Use the information in the table below to calculate the following ratios for Windswept Woodworks for year 1 and year 2.

Windswept Woodworks, Incorporated
Input Data
(millions of dollars)
	Year 2		Year 1
Accounts payable	582		514
Accounts receivable	1,426		960
Accumulated depreciation	6,892		6,762
Cash & equivalents	370		258
Common stock	1,330		1,250
Cost of goods sold	1,550		n.a.
Depreciation expense	?		n.a.
Common stock dividends paid	?		n.a.
Interest expense	190		n.a.
Inventory	1,160		1,156
Addition to retained earnings	602		n.a.
Long-term debt	958		866
Notes payable	280		430
Gross plant & equipment	10,460		10,200
Retained earnings	3,208		2,606
Sales	3,068		n.a.
Other current liabilities	166		146
Tax rate	21%		n.a.
Market price per share – year end	$ 23.80		$ 21.50
Number of shares outstanding	500	million	500	million

(For all requirements, round your answers to 2 decimal places.)

Required:

a. Interest coverage ratio (Assume that year 1 EBIT was 1,307 and year 1 interest expense was 160.)

Year 2 interest coverage ratio

Year 1 interest coverage ratio

b. Average collection period (Assume that the accounts receivable balance was 1,000 on December 31 of the previous year and that year 1 sales were 2,768.)

year 2 ACP

Year 1 ACP

c. Current ratio

year 1 current ratio

year 2 current ratio

Answer rating: 100% (QA)

a Interest coverage ratio EBIT Interest Expense For Year 2 EBIT Net Income Interest Expense ... View the full answer