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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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    https://brainmass.com/business/financial-ratios/cash-debt-coverage-231621

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    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

    $2.49

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