Maple Leaf Foods Inc. reported the following selected information (in thousands): _________________________________20112010 Total assets...............................$2,940,459...........$2,834,910 Total liabilities.............................2,010,346............1,848,138 Interest
Question:
Maple Leaf Foods Inc. reported the following selected information (in thousands):
_________________________________20112010
Total assets...............................$2,940,459...........$2,834,910
Total liabilities.............................2,010,346............1,848,138
Interest expense...............................70,747...............64,874
Income tax expense...........................24,469...............19,077
Profit............................................87,331...............35,613
Instructions
(a) Calculate Maple Leaf Foods' debt to total assets and interest coverage ratios for each year.
(b) Based on the ratios calculated in (a), what conclusions can you make about Maple Leaf Foods Inc.'s solvency?
Taking It Further
Maple Leaf Foods Inc. had total operating lease, rent and other commitments that required annual payments of $334,837 thousand at the end of 2011. Explain the impact that an operating lease has on a company's solvency ratios. Does this information change any of your conclusions in (b)?
SolvencySolvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
Step by Step Answer:
a in thousands Debt to total assets Total debt Total assets 2011 2010346 2940459 684 2010 1848138 28...View the full answer
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
