Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Textbook Question

Chapter 9, Problem 9.13S

LO 5

(Learning Objective 5: Calculate the leverage ratio, debt ratio, and times-interest-earned ratio, and evaluate debt-paying ability) Examine the following selected financial information for The Deal Corporation and Simple Stores. Inc.. as of the end of their fiscal years ending in 2018:

(In millions)	The Deal Corporation	Simple Stores, Inc.
1. Total assets	$16,870	$203,130
2. Total common stockholders’ equity	$ 3,080	$ 71,310
3. Operating income	$ 1,400	$ 26,930
4. Interest expense	$ 87	$ 2,050
5. Leverage ratio
6. Total debt
7. Debt ratio
8. Times interest earned

1. Complete the table, calculating all the requested information for the two companies. Use year-end figures in place of averages where needed for the purposes of calculating the ratios in this exercise.

2. Evaluate each company’s long-term debt-paying ability (strong, medium, weak.)

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Chapter 9, Problem 9.12S

Chapter 9, Problem 9.14S

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Chapter 9 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 9 - Brownlee Company issued 525,000, 8%, six-year...Ch. 9 - A bond with a face value of 250,000 and a quoted...Ch. 9 - Mission Furniture issued 500,000 in bonds payable...Ch. 9 - Bonds with an 8% stated interest rate were issued...Ch. 9 - Brimfest Corporation issued 2,400,000, 10-year, 6%...Ch. 9 - The Discount on Bonds Payable account a.is an...Ch. 9 - The discount on a bond payable becomes...Ch. 9 - The carrying value of Bonds Payable equals a.Bonds...Ch. 9 - Prob. 9QC Ch. 9 - Prob. 10QC

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Solution Summary: The author explains that financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

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Chapter 9 Solutions