Question
Review the additional case information below. Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid
Review the additional case information below.
Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate
A)
1) 149,516 / 37,468 = 3.99 Current Ratio 3.99:1
2) 462,500 / 3,250 = 142.30 Accounts receivable turnover 142 times
3) 231,250 / 17,897 = 12.92 Inventory turnover 12.9 times
4) 37,486 / 149,516 = .250 Debt to asset ratio 25%
5) 74000 +550+18500/550 93,050/550 = 169.18
Times interest earned 169 times
6) 231,250 / 462,.500 = .5 Gross profit rate 50%
7) 74000/462500 = .16 Profit Margin 16%
8) 462,500 / 149,516 = 3.093 Asset turnover $ 3.09
9) 74,000 / 149,516 = .4949 Return on assets 49%
10) 74,000 / 112,030 = .660
Return on stockholders equity = 66%
My question is where do I implement the additional case study information? I have my current ratios listed above but if they are off then i can not move onto the next series of questions. Not sure where to put the information for the new loan.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started