Assets Current assets: Cash and cash equivalents Short-term investments Accounts

Question

Assets Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Merchandise inventories other current assets 2,096 1,317 1,222 5,063 416 10,114 3,693 $13,807 Total current assets Long-term assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable 5,050 3,675 8,725 2,240 2,842 $13,807 other current liabilities Total current liabilities Long-term liabilities Shareholders' equity Total liabilities and shareholders equity Bargain Deal, Inc. Income Statement For the Year Ended January 30, 2016 s in millions) Revenues Costs and expenses $39,588 38,165 1,423 Operating income Other income (expense)* 1,346 683 Income before income taxes Income tax expense Net income $ 663 "Includes $188 of interest expense. Required 1-a. Calculate the current ratio for Bargain Deal for its fiscal year ended January 30, 2016. 1-b. Calculate the acid-test ratio for Bargain Deal for its fiscal year ended January 30, 2016. 1-c. Calculate the debt to equity ratio for Bargain Deal for its fiscal year ended January 30, 2016. 1-d. Calculate the times interest earned ratio for Bargain Deal for its fiscal year ended January 30, 2016.

Explanation / Answer

1a) Current ratio = Current assets/Current liabilities

= 10114/8725

Current ratio = 1.16 : 1

1b) Quick ratio = (Cash+short term investment+account receivable)/Current liabilties

= (2096+1317+1222)/8725

Quick ratio = 0.53 : 1

1c) Debt to equity ratio = Total liabilties/Total equity

= (8725+2240)/2842

Debt to equity ratio = 3.86:1

1d) Times interest earned ratio = Income before interest and tax/Interest expense

= (1423+111)/188

Times interest earned ratio = 19.9 Times

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