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Cash debt coverage

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The comparative statements of Mustang Company are shown below.
Mustang Company
Income Statements
For the years ended Dec 31
2005 2004

Net Sales $780,000 $624,000
Cost of good sold 440,000 405,600
Gross profit 340,000 218,400
Selling and administrative expense 146,880 149,760
Income from operations 193,120 68,640
Other expenses and losses
Interest expense 9,920 7,200
Income before income taxes 183,200 61,440
Income tax expense 42,000 14,000
Net income $141,200 $47,440

Mustang Company
Balance Sheet
Dec 31

Assets 2005 2004

Current assets
Cash $23,100 $21,600
Short term investments 44,800 33,000
Accounts receivable 106,200 83,800
Inventory 116,400 74,000
Total current assets 290,500 212,400
Plant assets (net) 485,300 439,600
Total assets $775,800 $652,000

Liabilities and Stockholder's Equity 2005 2004
Current Liabilities
Accounts Payable $148,200 $132,000
Income taxes payable 25,300 24,000
Total current liabilities 173,500 156,000
Bonds Payable 132,000 120,000
Total liabilities 305,500 276,000
Stockholders' equity
Common Stock ($10par) 140,000 130,000
Retained earnings 330,300 246,000
Total stock holders' equity 470,300 376,000
Total liabilities and stockholder's equity $775,800 $652,000

All sales were on account. Net cash provided by operating activities was 114,000. Capital expenditures were 47,000 and cash dividends were 55,000.

Compute the following ratios for 2005:

A) Earnings per share
B) Return on common stockholder's equity
C) Return on assets
D) Current
E) Receivables turnover
F) Average collection period
G) Inventory turnover
H) Days in inventory
I) Times interest earned
J) Asset turnover
K) Debt to total assets
L) Current cash debt coverage
M) Cash debt coverage
N) Free cash flow

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Please see the attached file.

Compute the following ratios for 2005:

A) Earnings per share
B) Return on common stockholder's equity
C) Return on assets
D) Current
E) Receivables turnover
F) Average collection period
G) Inventory turnover
H) Days in inventory
I) Times interest earned
J) Asset turnover
K) Debt to total assets
L) Current cash debt coverage
M) Cash debt coverage
N) Free cash flow ...

Solution Summary

Response provides steps to compute the Cash debt coverage and other ratios

$2.19
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