The income statement of Lot Corp. for the year ended December 31, Year 1, follows: Additional Information:
Question:
The income statement of Lot Corp. for the year ended December 31, Year 1, follows:
Additional Information:
1. The following changes occurred in current assets and liabilities for Year 1:
2. Tax rate is 40%.
Required:
a. Compute the following earnings coverage ratios:
(1) Earnings to fixed charges.
(2) Cash flow to fixed charges.
(3) Earnings coverage of preferred dividends.
b. Analyze and interpret the earnings coverage ratios in (a).
Transcribed Image Text:
LOT CORPORATION Income Statement ($ thousands) For Year Ended December 31, Year 1 Sales $ 27,400 Undistributed income of less than 50%-owned affiliates. 400 Total revenue. 27,800 Less: Cost of goods sold (14,000) Gross profit... Selling and administrative expenses. Depreciation. Rental expense. Share of minority interest in consolidated incomele) Interest expense 13,800 $3,600 1,200 1,400 600 1,200 (8,000) Income before taxes 5,800 Income taxes Current. 2,000 Deferred 1,000 (3,000) Net income $ 2,800 Dividends Preferred stock 400 Common stock 1,000 (1,400) Earnings retained for the year. $ 1,400 (a Represents depreciation excluded from all other expense categories and includes $100 amortization of previously capitalized interest. Includes $400 of interest implicit in operating lease rental payments that should be considered as having financing characteristics. e These subsidiaries have fixed charges. M Interest expense includes: Interest incurred (except items below). Amortization of bond discount.. Interest portion of capitalized leases. Interest capitalized. $ 880 100 340 (120) $1,200
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 75% (16 reviews)
a 1 Ratio of Earnings to Fixed Charges Numerator Denominator Pretax income 5800 Int incurred int capitalized 880340120 1100 1220 Amortization of bond ...View the full answer
Answered By
Gauri Hendre
I worked as EI educator for Eduphy India YT channel. I gave online tutorials to the students who were living in the villages and wanted to study much more and were preparing for NEET, TET. I gave tutions for topics in Biotechnology. I am currently working as a tutor on course hero for the biochemistry, microbiology, biology, cell biology, genetics subjects. I worked as a project intern in BAIF where did analysis on diseases mainly genetic disorders in the bovine. I worked as a trainee in serum institute of India and Vasantdada sugar institute. I am working as a writer on Quora partner program from 2019. I writing on the topics on social health issues including current COVID-19 pandemic, different concepts in science discipline. I learned foreign languages such as german and french upto A1 level. I attended different conferences in the science discipline and did trainings in cognitive skills and personality development skills from Lila Poonawalla foundation. I have been the member of Lila poonawalla foundation since 2017. Even I acquired the skills like Excel spreadsheet, MS Office, MS Powerpoint and Data entry.
5.00+
4+ Reviews
10+ Question Solved
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
Question Posted:
Students also viewed these Managerial Accounting questions
-
The income statement for Delta-tec Inc. for the year ended December 31, 2016, was as follows: Delta-tec Inc. Income Statement (selected items) For the Year Ended December 31, 2016 1 Income from...
-
The following income statement and balance sheets for Virtual Gaming Systems are provided. Earnings per share for the year ended December 31, 2021, are $1.30. The closing stock price on December 31,...
-
In Exercises 912, use the given conditions to write an equation for each line in point-slope form and general form Passing through (4, -7) and perpendicular to the line whose equation is x - 2y - 3 =...
-
Predict the type of solid exhibited by each substance. a. H2S b. Si c. CsF
-
Repeat Exercise E7.4, but allow the user to specify the file name on the commandline. If the user doesnt specify any file name, then prompt the user for the name. Data from Exercise E7.4, Write a...
-
You have received a job offer from a startup company headed by \(\mathrm{PhD}\) chemists to be their chief (and only) process engineer, responsible to move their process for a novel solid adhesive...
-
The following are several activities that Wallingford Inc. engaged in 1. Wrote off an open receivable as uncollected. 2. Purchased a piece of plant equipment. 3. Reacquired 5,000 shares of its common...
-
8 A car is driving along at 13 m/s, and the rain is falling at 7 m/s straight down. What angle (in degrees) does the rain make with respect to the horizontal as observed by the driver?
-
Consider a reduced 7-bit IEEE floating-point format, with 3 bits for the exponent and 3 bits for the significand. List all 127 values.
-
The income statement of Kimberly Corporation for the year ended December 31, Year 1, is reproduced below: Additional Information: 1. The following changes occurred in current assets and current...
-
Your supervisor is considering purchasing the bonds and preferred shares of ARC Corp. She furnishes you the following ARC income statement and expresses concern about the coverage of fixed charges....
-
Explain the main concepts behind the technique of radiocarbon dating. How can radiocarbon dating be corrected forchanges in atmospheric concentrations of C-14? What range of ages can be reliably...
-
How should an operational manager be involved in the business-as-usual activities of managing business processes?
-
What are the components of business capability?
-
What are the four aspects of the BPM success stool?
-
Why does a one approach fits all approach not work?
-
Describe the role of the typical BPM leader.
-
With a focus on innovation, Pegasus is a company committed to technology leadership in the new millennium. Its systems and products are selling well in markets throughout the world. The CEO wants the...
-
You continue to work in the corporate office for a nationwide convenience store franchise that operates nearly 10,000 stores. The per- store daily customer count (i.e., the mean number of customers...
-
In a certain elaborate roller coaster, the cars are not on tracks but inside a U-shaped track much like a bobsled run. The cars are thus free to swing left and right across the U, climbing the walls...
-
MARU S.A. de C.V., a Mexican corporation that follows IFRS, has elected to use the revaluation model for its property, plant, and equipment. One of MARUs machines was purchased for 2,500,000 Mexican...
-
A financial analyst is analyzing the amortization of a product patent acquired by MAKETTI S.p.A., an Italian corporation. He gathers the following information about the patent: If the analyst uses...
-
An analyst in the finance department of BOOLDO, S.A., a French corporation, is computing the amortization of a customer list, an intangible asset, for the fiscal year ended 31 December 2009. She...
-
York's outstanding stock consists of 80,000 shares of cumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of...
-
Hudson Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of...
-
Robert is designing a new Active Directory Domain Services infrastructure for a company called Litware, Inc., which has its headquarters in New York and two additional offices in London and Tokyo....
Study smarter with the SolutionInn App