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
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
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