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# Current cash debt coverage

E13-9 Compute the following ratios at December 31, 2007.

E13-9 Maury Company has these comparative balance sheet data:
MAURY COMPANY
Balance Sheets
December 31

2007 2006
Cash \$ 25,000 \$ 30,000
Receivables (net) 65,000 60,000
Inventories 60,000 50,000
Plant assets (net) 200,000 180,000
\$350,000 \$320,000

Accounts payable \$ 55,000 \$ 60,000
Mortgage payable (15%) 100,000 100,000
Common stock, \$10 par 135,000 120,000
Retained earnings 60,000 40,000
\$350,000 \$320,000

1. Net income was \$25,000.
2. Sales on account were \$400,000. Sales returns and allowances amounted to \$25,000.
3. Cost of goods sold was \$198,000.
4. Net cash provided by operating activities was \$48,000.
5. Capital expenditures were \$25,000, and cash dividends were \$18,000.

Instructions
Compute the following ratios at December 31, 2007.
(a) Current. (e) Days in inventory.
(b) Receivables turnover. (f) Cash debt coverage.
(c) Average collection period. (g) Current cash debt coverage.
(d) Inventory turnover. (h) Free cash flow.

#### Solution Preview

Year 2007
a. Current Ratio 150000 2.73
CURRENTASSETS/CURRENT LIABILITIES 55000

(b) Receivables turnover. 375000 6.00
Net Sales/Average Receivables 62500

(c) Average collection ...

#### Solution Summary

Response provides the steps to compute the Current cash debt coverage

\$2.19