ption 1: Ratio Analysis Exercises and Problems
Use the net income statement for Summer Peebles, Inc., below, to do the following assigned problems.
- Compute the following earnings coverage ratios:
- Earnings to fixed charges.
- Cash flow to fixed charges.
- Earnings coverage of preferred dividends.
- Analyze and interpret the earnings coverage ratios in (A).
Summer Peebles, Inc. Consolidated Income Statement ($ thousands)
Year Ending December 31, 2015
Undistributed Income of Less Than 50%-Owned Affiliates
Cost of Goods Sold
Selling and Administrative Expenses
Share of Minority Interest in Consolidated Income
Income Before Taxes
Earnings Retained for the Year
- The following changes occurred in current assets and current liabilities for 2015:
- Current Accounts Increase (Decrease)
- Accounts Receivable $900.00
- Notes Payable to Bank -$200.00
- Inventories -$800.00
- Accounts Payable $700.00
- Dividend Payable -$100.00
- The effective tax rate is 40%.
- Shares of minority interests in consolidated income do not have fixed charges.
- Interest expenses include:
Interest Incurred (Except Items Below)
Amortization of Bond Premium
Interest on Capitalized Leases
Less Interest Capitalized
- Amortization of previously capitalized interest (included in depreciation) is $60.
- Interest implicit in operating lease rental payment (included in rental expense) is $120.
Your submission should:
- Be 1-2 pages for the written portion.
- Include the Excel spreadsheet with computations.
- Clearly separate your responses so your instructor knows the problems you are answering.
THE ANSWERS ARE INCLUDED IN THIS POST. 1, 2, 3, 4
PAPER MUST BE FORMED AND WRITTEN WITH THE EXCEL SHEET