In Problem 6, how might we determine whether these ratios reflect a well-managed, creditworthy company? (LG 20-4)

Use the following financial statements for Lake of Egypt Marina to answer Problem 8. (LG 20-4)

Lake of Egypt Marina Inc.

Income Statement for Years Ending December 31, 2018 and 2019

(in millions of dollars)

2018 2019 Net sales (all credit) $432 $515 Less: Cost of goods sold 200 260 Gross profits 232 255 Less: Depreciation and other operating expenses 20 22 Earnings before interest and taxes (EBIT) 212 233 Less: Interest 30 33 Earnings before taxes (EBT) 182 200 Less: Taxes 55 57 Net income $127 $143 Less: Preferred stock dividends $ 5 $ 5 Net income available to common 122 138 page 630 stockholders Less: Common stock dividends 65 65 Addition to retained earnings $ 57 $ 73

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