P3-16 (similar to) Debt analysis Springfield Bank is evaluating Creek Enterprises, which has requested a 53,830,000 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 Creok's recent financial statements, evaluate and recommend appropriate action on the loan request. Industry averages Debt ratio 0.43 Creek Enterprises Income Statement Times interest earned ratio Fixed-payment coverage ratio Crook Enterprises Balance Sheet D 1.99 Creek Enterprises's debt ratio is 72. (Round to two decimal places) Creek Enterprises's times interest earned ratio is 294 (Round to wo decimal places) Creek Enterprisos's fixed-payment coverage ratio is W (Round to two decimal places) 7.30 m Creek Enterprises Income Statement for the Year Ended December 31, 2019 Sales revenue $30,024,000 Less: Cost of goods sold 21,009,000 Gross profits $9,015,000 Less: Operating expenses Selling expense $3,017,000 General and administrative expenses 1,790,000 Lease expense 200,000 Depreciation expense 1,046,000 Total operating expense 6,053,000 Operating profits $2,962,000 Less: Interest expense 1,007,000 Net profits before taxes $1,955,000 Less: Taxes (rate = 21%) 410.550 Net profits after taxes $1,544,450 21,009,000 $9,015,000 $3,017,000 1,790,000 200,000 1,046,000 Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less. Taxes (rate=21%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders 6,053,000 $2,962,000 1,007,000 $1,955,000 410,550 $1,544,450 103,275 $1,441,175 financial leases)" $19,678,000 Gross fixed assets (at cost) Stockholders' equity Land and buildings $10,967,000 Preferred stock (24,300 shares, $4.25 dividend) $2,491,000 Machinery and equipment 20,507.000 Common stock (1.08 million Furniture and fixtures 7,984,000 shares at $5.00 par) 5,400,000 Gross fixed assets $39,458,000 Paid-in capital in excess of par value 3,999.000 Less: Accumulated depreciation 12,978,000 Retained earnings 1.979,000 Net fixed assets $26,480,000 Total stockholders' equity $13,869,000 Total liabilities and Total assets $50,037,000 stockholders' equity $50,037,000 *The firm has a 4-year financial lease requiring annual beginning-of-year payments of $200,000. Three years of the lease have yet to run. **Required annual principal payments are $789,000