Question
Financial ratios: Financial leverage.The financial statements for Tyler Toys, Inc. are shown in the popup window: Calculate the debt ratio, times interest earned ratio, and
Financial ratios: Financial leverage.The financial statements for Tyler Toys, Inc. are shown in the popup window: Calculate the debt ratio, times interest earned ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?
Tyler Toys, Inc. | ||
Income Statement for Years Ending December 31, 2013 and 2014 | ||
| 2014 | 2013 |
Revenue | $14,146,494 | $13,566,550 |
Cost of goods sold | $-8,448,154 | $-8,132,959 |
Selling, general, and administrative expenses | $-997,530 | $-981,634 |
Depreciation | $-1,497,830 | $-1,471,612 |
EBIT | $3,202,980 | $2,980,345 |
Interest expense | $-375,704 | $-354,543 |
Taxes | $-1,074,365 | $-997,805 |
Net income | $1,752,911 | $1,627,997 |
Right-click on the table and select Copy to Clipboard and then right-click the
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Tyler Toys, Inc. | |||||
Balance Sheet as of December 31, 2013 and 2014 | |||||
ASSETS | 2014 | 2013 | LIABILITIES | 2014 | 2013 |
Current assets |
|
| Current liabilities |
|
|
Cash | $191,077 | $187,345 | Accounts payable | $1,545,788 | $1,455,214 |
Investments | $180,531 | $120,023 | Short-term debt | $311,676 | $333,719 |
Accounts receivable | $668,727 | $631,504 | Total current liabilities | $1,857,464 | $1,788,933 |
Inventory | $587,152 | $563,321 | Long-term liabilities |
|
|
Total current assets | $1,627,487 | $1,502,193 | Debt | $7,285,241 | $6,603,887 |
Long-term assets |
|
| Other liabilities | $1,463,807 | $1,345,856 |
Investments | $3,054,459 | $2,828,564 | Total liabilities | $10,606,512 | $9,738,676 |
Plant, property, and equipment | $8,496,176 | $8,481,193 | OWNERS EQUITY |
|
|
Goodwill | $347,867 | $347,105 | Common stock | $1,457,157 | $1,454,866 |
Intangible assets | $1,158,577 | $957,015 | Retained earnings | $2,620,897 | $2,922,528 |
|
|
| Total owners equity | $4,078,054 | $4,377,394 |
|
|
| TOTAL LIABILITIES |
|
|
TOTAL ASSETS | $14,684,566 | $14,116,070 | AND OWNERS EQUITY | $14,684,566 | $14,116,070 |
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