Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(14 points) Pelican Paper and Timberland Forest are competitors in the manufacture of craft papers. Some financial statement values for each company for the most

image text in transcribed
(14 points) Pelican Paper and Timberland Forest are competitors in the manufacture of craft papers. Some financial statement values for each company for the most recent fiscal year are listed below: Pelican Paper Timberland Forest Property, Plant and Equipment $ 6,000,000 $7,000,000 Total Assets 10,000,000 10,000,000 Accounts Payable 200,000 500,000 Long-term and interest-bearing debt 800,000 4,500,000 Total Liabilities 1,000,000 5,000,000 Total Shareholders' Equity 9,000,000 5,000,000 Total Sales 25,000,000 25,000,000 EBIT 6,250,000 6,250,000 Interest expense 80,000 500,000 Net income 3,700,000 3,450,000 Using the information above, A. Calculate the following debt utilization ratios for both Pelican Paper and Timberland Forest (4 points) D Debt to total assets ratio ) Times interest eamed B. Calculate the following profitability ratios for both Pelican Paper and Timberland Forest (6 points): Profit Margin D) ii) Return on Assets 1) Return on Equity C. If f you had $100,000 to invest, would you invest in Pelican Paper or Timberland Forest? Provide at least two reasons for your decision. (4 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Focus On Personal Finance An Active Approach To Help You Develop Successful Financial Skills

Authors: Jack Kapoor, Les Dlabay, Robert Hughes

4th Edition

0078034787, 978-0078034787

More Books

Students also viewed these Finance questions

Question

How do cultures and social communities shape communication?

Answered: 1 week ago