The adjusted trial balance for Sykes Ltd. at October 31, 2024, contained the following: 

Accounts payable ..........................................................   $ 57,000 

Income tax expense .....................................................   $ 11,800 

Accounts receivable .........................................................   98,000 

Income tax payable ............................................................   5,900 

Allowance for doubtful accounts .....................................   4,900 

Lease liability ....................................................................   40,243 

Bonds payable, due 2027 ................................................500,000 

Notes payable ...................................................................230,211 

Interest expense .................................................................53,330 

Notes receivable, due December 2025 ...........................35,000 

Interest payable ..................................................................15,000 

Unearned revenue ..............................................................10,000

Of the lease liability amount, $26,430 is due within the next year. Total payments on the note payable in the next 12 months will be $20,800, of which $11,125 is for interest. Sykes reported profit for the year ended October 31, 2024, of $36,000. Total assets are $2,044,147. 

Instructions 

a. Prepare the liabilities section of the balance sheet. 

b. Calculate Sykes’s debt to total assets and interest coverage ratios for the year ended October 31, 2024. 

c. Based on the ratios calculated in part (b), what conclusions can you make about Sykes’s solvency? 

What other information would help in the analysis of the company’s solvency?