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Question
A company's calendar-year financial data are shown below. The company has pledged all of its net plant assets as security for its long-term notes payable:
| Sales | $650,000 |
| Cost of goods sold | 422,500 |
| Gross profit | $227,500 |
| Operating expenses | 140,500 |
| Operating income | $ 87,000 |
| Interest expense | 9,100 |
| Income before taxes | $ 77,900 |
| Income taxes | 23,400 |
| Net income | $ 54,500 |
| Ending Balances | |
| Cash | $ 19,500 |
| Accounts receivable (net) | 65,000 |
| Inventory | 71,500 |
| Plant assets (net) | 195,000 |
| Total assets | $351,000 |
| Current liabilities | $ 74,100 |
| Long-term notes payable | 97,500 |
| Common stock | 65,000 |
| Retained earnings | 114,400 |
| Total liabilities and equity | $351,000 |
Calculate the following ratios for this company:
(a) Equity ratio.
(b) Pledged assets to secured liabilities ratio.
(c) Times interest earned.
Answer
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