Hi, please help me to check and see if I am on the right track. (Specifically for "requirement 3", I don't know if I choose the correct one, each blank for requirement 3 contains 2 options, one is the one that I chose, the other one is completely opposite than the one that I selected. please let me know the answer for requirement 3 and help me to check if I am doing correct for requirement 1 and 2) Thank you.
The classified balance sheet and selected income statement data for Roberts, Inc., as of December 31, 2018, are presented next. (Click the icon to view the classified balance sheet.) (Click the icon to view the selected income statement data.) Read the requirements. Requirement 1. Calculate Roberts, inc. s debt ratio and interest coverage ratio as of December 31, 2018. Round to two decimal places. Begin by calculating Roberts, Inc.'s debt ratio. Select the formula and then enter the amounts to calculate the ratio. (Abbreviation used: EBIT = Earnings before interest and taxes. Enter the ratio as a decimal to two places, XX.) Total liabilities Total assets = Debt ratio 162650 3 86400 = 0.42 Now calculate Roberts, Inc.'s interest coverage ratio. Select the formula and then enter the amounts to calculate the ratio. (Abbreviation used: EBIT = Earnings before interest and taxes. Round the ratio to two decimal places, XX.) EBIT Interest expense Interest coverage ratio = = 97500 1 18200 5.36 Requirement 2. What percentage of Roberts, Inc.'s assets belong to the stockholders? (Enter the amount as a whole percent, X%.) 58 % of the company's assets belong to the stockholders. Requirement 3. Would you be willing to extend credit to Roberts, Inc.? Why or why not? (Assume that the average debt ratio for most companies ranges from 0.57 to 0.67 and the average interest coverage ratio for most companies ranges from 1 to 3.) indicating that its ability to repay any additional debt is strong. The Yes, I would be willing to extend credit to Roberts since the company's debt ratio is high interest coverage ratio also supports my decision. high Choose from any list or enter any number in the input fields and then continue to the low on. Cash Accounts receivable Supplies Prepaid rent Total current assets 17,500 4,400 700 2,800 Accounts payable Salaries payable Unearned service revenue Note payable Total current liabilities 9.900 2,100 650 10,000 25,400 22,650 Fixed assets: Land 30,000 110,000 $ 35,000 Equipment Less: Accumulated 140,000 14,000 depreciation, equipment Building Less: Accumulated Long-term debt: 60,000 Mortgage note payable Bonds payable Total long-term debt 21,000 Stockholders' Equity Common stock 280,000 Retained earnings 361,000 Total stockholders' equity 386,400 Total liabilities and stockholders' equity 300,000 7,500 216,250 20,000 depreciation, building Total fixed assets 223,750 $ $ 386,400 Total assets A Data Table - X Selected Income Statement Data Gross profit ........................ $ Operating expenses Earnings before interest and taxes...... Interest expense Income tax expense ....... Net income 253,200 155,700 97,500 18,200 36,700 42,600 Print Done
