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The balance sheet for Shaver Corporation reported the following: cash, $17,500; short-term investments, $22,500; net accounts receivable, $60,000; inventories, $65,000; prepaids, $22,500; equipment, $106,000; current
The balance sheet for Shaver Corporation reported the following: cash, $17,500; short-term investments, $22,500; net accounts receivable, $60,000; inventories, $65,000; prepaids, $22,500; equipment, $106,000; current liabilities, $65,000; notes payable (long- term), $95,000; total stockholders' equity, $133,500; net income, $5,820; interest expense, $9,400; income before income taxes, $12.780 1. Compute Shaver's debt-to-assets ratio and times interest earned ratio. (Round your answers to 2 decimal places.) Ratio Debt-to-Assets Times Interest Earned 2-a. Based on these ratios, does it appear Shaver relies mainly on debt or equity to finance its assets? O Debt O Equity 2-b. Is it probable that Shaver will be able to meet its future interest obligations? O Yes O No
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