FINANCIAL ACCOUNTING>IC<
15th Edition
ISBN: 9781119344988
Author: Kimmel
Publisher: WILEY C
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Chapter 2, Problem 2.3EYCT
(a)
To determine
Formula of working capital:
Formula of current ratio:
Debt to assets ratio: This financial ratio evaluates the ability of a company to pay off long-term debt obligations owed to creditors. This ratio assesses the solvency of a company.
Formula of debt to assets ratio:
Formula of free cash flow:
To compute: (1) Working capital, (2) Current ratio (3) Debt to assets ratio, (4) Free cash flow of Incorporation A and Incorporation W for 2014
(b)
To determine
To analyze: The liquidity and solvency position of two companies based on the computed ratios
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The financial statements for Tyler Toys, Inc. are shown in the popup window:
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.
Calculate the debt ratio, times interest earned ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,146,575
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Interest expense
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Taxes
$-1,074,041
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Net income
$1,752,382
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Right-click on the table and select Copy to Clipboard and then right-click the
highlighted texts in the popup dialogue box and select Copy in order to paste its…
The December 31, 2015, balance sheet of Schism, Inc., showed long-term debt of $1,730,000, and the December 31, 2016, balance sheet showed long-term debt of $1,420,000. The 2016 income statement showed an interest expense of $97,000.
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Chapter 2 Solutions
FINANCIAL ACCOUNTING>IC<
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