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Flag this Question Question 231 pts Soni Manufacturing reports the following capital structure: Current liabilities P100,000...

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Question 231 pts

Soni Manufacturing reports the following capital structure:

Current liabilities

P100,000

Long-term debt

400,000

Deferred income taxes

10,000

Preferred stock

80,000

Common stock

100,000

Premium on common stock

180,000

Retained earnings

170,000

What is the debt ratio?

Group of answer choices

0.49

0.93

0.48

0.96

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Question 241 pts

Medi Company had the following financial statistics for 2020:

Long-term debt (average rate of interest rate is 8%)

P400,000

Interest expense

35,000

Net income

48,000

Income tax

46,000

Operating income

107,000

What is the times interest earned for 2020?

Group of answer choices

3.3 times

11.4 times

3.1 times

3.7 times

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Question 251 pts

Calculador Company reported the following on its income statement:

Income before taxes

P400,000

Income tax expense

100,000

Net income

P300,000

An analysis of the income statement revealed that interest expense was P100,000.

Calculador Company’s times interest earned (TIE) was

Group of answer choices

5 times

3.5 times

4 times

3 times

Homework Answers

Answer #1

Q231) 0.49

Explanation: Total asset= current liabilities + long term debt + deferred income taxes + Preferred stock + common stock + premium on common stock + retained earnings

= 100,000 + 400,000 + 10,000 + 80,000 + 100,000 + 180,000 + 170,000

= 1,040,000

Debt ratio = Total liabilities / Total asset

= current liabilities + long term debt + deferred income tax / total asset

= 100,000 + 400,000 + 10,000 / 1,040,000

= 510,000 / 1,040,000

= 0.49

Q241) 3.7 times

Explanation: EBIT = Net income + income tax + interest expense / interest expense

= 48,000 + 46,000 + 35,000 / 35,000

= 129,000 / 35,000

= 3.7 times

Q251) 5 times

Explanation:

EBIT = Net income + income tax + interest expense / interest expense

= 300,000 + 100,000 + 100,000 / 100,000

= 500,000 / 100,000

= 5 times

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