Find Debt Ratio, Times Interest Earned Ratio, Fixed Payment coverage ratio and compare to industry average
P3-16 (similar to) Question Help Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a $4,360,000 loan, to assess the firm's financial leverage and financial risk. On the basis of the debt ratios for Creek, along with the industry averages and Creek's recent financial statements, evaluate and recommend appropriate action on the loan request. - X Industry averages Creek Enterp Data Table Debt ratio 0.44 x Data Table Times interest earned ratio 7.21 Creek Enterp: Fixed-payment coverage ratio 1.96 (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) Creek Enterprises's debt ratio is (Round to two decimal places.) Creek Enterprises Balance Sheet December 31, 2019 (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) Assets Liabilities and Stockholders' Equity Creek Enterprises Income Statement for the Year Ended December 31, 2019 Current assets Current liabilities Sales revenue $29,953,000 Cash $1,002,000 Accounts payable $8,049,000 Less: Cost of goods sold 20,990,000 Marketable securities 3,037,000 Notes payable 8,025,000 Gross profits $8,963.000 Accounts receivable 11,960,000 Accruals 498,000 Less: Operating expenses Inventories 7,451,000 Total current liabilities $16,572,000 Selling expense $2,973,000 Total current assets $23,450,000 Long-term debt (includes General and administrative expenses 1,848,000 financial leases)** $19,293,000 Lease expense 162.000 Gross fixed assets (at cost)* Stockholders' equity Depreciation expense 1,015,000 Land and buildings $11,014,000 Preferred stock (24,700 Total operating expense 5,998,000 shares, 54.25 dividend) $2,549,000 Operating profits $2.965,000 Machinery and equipment 20,536,000 Common stock (1.18 million Less: Interest expense 1,049,000 Furniture and fixtures 8,010,000 shares at $4.75 par) 5,605,000 Net profits before taxes $1,916,000 Gross fixed ass $39,560,000 Paid-in capital in Less: Taxes (rate = 21%) 402,360 par value 3,966,000 Net profits after taxes $1,513,640 Less: Accumulated depreciation 13,038,000 Retained earnings 1.987,000 Less: Preferred stock dividends Net fixed assets $26,522,000 Total stockholders' equity $14,107,000 Earnings available for common stockholders $1,408,665 Total liabilities and Total assets $49,972,000 stockholders' equity $49,972,000 *The firm has a 4-year financial lease requiring annual beginning-of-year payments of $162,000. Three years Print Done of the lease have yet to run. **Required annual principal payments are $829,000. 104.975 Print Done Enter your answer in the answer box and then click Check
