Question
Refer to the file Yellow Hammer Corporation. A)Assess Yellow Hammers ability to meet its interest obligations in 2017 by calculating interest coverage ratios using EBIT.
Refer to the file Yellow Hammer Corporation.
A)Assess Yellow Hammers ability to meet its interest obligations in 2017 by calculating interest coverage ratios using EBIT.
B) Assess Yellow Hammers ability to meet its interest obligations in 2017 by calculating interest coverage ratios using EBITDA.
C)Assess Yellow Hammers ability to meet its interest obligations in 2017 by calculating leverage ratio of total debt to total capitalization (use book value of equity).
D)Assess Yellow Hammers ability to meet its interest obligations in 2017 by calculating leverage ratio of total debt to EBITDA.
Yellow Hammer Corporation
Consolidated Balance Sheet
Year Ended December 31 (in $ millions)
Assets
2017
2016
Liabilities and Stockholders' Equity
2017
2016
Current Assets
Current Liabilities
Cash
21.2
19.5
Accounts payable
29.2
24.5
Accounts receivable
18.5
13.2
Notes payable/short-term debt
3.5
3.2
Inventories
15.3
14.3
Current maturies of long-term debt
13.3
12.3
Other current assets
2.0
1.0
Other current liabilities
2.0
4.0
Total current assets
57.0
48.0
Total current liabilities
48.0
44.0
Long-Term Assets
Long-Term Liabilities
Land
22.2
20.7
Long-term debt
99.9
76.3
Buildings
36.5
30.5
Deferred taxes
7.6
7.4
Equipment
39.7
33.2
Total long-term liabilities
107.5
83.7
Less accumulated depreciation
-18.7
-17.5
Net property, plant, and equipment
79.7
66.9
Total Liabilities
155.5
127.7
Goodwill and intangible assets
20.0
20.0
Stockholders' Equity
22.2
21.2
Other long-term assets
21.0
14.0
Total long-term assets
120.7
100.9
Total Liabilities and Stockholders' Equity
177.7
148.9
Total assets
177.7
148.9
Yellow Hammer Corporation
Income Statement
Year Ended December 31 (in $ millions)
2017
2016
Total sales
186.7
176.1
Cost of sales
153.4
147.3
Gross Profit
33.3
28.8
Selling, general, and administrative expenses
13.5
13.0
Research and development
8.2
7.6
Depreciation and amortization
1.2
1.1
Operating Income
10.4
7.1
Other income
0.0
0.0
Earnings Before Interest and Taxes
10.4
7.1
Interest income (expense)
7.7
4.6
Pretax Income
2.7
2.5
Taxes
0.7
0.6
Net Income
2.0
1.9
Earnings per share
$0.556
$0.528
Diluted earnings per share
$0.526
$0.500
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Money Banking And Financial Markets
Authors: Stephen G. Cecchetti
2nd International Edition
0071287728, 9780071287722
