Question
Examine the following selected financial information for Best Value Corporation and Modern Stores, Inc., as of the end of their fiscal years ending in 2018:
Examine the following selected financial information for
Best Value
Corporation and
Modern
Stores, Inc., as of the end of their fiscal years ending in
2018:
Data table
| (In millions) | Best Value Corporation | Modern Stores, Inc. | |||||
|---|---|---|---|---|---|---|---|
| 1. | Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . | $15,256 |
| $203,110 | |||
| 2. | Total common stockholders' equity. . . . . | $3,075 |
| $71,460 | |||
| 3. | Operating income. . . . . . . . . . . . . . . . . . . . | $1,350 |
| $26,820 | |||
| 4. | Interest expense. . . . . . . . . . . . . . . . . . . . . . | $88 |
| $2,020 | |||
| 5. | Leverage ratio. . . . . . . . . . . . . . . . . . . . . . . . |
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| 6. | Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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| 7. | Debt ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . |
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| 8. | Times interest earned. . . . . . . . . . . . . . . . . |
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Requirements
| 1. | Complete the table, calculating all the requested information for the two companies. Use year-end figures in place of averages where needed for the purpose of calculating the ratios in this exercise. |
| 2. | Evaluate each company's long-term debt-paying ability (strong, medium, weak). |
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Managerial Accounting
Authors: Karen W. Braun, Wendy M. Tietz
3rd edition
132890542, 978-0132890540
