财务报告与分析三友会计名著译丛 第07章习题答案docWord文件下载.docx

1、 Capitalized Interest Income before income taxes $675 Plus interest 60 Adjusted income $735 Interest expense $ 60 Times Interest Earned = $735 = 12.25 times per year $60b. Adjusted income from （part a） $735 1/3 of operating lease payments （1/3 x $150） 50 Adjusted income, including rentals $785 Inter

2、est expense $ 60 1/3 of operating lease payments 50 $110 Fixed Charge Coverage = $785 = 7.14 times per year $110PROBLEM 73 Recurring Earnings, Excluding Interest Expense, Tax Expense, Equity Earning, a. Times Interest Earned = and Minority Earnings_ Interest Expense, Including Capitalized Interest I

3、ncome before income taxes and extraordinary charges $36 Plus interest 16 （1） Adjusted income 52 （2） Interest expense $16 Times Interest Earned: （1） divided by （2） = 3.25 times per year Recurring Earnings, Excluding Interest Expense, Tax Expense, Equity Earnings, and Minority Earnings + Interest Port

4、ionb. Fixed Charge Coverage = Of Rentals_ Interest Expense, Including Capitalized Interest + Interest Portion Of Rentals Adjusted income （part a） $ 52 （1/3 x $60） 20 （l） Adjusted income, including rentals $72 Interest expense $16 1/3 of operating lease payments 20 （2） Adjusted interest expense $36 F

5、ixed charge coverage: （1） divided by （2） = 2.00 times per yearPROBLEM 74a. Debt Ratio = b. Debt/Equity Ratio = c. Ratio of Total Debt to Tangible Net Worth = Total Liabilities = $174,979 = $174,979 = 70.9% Tangible Net Worth $249,222 $2,324 $246,898d. Kaufman Company has financed over 41% of its ass

6、ets by the use of funds from outside creditors. The Debt/Equity Ratio and the Debt to Tangible Net Worth Ratio are over 70%. Whether these ratios are reasonable depends upon the stability of earnings.PROBLEM 7-5RatioTransactionTimesInterestEarnedDebtDebt/EquityTotal Debt/TangibleNet Wortha. Purchase

7、 of buildings financed by mortgageb. Purchase inventory on short-term loanc. Declaration and payment of cash dividendd. Declaration and payment of stock dividende. Firm increases profits by cutting cost of salesf. Appropriation of retained earningsg. Sale of common stockh. Repayment of long-term ban

8、k loani. Conversion of bonds to common stock j. Sale of inventory at greater than cost-+PROBLEM 76a. Times Interest Earned:Times interest earned relates earnings before interest expense, tax, minority earnings, and equity income to interest expense. The higher this ratio, the better the interest cov

9、erage. The times interest earned has improved materially in strengthening the longterm debt position. Considering that the debt ratio and the debt to tangible net worth have remained fairly constant, the probable reason for the improvement is an increase in profits.The times interest earned only ind

10、icates the interest coverage. It is limited in that it does not consider other possible fixed charges, and it does not indicate the proportion of the firms resources that have come from debt.Debt Ratio:The debt ratio relates the total liabilities to the total assets.The lower this ratio, the lower t

11、he proportion of assets that have been financed by creditors.For Arodex Company, this ratio has been steady for the past three years. This ratio indicates that about 40% of the total assets have been financed by creditors. For most firms, a 40% debt ratio would be considered to be reasonable.The deb

12、t ratio is limited in that it relates liabilities to the book value of total assets. Many assets would have a value greater than book value. This tends to overstate the debt ratio and, therefore, usually results in a conservative ratio. The debt ratio does not consider immediate profitability and, t

13、herefore, can be misleading as to the firms ability to handle longterm debt.Debt to Tangible Net Worth:The debt to tangible net worth relates total liabilities to shareholders equity less intangible assets. The lower this ratio, the lower the proportion of tangible assets that has been financed by c

14、reditors.Arodex Company has had a stable ratio of approximately 81% for the past three years. This indicates that creditors have financed 81% as much as the shareholders after eliminating intangibles from the shareholders contributionfor most firms, this would be considered to be reasonable. The deb

15、t to tangible net worth ratio is more conservative than the debt ratio because of the elimination of intangible items. It is also conservative for the same reason that the debt ratio was conservative, in that book value is used for the assets and many assets have a value greater than book value. The

16、 debt to tangible net worth ratio also does not consider immediate profitability and, therefore, can be misleading as to the firms ability to handle longterm debt.Collective inferences one may draw from the ratios of Arodex, Company:Overall it appears that Arodex Company has a reasonable and improvi

17、ng longterm debt position. The debt ratio and the debt to tangible net worth ratios indicate that the proportion of debt appears to be reasonable. The times interest earned appears to be reasonable and improving.The stability of earnings and comparison with industry ratios will be important in reach

18、ing a conclusion on the longterm debt position of Arodex Company.b. Ratios are based on past data. The future is what is important, and uncertainties of the future cannot be accurately determined by ratios based upon past data.Ratios provide only one aspect of a firms long-term debt-paying ability.

19、Other information, such as information about management and products, is also important.A comparison of this firms ratios with ratios of other firms in the same industry would be helpful in order to decide if the ratios are reasonable.PROBLEM 77a. 1. Times Interest Expense, Tax Expense, Equity Earni

20、ngs, Earned = and Minority Earnings_ Interest Expense, Including $162,000 = 8.1 times per year $ 20,0002. Debt Ratio = Total Liabilities Total Assets $193,000 = 32.2% $600,0003. Debt/Equity Ratio = Total Liabilities Stockholders Equity $193,000 = 47.4% $407,000 4. Debt to Tangible Net Worth Ratio =

21、Total Liabilities Tangible Net Worth $193,000 = 49.9% $407,000 $20,000b. New asset structure for all plans: Assets Current assets $226,000 Property, plant, and equipment 554,000 Intangibles 20,000 Total assets $800,000 Liabilities and Equity Plan A Current Liabilities $ 93,000 $200,000,000/100 = Lon

22、gterm debt 100,000 2,000,000 shares Preferred stock 250,000 Common equity 357,000 No change in net income $800,000 Plan B Current liabilities $ 93,000 $200,000,000/10 = Longterm debt 100,000 20,000,000 shares Preferred stock 50,000 Common stock 120,000 Premium on common stock 300,000 Retained earnin

23、gs 137,000 No change in net income Plan C Current liabilities $ 93,000 Operating Income $162,000 Longterm debt 300,000 Interest expense 52,000* Preferred stock 50,000 110,000 Common equity 357,000 Taxes （40%） 44,000 $800,000 Net Income $ 66,000 * $20,000 + 16% （$200,000） = $52,0001. Recurring Earnin

24、gs, Excluding Interest Expense, Times Interest Tax Expense, Equity Earnings, and Minority Earnings Earned = Interest Expense, Including Capitalized Interest Plan A Plan B Plan C2. Debt = Total Liabilities Ratio Total Assets Plan A Plan B Plan C 3. Debt/Equity Ratio = 4. Debt to Tangible Net Worth =

25、Plan A Plan B Plan Cc. Preferred Stock Alternative: Advantages:1. Lesser drop in earnings per share than under the common stock alternative.2. Not the absolute reduction in earnings that accompanied the debt alternative. 3. There would be an improvement in the Debt Ratio, Debt/Equity Ratio, and Tota

26、l Debt to Tangible Net Worth Ratio.4. Does not have the reduced times interest earned that accompanied alternative of issuing longterm debt.Disadvantages:1. An increase in the fixed preferred dividend charge that the firm must pay before any dividends can be paid to common stockholders.Common Stock

27、Alternative: 1. No increase in fixed obligations. 2. There would be an improvement in the Debt Ratio, Debt/Equity Ratio, and the Total Debt to Tangible Net Worth Ratio. 3. Not the absolute reduction in earnings that accompanied the debt alternative. 4. Does not have the reduced times interest earned

28、 that accompanied alternative of issuing longterm debt.1. Maximum dilution in earnings per share of the three alternatives. Long-Term Bonds Alternative: 1. Higher earnings per share than with common stock. 1. Material decline in Times Interest Earned. 2. A material increase in the Debt Ratio, Debt/Equity Ratio, and Total Debt to Tangible Net Worth Ratio. 3. Absolute reduction in earnings. 4. Increase in the interest fixed charge that must be paid.d. The 10% pre