# brain brian

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
Sales
\$15,000.00
Undistributed Income of Less Than 50%-Owned Affiliates
\$300.00
Total Revenue
\$15,300.00
Cost of Goods Sold
\$7,000.00
\$2,000.00
Depreciation
\$600.00
Rental Expense
\$500.00
Share of Minority Interest in Consolidated Income
\$200.00
Interest Expense
\$400.00
-\$10,700.00
Income Before Taxes
\$4,600.00
Income Taxes
Current
\$900.00
Deferred
\$400.00
-\$1,300.00
Net Income
\$3,300.00
Less Dividends
Common Stock
\$300.00
Preferred Stock
\$400.00
-\$700.00
Earnings Retained for the Year
\$2,600.00
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)
\$600.00
-\$300.00
Interest on Capitalized Leases
\$140.00
Interest Incurred
\$440.00
Less Interest Capitalized
-\$40.00
Interest Expense
\$400.00
Amortization of previously capitalized interest (included in depreciation) is \$60.
Interest implicit in operating lease rental payment (included in rental expense) is \$120.
Be 1-2 pages for the written portion.
Include the Excel spreadsheet with computations.
THE ANSWERS ARE INCLUDED IN THIS POST. 1, 2, 3, 4
PAPER MUST BE FORMED AND WRITTEN WITH THE EXCEL SHEET

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