ky’s total assets are $200 million, and its liabilities other than the bonds payable are $90 million. The company is considering some additional financing through leasing. Required:
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Chunky Cheese Pizza has $60 million in bonds payable. The bond agreement states that the debt to equity ratio cannot exceed 3.02. Chunky’s total assets are $200 million, and its liabilities other than the bonds payable are $90 million. The company is considering some additional financing through leasing.
Required:
1. Calculate total
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- Clayton Industries has the following account balances: Current assets Noncurrent assets The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. Currently If bonds are issued If stock is issued $ 22,000 Current liabilities 77,880 Noncurrent liabilities stockholders' equity Currently If bonds are issued If stock is issued Current Ratio 2.44 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management. Note: Round your answers to 1 decimal place. Bonds Stock to 1 to 1 Debt to Assets Ratio Additional Retained Earnings $ 9,000 50,000 48,888 % % % b. Assume that after the funds are invested, EBIT…Chunky Cheese Pizza has $61.9 million in bonds payable. The bond indenture states that the debt to equity ratio cannot exceed 3.22. Chunky’s total assets are $201.9 million, and its liabilities other than the bonds payable are $91.9 million. The company is considering some additional financing through leasing. 2. Calculate the debt to equity ratio. (Enter your answers in millions. (i.e., $5,500,000 should be entered as 5.5). Round ratio answer to 2 decimal place.) Debt to Equity Ratio = million million(Financing decisions) Brussels Electronics, Inc, has total assets of $64 million and total debt of $45 million. The company also has operating profits of $23 millions with interest expenses of $7 million. a. What is Brussels Electronic's debt ratio? b. What is Brussels Electronic's time interest earned? c. Based on the information above, would you recommend to Brussels Electron-ics's management that the firm is in a strong enough position to assume more debt and increase interest expense to $9 million?
- Fair-to-Midland Manufacturing, Inc. (FMM), has applied for a loan at True Credit Bank. Jon Fulkerson, the credit analyst at the bank, has gathered the following information from the company's financial statements: Total assets EBIT Net working capital Book value of equity Accumulated retained earnings Sales $105,000 8,400 4,900 34,000 18,300 107,000 The stock price of FMM is $36 per share and there are 6,500 shares outstanding. What is the Z-score for this company? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) Z-scoreRead the following case and then use your knowledge, skills and critical thinking to answer the questions below: You are hired to work as an accountant at African Company which has an active trading strategy for debt investments. African Company engaged in purchasing and selling several debt investments to make profits. On December 31, 2018, the company had 3 debt investments as follows: Egyptian Company 7% Bonds, the amortized cost is $310,000. Tunisia Company 8% Bonds, the amortized cost is $525,000. Morocco Company 6% Bonds, the amortized cost is $415,000. If the market values of Egyptian Company, Tunisia Company, and Morocco Company debt investments on December 31, 2018, were, $304,000, $538,000, $413,000, respectively. Required 1: Prepare the debt investments portfolio for African Company on December 31, 2018, and prepare the adjusting entry on the date? Required 2: Assume that African Company sold Tunisia Company 8% Bonds on April 1, 2019 for $519,000 at that time the amortized…a)Assume that the following data is extracted from the financial statements of Richy-Rich bank: equity is $350 million, interest expense is $115 million, provision for loan loss (P) is $35 million, noninterest income is $30 million, noninterest expense is $50 million and a tax rate is 33%. What is the minimum total interest income required to give a return on equity (ROE) of 20%? Show workings when necessary. b) Be-smart Bank reported an equity multipler ratio of 6.5 at the end of year 2021. If the bank’s total debt at the end of year 2021 was $5 million, how much of its assets were financed with equity? Show calculations when necessary. c) What are the main sources of funding for commercial banks? Using bullet points, classify these sources and briefly describe each category.
- Fox Company has debt totaling $2,000,000 and total stockholders’ equity of $4,000,000. WolfeCompany has debt totaling $3,000,000 and stockholders’ equity of $5,000,000.a. Calculate the debt ratio for each company. (Hint: You will find an explanation of the debt ratioand how it is computed in Exhibit 10–8.)b. Briefly explain the meaning of the debt ratio.At the end of the current year, the following information is available for both Pulaski Company and Scott Company. Pulaski Company Scott Company Total assets $ 860,000 $ 440,000 Total liabilities 360,000 240,000 Total equity 500,000 200,000 Required:1. Compute the debt-to-equity ratios for both companies.2. Which company has the riskier financing structure? Complete this question by entering your answers in the tabs below. Required 2 Compute the debt-to-equity ratios for both companies. Choose Numerator: / Choose Denominator: / Debt-to-Equity Ratio Pulaski Company / = Scott Company / =Here is a simplified balance sheet for Epicure Pizza (figures in $ millions): Assets Liabilities and Shareholders' Equity Current assets $ 120 Current liabilities $ 160 Fixed assets 118 Long term debt 28 Equity 50 Total $ 238 Total $ 238 Note: There are 10 million shares outstanding. Epicure shares are currently priced at $8 each. a. What value should be used for debt when calculating the firm's WACC? (Enter your answer in millions.)
- Based on the ratios below, which of the two companies is most liquid? Assume that both companies have approached you seeking a six-month (short-term) loan in the amount of 30% of the respective company’s current assets. You have but one loan to give. To which company do you grant the loan? Please discuss each ratio. COMPANY 1(Data from left to right: 2018, 2019) Accounts receivable turnover =Net Credit Sales/ Average Debtors =6643051 / 58752 =113.07 =6084766 / 71649 =84.92 Average Days to collect= 365 / Accounts receivable turnover =365 / 113.07= 3.22 365 / 84.92= 4.29 Inventory Turnover= COGS / Average Inventory = 3868119 / 954183 =4.05 =3559158 / 752562 =4.73 Average Inventory Period= 365 / Inventory Turnover = 365 / 4.05= 90.12 365 / 4.73 = 77.16 Company 2(Data years from left to right: 2018, 2019, 2020) Accounts Receivable turnover Ratio = ( Net Credit sales / Average Accounts receivable ) From table A (5/7) 184.15 143.98 129.22 Avg Days to…The Mikado Company has a long-term debt ratio (i.e., the ratio of long-term debt to long-term debt plus equity) of 47 and a current ratio of 1.36. Current liabilities are $2,440, sales are $10,600, profit margin is 12 percent, and ROE is 17 percent. What is the amount of the firm's net fixed assets? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Net fixed assetsBinomial Tree Farm's financing includes $5 million of bank loans. Its common equity is shown in Binomial's Annual Report at $6.67 million. It has 500,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its company cost of capital or asset beta? Note: Enter your answer as a percent rounded to 2 decimal places. Debt ratio %