Triple A Office Mart Income Statement (selected years) 1990 1989199019911992 Sales$3,800,000$4,180,000$4,850,000$6,000,000 Cost of goods sold(2,460,000)(2,975,000)(3,200,000)(4,180,000) Gross profit$1,340,000$1,205,000$1,650,000$1,820,000
Question:
Triple A Office Mart
Income Statement (selected years)
1990
1989199019911992
Sales$3,800,000$4,180,000$4,850,000$6,000,000
Cost of goods sold(2,460,000)(2,975,000)(3,200,000)(4,180,000)
Gross profit$1,340,000$1,205,000$1,650,000$1,820,000
Selling, admin, and
Depreciation expenses($684,000)($820,000)($898,408)($1,015,467)
Interest(30,780)(30,780)(42,372)(35,313)
Profit before tax$625,220$354,220$709,220$769,220
Taxes(187,566)(106,266)(212,766)(230,766)
Net income$437,654$247,954$496,454$538,454
TABLE 2
Triple A Office Mart
Balance Sheet
1989199019911992
Cash$295,000$326,040$378,300$468,000
Accounts receivable11,40012,54020,70018,000
Inventory950,0001,028,5951,559,4071,735,207
Total current assets$1,256,400$1,367,175$1,958,407$2,221,207
Property, plant, equip...450,000501,600501,600503,000
Total assets$1,706,400$1,868,775$2,460,007$2,724,207
Accounts payable$152,000$167,200$190,000$300,000
Notes payable-bank...............289,776113,326
Accrued wages & taxes114,000125,000145,500180,000
Total current liabilities266,000292,200625,276593,326
Long term debt342,200342,000342,200342,200
Common stock600,000600,000600,000600,000
(120,000 shares)
Retained earnings498,200634,575892,7311,188,881
Total liabilities and equity$1,706,400$1,868,775$2,460,007$2,724,207
If the typical firm in the industry in which Triple A operates has a debt to equity ratio of 42 percent, what advice would you give Triple A concerning its debt ratio? Show the work.
Expert Answer:
To calculate the debt ratio for Triple A Office Mart we need to divide the total debt by the total e... View the full answer
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
