Question

Markus Company’s common stock sold for $3.25 per share at the end of this year. The company paid a common stock dividend of $0.65 per share this year. It also provided the following data excerpts from this year’s financial statements:     

	Ending Balance		Beginning Balance
Cash	$	39,000	$	35,200
Accounts receivable	$	72,000	$	56,200
Inventory	$	61,900	$	72,000
Current assets	$	172,900	$	163,400
Total assets	$	531,000	$	550,400
Current liabilities	$	69,000	$	60,000
Total liabilities	$	156,000	$	140,400
Common stock, $1 par value	$	132,000	$	132,000
Total stockholders’ equity	$	375,000	$	410,000
Total liabilities and stockholders’ equity	$	531,000	$	550,400

     

	This Year
Sales (all on account)	$	850,000
Cost of goods sold	$	493,000
Gross margin	$	357,000
Net operating income	$	173,375
Interest expense	$	9,500
Net income	$	114,712

13. What is the times interest earned ratio? (Round your answer to 2 decimal place.)

14. What is the debt-to-equity ratio at the end of this year? (Round your answer to 2 decimal places.)      

15. What is the equity multiplier? (Round your answer to 2 decimal places.)      

Answer 1

13)

Earnings before interest and taxes is also known as net operating income.

Times interest earned ratio (TIE) = 18.25

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14)

Debt to equity ratio = 0.38

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15)

Equity multiplier = 1.38