz, Incorporated.
CRUZ, INCORPORATED
Comparative Balance Sheets
At December 31
Assets
Cash
Accounts receivable, net
Prepaid expenses
Inventory
Total current assets
Furniture
Accumulated depreciation-Furniture
Total assets
Liabilities and Equity
Accounts payable
Wages payable
2021
2020
$ 66,100
28,500
$ 16,600
35,200
59,700
66,100
3,700
3,000
158,000
120,900
74,600
(11,600)
$ 221,000
$ 10,400
6,300
85,000
(6,400)
$ 199,500
$ 14,700
3,500
Income taxes payable
1,000
1,900
Total current liabilities
Notes payable (long-term)
Total liabilities
Equity
Common stock, $5 par value
Retained earnings
17,700
20,100
20,700
50,500
38,400
70,600
159,500
Total liabilities and equity
23,100
$ 221,000
125,000
3,900
$ 199,500
CRUZ, INCORPORATED
Income Statement
Sales
For Year Ended December 31, 2021
$ 341,600…
Use the following information to answer this question.
Windswept, Incorporated
2022 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 receivable
Inventory
Total
Net fixed assets
Total assets
What is the return on equity for 2022?
$ 8,700
7,340
405
$ 955
82
$ 873
306
$ 567
Windswept, Incorporated
2021 and 2022 Balance Sheets
(in millions)
2021
$ 150
$ 185
920
1,520
730
1,550
$2,590 $2,465
3,260
3,670
$ 5,850 $ 6,135
2022
Accounts payable
Long-term debt
Common stock
Retained earnings
Total liabilities & equity
2021
$ 1,180
1,000
3,210
460
2022
$1,260
1,265
2,900
710
$ 5,850 $6,135
The following financial information was obtained from the year ended 2024 income statements for Luigi Automotive and Steinbeck Automotive:
(Click the icon to view the financial information.)
Requirements
1. Compute the times-interest-earned ratio for each company. Round to two decimals.
2.
Which company was better able to cover its interest expense?
Requirement 1. Compute the times-interest-earned ratio for each company. Round to two decimals.
Begin by showing the formula for the times-interest-earned ratio.
Times-interest-earned ratio =
C--)
Data table
Net income
Income tax expense
Interest expense
Print
$
Luigi Steinbeck
52,395 $
20,590
550
Done
89,990
26,260
3,100
X
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