1.The following information is computed from Fast Food Chain's annual report for 2018. 2017 $ 2,364,916 8,516,833 2018 Current assets $ 2,731,020 Property and equipment, net 10,960,286 Intangible assets, at cost less applicable amortization 294,775 $13,986,081 255,919 $11,137,668 $ 2,210,735 26,000 Current liabilities $ 3,168,123 Deferred federal income taxes 160,000 Mortgage note payable 456,000 Stockholders' equity 10, 201,958 $13,986,081 8,900,933 $11,137,668 $33,410,599 $25,804,285 (30,168, 715) (23,159,745) Net sales Cost of goods sold Selling and administrative expense Interest expense Income tax expense Net income (2,000,000) (216,936) (400,000) $ 624, 948 (1,500,000) (39,456) (300,000) $ 805,084 Note: One-third of the operating lease rental charge was $100,000 in 2018 and $50,000 in 2017. Capitalized interest totaled $30,000 in 2018 and $20,000 in 2017. Required: a. Based on the above data for both years, compute: 1. times interest earned 3. 4. 5. debt ratio debt/equity ratio debt to tangible net worth b.Comment on the firm's long-term borrowing ability based on the analysis. 2. Required Following is a list of paired ratios and transactions. For each transaction, indicate the effect of that transaction on the specific ratio. Use + for increase, - for decrease, and 0 for no effect. Ratio Debt Ratio of 0.4 a Transaction A firm is required to capitalize leases previously presented only in notes. b. A firm issue and sells common stocks. A firm has an increase in selling expense with no change in other expenses. d. A firm writes off a sizeable account receivable. c. Debt/Equity Ratio of 1.12 Times Interest Earned Ratio of 6.2 to 1 Times Interest Earned Ratio of 3.6 to 1 e. A firm pays cash for a valuable patent. Debt to Tangible Net Worth Ratio of 1.3 to 1 3.. You have been asked to evaluate the long-term borrowing position of Client, Inc. However, you were given only the following limited information. 3.. You have been asked to evaluate the long-term borrowing position of Client, Inc. However, you were given only the following limited information. Bonds payable, 12% Stockholders' equity Current assets Tangible assets, net Intangible assets Investments Other assets Sales Operating expenses $1,000,000 1,800,000 1,870,000 1,600,000 40,000 120,000 90,000 4,000,000 3,620,000 Required: Assuming that this is the only information you will receive, estimate the following ratios: Times interest earned ratio b. Debt ratio Debt/equity ratio d. Debt to tangible net worth ratio a. c