Chapter $10$ Homework $-2$

Question $4-$ Chapter $10$ H

ChatGPT

PA$10-4($Algo$)$ Comparing

chegg.com$/$chat$?$autotype

Google $-$ Yahoo Search Re

CP Links

All Bookmarks

Chapter $10$ Homework

Saved

Help

Save & Exit

Submit

Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion.

$4$

$16\mathrm{.}66$ points

M$10-13($Algo$)$ Computing the Debt$-$to$-$Assets Ratio and the Times Interest Earned Ratio $[$LO $10-5]$

The balance sheet for Shaver Corporation reported the following: cash, $$11,500$; short$-$term investments, $$16,500$; net accounts receivable, $$48,000$; inventory, $$53,000$; prepaids, $$16,500$; equipment, $$102,000$; current liabilities, $$53,000$; notes payable $($longterm$),$ $$83,000$; total stockholders' equity, $$11,500$; net income, $$4,620$; interest expense, $$7,000$; income before income taxes, $$9,180.$

Required:

Compute Shaver's debt$-$to$-$assets ratio and times interest earned ratio.

$2-$a$.$ Based on these ratios, does it appear Shaver relies mainly on debt or equity to finance its assets?

$2-$b$.$ Is it probable that Shaver will be able to meet its future interest obligations?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Req $1$

Req $2A$

Req $2$B

Compute Shaver's debt$-$to$-$assets ratio and times interest earned ratio. $($Round your answers to $2$ decimal places.$)$

$\begin{array}{cc}?& \text{R}\text{a}\text{t}\text{i}\text{o}\\ \text{D}\text{e}\text{b}\text{t}-to-\text{A}\text{s}\text{s}\text{e}\text{t}\text{s}& 54\mathrm{.}90\\ \text{T}\text{i}\text{m}\text{e}\text{s}\text{I}\text{n}\text{t}\text{e}\text{r}\text{e}\text{s}\text{t}\text{E}\text{a}\text{r}\text{n}\text{e}\text{d}\text{R}\text{a}\text{t}\text{i}\text{o}& 1\mathrm{.}66\end{array}$

Return to question